As filed with the United States Securities and Exchange Commission
on February 11, 2008
1933 Act Registration No. 33-57340
1940 Act Registration No. 811-7452
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.___________
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Post-Effective Amendment No. 34 X
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
11 Greenway Plaza, Suite 100, Houston, TX 77046-1173
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (713) 626-1919
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John M. Zerr, Esquire
11 Greenway Plaza, Suite 100, Houston, TX 77046-1173
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(Name and Address of Agent for Service)
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Copy to:
Margaret Gallardo-Cortez, Esquire Christian A. Szautner, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP
11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor
Houston, Texas 77046-1173 Philadelphia, Pennsylvania 19103-7599
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Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Amendment.
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.
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AIM V.I. BASIC BALANCED FUND
PROSPECTUS
MAY 1, 2008
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Series I shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Basic Balanced Fund's investment objective is long-term growth of capital and current income.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 6 Portfolio Managers 6 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 7 Trade Activity Monitoring 7 Fair Value Pricing 8 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 9 Payments to Insurance Companies 9 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
INVESTMENT OBJECTIVE AND STRATEGIES
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 invests without regard to market capitalization. The fund normally invests a minimum of 30% and a maximum of 70% of its total assets in equity securities. The fund will invest at least 25% and a maximum of 70% of its total assets in investment-grade non-convertible debt securities. The fund may also invest up to 25% of its total assets in convertible securities and up to 25% of its total assets in foreign securities. The fund may also invest in credit derivatives.
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.
In selecting equity securities, the portfolio managers emphasize the following characteristics, although not all investments will have these attributes:
- Buy business trading at a significant discount to portfolio managers' estimate of intrinsic value. A company's market price must generally offer 50% appreciation potential to estimated intrinsic value over a 2 to 3 year time period.
- Emphasize quality businesses with potential to grow intrinsic value over time. We seek established companies which we believe have solid growth prospects, the ability to earn an attractive return on invested capital and a management team that exhibits intelligent capital allocation skills.
They estimate a company's intrinsic value primarily by taking the present value of projected future free cash flows (i.e. the excess cash generated by the business after considering all cash inflows and outflows to operate the business). They believe this intrinsic value represents the fair economic worth of the business and a value that an informed buyer would pay to acquire the entire company for cash. They check this valuation method with long-run absolute valuation characteristics (including price-to-earnings ratio and price-to-book value ratio) adjusted for the prevailing inflation and interest rate environment.
The portfolio managers will consider selling a security to capitalize on a more attractive investment opportunity, if a security is trading significantly above the portfolio managers' estimate of intrinsic value or if there is a permanent, fundamental deterioration in business prospects that results in inadequate upside potential to estimated intrinsic value.
The fund's investments in the types of securities described in this prospectus vary from time to time, and at any time, the fund may not be invested in all types of securities described in this prospectus. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- 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.
PRINCIPAL RISKS OF INVESTING IN THE FUND (CONTINUED)
- 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. There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio managers will produce the desired results. An investment in the fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
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
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1999............................................................. 19.31%
2000............................................................. -4.20%
2001............................................................. -11.42%
2002............................................................. -17.10%
2003............................................................. 16.36%
2004............................................................. 7.52%
2005............................................................. 5.29%
2006............................................................. 10.55%
2007.............................................................
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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)]. For periods prior to July 1, 2005,
performance shown above relates to the fund before changing its investment
objective and strategy with an emphasis on purchasing debt securities for both
growth of capital and current income.
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2007) 1 YEAR 5 YEARS INCEPTION DATE -------------------------------------------------------------------------- AIM V.I. Basic Balanced Fund % % % 05/01/98 S&P 500--Registered Trademark-- Index(1,2) (3) 04/30/98(3) Custom Basic Balanced Index(1,2,4) (3) 04/30/98(3) Lipper VUF Mixed-Asset Target Allocation Moderate Funds Index(1,2,5) (3) 04/30/98(3) -------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is a market capitalization weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. The fund has also included the Custom Basic Balanced Index as its style specific index because the fund believes the Custom Balanced Index more closely reflects the performance of the types of securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) Mixed-Asset Target Allocation Moderate Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(2) The indices may not reflect payment of fees, expenses or taxes.
(3) The average annual total return given is since the month-end closest to the
inception date of the fund's Series I shares.
(4) The Custom Basic Balanced Index is an index created by Invesco Aim Advisors, Inc. to benchmark the fund. The index consists of the following indices: 60% Russell 1000--Registered Trademark-- Value Index and 40% Lehman Brothers U.S. Aggregate Bond Index. The Russell 1000--Registered Trademark-- Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 1000--Registered Trademark-- Value Index is a trademark/service mark of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company. The Lehman Brothers U.S. Aggregate Bond Index covers U.S. investment-grade fixed-rate bonds with components for government and corporate securities, mortgage pass-throughs and asset-backed securities.
(5) The Lipper VUF Mixed-Asset Target Allocation Moderate Funds Index is an equally weighted representation of the largest variable insurance underlying moderate funds in the Lipper Mixed-Asset Target Allocation Moderate Funds category. These funds, by portfolio practice, maintain a mix between 40%-60% equity securities, with the remainder invested in bonds, cash and cash equivalents.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees(2) % Other Expenses Acquired Fund Fees and Expenses(3) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(2,4) Net Annual Fund Operating Expenses -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Through December 31, 2009, the fund's advisor has contractually agreed to
waive a portion of its advisory fees to the extent necessary so that the
advisory fees payable by the fund does not exceed a specified maximum annual
advisory fee rate, where in the fee rate includes breakpoints and is based
upon net asset levels. The fund's maximum annual advisory fee rate ranges
from 0.62% (for average net assets up to $150 million) to 0.45% (for average
net assets over $10 billion).
(3) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but are expenses of the investment companies in which the fund
invests. You incur these fees and expenses indirectly through the valuation
of the fund's investment in those investment companies. As a result, the Net
Annual Fund Operating Expenses listed above may exceed the limit on Total
Annual Fund Operating Expenses, if any. The impact of the acquired fund fees
and expenses are included in the total returns of the fund.
(4) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 0.91% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees, and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series I shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Basic Balanced Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 ----------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- |
(1) Your actual expenses may be higher or lower than those shown above.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc, (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Bret W. Stanley, (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 1998. As the lead manager, Mr. Stanley generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Stanley may perform these functions, and the nature of these functions, may change from time to time.
- R. Canon Coleman II, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 1999.
- Jan H. Friedli, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with Invesco Aim and/or its affiliates since 1999.
- Brendan D. Gau, Portfolio Manager, who has been responsible for the fund since 2006 and has been associated with Invesco Aim and/or its affiliates since 1996.
- Matthew W. Seinsheimer, Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 1998.
- Michael J. Simon, Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 2001.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance
company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the
principal market where a foreign security trades is not the current market value
as of the close of the NYSE. For foreign securities where the advisor believes,
at the approved degree of certainty, that the price is not reflective of current
market value, the advisor will use the indication of fair value from the pricing
service to determine the fair value of the security. The pricing vendor, pricing
methodology or degree of certainty may change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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
fund. Variable product owners should refer to the prospectus for their variable
products for information regarding the tax consequences of owning such variable
products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the
fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES I
------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------
2007 2006 2005 2004 2003
------- ------- ------- ------- -------
Net asset value, beginning of period $ $ $ $ $
--------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
--------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
====================================================================================================================
Total from investment operations
====================================================================================================================
Less dividends from net investment income
====================================================================================================================
Net asset value, end of period $ $ $ $ $
____________________________________________________________________________________________________________________
====================================================================================================================
Total return % % % % %
____________________________________________________________________________________________________________________
====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
____________________________________________________________________________________________________________________
====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % % %
--------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % % % %
====================================================================================================================
Ratio of net investment income to average net assets % % % % %
____________________________________________________________________________________________________________________
====================================================================================================================
Portfolio turnover rate % % % % %
____________________________________________________________________________________________________________________
====================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VIBBA-PRO-1
AIM V.I. BASIC BALANCED FUND
PROSPECTUS
MAY 1, 2008
|
SERIES II SHARES
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Basic Balanced Fund's investment objective is long-term growth of capital and current income.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
--Registered Trademark--
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 5 ------------------------------------------------------ Fees and Expenses of the Fund 5 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 6 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 7 ------------------------------------------------------ The Advisors 7 Advisor Compensation 7 Portfolio Managers 8 OTHER INFORMATION 8 ------------------------------------------------------ Purchase and Redemption of Shares 8 Excessive Short-Term Trading Activity Disclosures 9 Trade Activity Monitoring 9 Fair Value Pricing 9 Risks 9 Pricing of Shares 9 Taxes 11 Dividends and Distributions 11 Share Classes 11 Distribution Plan 11 Payments to Insurance Companies 11 FINANCIAL HIGHLIGHTS 13 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
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 invests without regard to market capitalization. The fund normally invests a minimum of 30% and a maximum of 70% of its total assets in equity securities. The fund will invest at least 25% and a maximum of 70% of its total assets in investment-grade non-convertible debt securities. The fund may also invest up to 25% of its total assets in convertible securities and up to 25% of its total assets in foreign securities. The fund may also invest in credit derivatives.
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 purchase debt securities for both capital appreciation and income, and to provide portfolio diversification.
In selecting equity securities, the portfolio managers emphasize the following characteristics, although not all investments will have these attributes:
- Buy business trading at a significant discount to portfolio managers' estimate of intrinsic value. A company's market price must generally offer 50% appreciation potential to estimated intrinsic value over a 2 to 3 year time period.
- Emphasize quality businesses with potential to grow intrinsic value over time. We seek established companies which we believe have solid growth prospects, the ability to earn an attractive return on invested capital and a management team that exhibits intelligent capital allocation skills.
They estimate a company's intrinsic value primarily by taking the present value of projected future free cash flows (i.e. the excess cash generated by the business after considering all cash inflows and outflows to operate the business). They believe this intrinsic value represents the fair economic worth of the business and a value that an informed buyer would pay to acquire the entire company for cash. They check this valuation method with long-run absolute valuation characteristics (including price-to-earnings ratio and price-to-book value ratio) adjusted for the prevailing inflation and interest rate environment.
The portfolio managers will consider selling a security to capitalize on a more attractive investment opportunity, if a security is trading significantly above the portfolio managers' estimate of intrinsic value or if there is a permanent, fundamental deterioration in business prospects that results in inadequate upside potential to estimated intrinsic value.
The fund's investments in the types of securities described in this prospectus vary from time to time, and at any time, the fund may not be invested in all types of securities described in this prospectus. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
- 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. There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio managers will produce the desired results. An investment in the fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The 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 chart shown does not
reflect charges assessed in connection with your variable product; if it did,
the performance shown would be lower.
Series I shares are not offered by this prospectus. The Series I shares 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 the fund).
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%
2003.................................................................. 16.15%
2004.................................................................. 7.24%
2005.................................................................. 5.00%
2006.................................................................. 10.26%
2007..................................................................
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* The returns shown for these periods are 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 return shown for this period is the blended return 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 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)]. For periods prior to July 1, 2005,
performance shown above relates to the fund before changing its investment
objective and strategy with an emphasis on purchasing debt securities for both
growth of capital and current income.
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------
SERIES I
(for the periods ended SINCE INCEPTION
December 31, 2007) 1 YEAR 5 YEARS INCEPTION DATE
--------------------------------------------------------------------------
AIM V.I. Basic Balanced
Fund(1) % % % 05/01/98
S&P 500--Registered
Trademark-- Index(2,3) 04/30/98(4)
Custom Balanced Index(2,3,5) 04/30/98(4)
Lipper VUF Mixed-Asset Target
Allocation Moderate Funds
Index(2,3,6) 04/30/98(4)
--------------------------------------------------------------------------
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(1) The returns shown for the one year and five year periods are the historical performance of the fund's Series II shares. The return shown for the since inception period is the blended return 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 a market capitalization weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. The fund has also included the Custom Basic Balanced Index as its style specific index because the fund believes the Custom Balanced Index more closely reflects the performance of the types of securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) Mixed-Asset Target Allocation Moderate Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(3) The indices may not reflect payment of fees, expenses or taxes.
(4) The average annual total return given is since the inception month-end
closest to the inception date of the fund's Series I shares.
(5) The Custom Basic Balanced Index is an index created by Invesco Aim Advisors, Inc. to benchmark the fund. The index consists of the following indices: 60% Russell 1000--Registered Trademark-- Value Index and 40% Lehman Brothers U.S. Aggregate Bond Index. The Russell 1000--Registered Trademark-- Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 1000--Registered Trademark-- Value Index is a trademark/service mark of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company. The Lehman Brothers U.S. Aggregate Bond Index covers U.S. investment-grade fixed-rate bonds with components for government and corporate securities, mortgage pass-throughs and asset-backed securities.
(6) The Lipper VUF Mixed-Asset Target Allocation Moderate Funds Index is an equally weighted representation of the largest variable insurance underlying moderate funds in the Lipper Mixed-Asset Target Allocation Moderate Funds category. These funds, by portfolio practice, maintain a mix between 40%-60% equity securities, with the remainder invested in bonds, cash and cash equivalents.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES ------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES ------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A ------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) ------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES ------------------------------------------------------------------------------- Management Fees(2) % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(3) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(2,4) Net Annual Fund Operating Expenses ------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Through December 31, 2009, the fund's advisor has contractually agreed to
waive a portion of its advisory fees to the extent necessary so that the
advisory fees payable by the fund does not exceed a specified maximum annual
advisory fee rate, wherein the fee rate includes breakpoints and is based
upon net asset levels. The fund's maximum annual advisory fee rate ranges
from 0.62% (for average net assets up to $150 million) to 0.45% (for average
net assets over $10 billion).
(3) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but are expenses of the investment companies in which the fund
invests. You incur these fees and expenses indirectly through the valuation
of the fund's investment in those investment companies. As a result, the Net
Annual Fund Operating Expenses listed above may exceed the limit on Total
Annual Fund Operating Expenses, if any. The impact of the acquired fund fees
and expenses are included in the total returns of the fund.
(4) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.16% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees, and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily, 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. Basic Balanced Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
-------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-------------------------------------------------------------------------------------------
SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-------------------------------------------------------------------------------------------
|
(1) Your actual expenses may be higher or lower than those shown above.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Bret W. Stanley (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 1998. As the lead manager, Mr. Stanley generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Stanley may perform these functions, and the nature of these functions, may change from time to time.
- R. Canon Coleman II, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 1999.
- Jan H. Friedli, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with Invesco Aim and/or its affiliates since 1999.
- Brendan D. Gau, Portfolio Manager, who has been responsible for the fund since 2006 and has been associated with Invesco Aim and/or its affiliates since 1996.
- Matthew W. Seinsheimer, Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 1998.
- Michael J. Simon, Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 2001.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are not designed to accommodate excessive short-term trading activity in violation of our policies described below. Excessive short-term trading activity in the fund's shares (i.e., purchases of fund shares followed shortly thereafter by redemptions of such shares, or vice versa) may hurt the long-term performance of the fund by requiring it to maintain an excessive amount of cash or to liquidate portfolio holdings at a disadvantageous time, thus interfering with the efficient management of the fund by causing it to
incur increased brokerage and administrative costs. Where excessive short-term
trading activity seeks to take advantage of arbitrage opportunities from stale
prices for portfolio securities, the value of fund shares held by long-term
investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund values portfolio securities for which market quotations are readily available at market value. The fund values all other securities and assets for which market quotations are not readily available at their fair value in good faith using procedures approved by the Board of the fund. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate
accounts of insurance companies issuing the variable products.
The fund expects that its distributions, if any, will consist of both
ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II shares. The plan allows the fund 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 fund). Because the fund pays these fees out of its 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 charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual
limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES II
-------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------
2007 2006 2005 2004 2003
------ ------ ------ ------ ------
Net asset value, beginning of period $ $ $ $
---------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
---------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
===============================================================================================================
Total from investment operations
===============================================================================================================
Less dividends from net investment income
===============================================================================================================
Net asset value, end of period $ $ $ $
_______________________________________________________________________________________________________________
===============================================================================================================
Total return % % % %
_______________________________________________________________________________________________________________
===============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $
_______________________________________________________________________________________________________________
===============================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % %
---------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % % %
===============================================================================================================
Ratio of net investment income to average net assets % % % %
_______________________________________________________________________________________________________________
===============================================================================================================
Portfolio turnover rate % % % %
_______________________________________________________________________________________________________________
===============================================================================================================
|
AIM V.I. BASIC VALUE FUND
PROSPECTUS
MAY 1, 2008
SERIES I SHARES
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Basic Value Fund's investment objective is long-term growth of capital.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 6 Portfolio Managers 6 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 7 Trade Activity Monitoring 7 Fair Value Pricing 8 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 9 Payments to Insurance Companies 9 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is long-term growth of capital. The investment
objective of the fund may be changed by the Board of Trustees (the Board)
without shareholder approval.
The fund seeks to meet this objective by investing, normally, at least 65%
of its total assets in equity securities of U.S. issuers that have market
capitalizations in excess of $5 billion. In complying with the fund's 65%
investment requirement, the fund will invest primarily in marketable equity
securities the portfolio managers believe have the potential for capital growth,
and its investments may include synthetic and derivative instruments. Synthetic
and derivative instruments are investments that have economic characteristics
similar to the fund's direct investments. Synthetic and derivative instruments
that the fund may invest in include futures contracts, option contracts, and
equity linked derivatives. Synthetic and derivative instruments may have the
effect of leveraging the fund's portfolio.
In selecting securities, the portfolio managers emphasize the following
characteristics, although not all investments will have these attributes:
- Buy businesses trading at a significant discount to portfolio managers' estimate of intrinsic value. A company's market price must generally offer 50% appreciation potential to estimated intrinsic value over a 2 to 3 year time period.
- Emphasize quality businesses with potential to grow intrinsic value over time. They seek established companies which they believe have solid growth prospects, the ability to earn an attractive return on invested capital and a management team that exhibits intelligent capital allocation skills. They estimate a company's intrinsic value primarily by taking the present value of projected future free cash flows (i.e. the excess cash generated by the business after considering all cash inflows and outflows to operate the business). They believe this intrinsic value represents the fair economic worth of the business and a value that an informed buyer would pay to acquire the entire company for cash. They check this valuation method with long-run absolute valuation characteristics (including price-to-earnings ratio and price-to-book value ratio) adjusted for the prevailing inflation and interest rate environment. The portfolio managers will consider selling a security to capitalize on a more attractive investment opportunity, if a security is trading significantly above the portfolio managers' estimate of intrinsic value or if there is a permanent, fundamental deterioration in business prospects that results in inadequate upside potential to estimated intrinsic value. The portfolio managers seek to achieve strong long-term performance by constructing a diversified portfolio of typically 40-60 stocks that offers value content greater than the broad market, as measured by the portfolio's aggregate discount to the portfolio managers' estimated intrinsic value of the portfolio. The investment process is fundamental in nature and focused on individual companies as opposed to macro economic forecasts or specific industry exposure. The portfolio construction process is intended to preserve and grow the estimated intrinsic value of the fund's portfolio rather than mirror the composition or sector weights of any benchmark. The fund may also invest up to 25% of its total assets in foreign securities. The fund's investments in the types of securities described in this prospectus vary from time to time, and at any time, the fund may not be invested in all types of securities described in this prospectus. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
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 historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
The principal risks of investing in the fund are:
Market Risk--The prices of and the income generated by securities held by
the fund may decline in response to certain events, including those directly
involving the companies whose securities are owned by the fund; general economic
and market conditions; regional or global economic instability; and currency and
interest rate fluctuations.
Value Investing Risk--Value stocks can react differently to issuer,
political, market and economic developments than the market as a whole and other
types of stocks. Value stocks tend to be currently out-of-favor with many
investors and can continue to be undervalued for long periods of time and may
not ever realize their full value.
Equity Securities Risk--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.
Derivatives Risk--The value of "derivatives"--so-called because their value
"derives" from the value of an underlying asset (including an underlying
security), reference rate or index--may rise or fall more rapidly than other
investments. For some derivatives, it is possible to lose more than the amount
invested in the derivative. If the fund uses derivatives to "hedge" the overall
risk of its portfolio, it is possible that the hedge may not succeed. This may
happen for various reasons, including unexpected changes in the value of the
rest of the fund's portfolio.
Counterparty Risk--Individually negotiated, or over-the-counter, derivatives
are also subject to counterparty risk, which is the risk that the other party to
the contract will not fulfill its contractual obligation to complete the
transaction with the fund.
Leveraging Risk--The fund may engage in transactions, including the use of
synthetic instruments and derivatives, which may give rise to a form of
leverage. Leverage may cause the fund's portfolio to be more volatile than if
the portfolio had not been leveraged because leverage can exaggerate the effect
of any increase or decrease in the value of securities held by the fund.
Foreign Securities Risk--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 delayed in settlement procedures.
Management Risk--There is no guarantee that the investment techniques and
risk analyses used by the fund's portfolio managers will produce the desired
results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
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
----------- -------
2002................................................................... -22.15%
2003................................................................... 33.63%
2004................................................................... 11.07%
2005................................................................... 5.74%
2006................................................................... 13.20%
2007................................................................... %
|
During the period shown in the bar chart, the highest quarterly return was
[20.56% (quarter ended June 30, 2003)] and the lowest quarterly return was
[-20.06% (quarter ended September 30, 2002)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS ----------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2007) 1 YEAR 5 YEAR INCEPTION DATE ------------------------------------------------------------------------------------------ AIM V.I. Basic Value Fund % % % 09/10/01 S&P 500--Registered Trademark-- Index(1,2) (3) 08/31/01(3) Russell 1000--Registered Trademark-- Value Index(1,2,4) (3) 08/31/01(3) Lipper VUF Large-Cap Value Funds Index(1,2,5) (3) 08/31/01(3) ------------------------------------------------------------------------------------------ |
(1) The Standard & Poor's 500 Index is a market capitalization weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. 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 Variable Underlying Funds (VUF) Large-Cap Value Funds Index (which may or may not include the fund) is included for comparison to a peer-group.
(2) The indices may not reflect payment of fees, expenses or taxes.
(3) The average annual total return given is since the month end closest to the
inception date of the fund's Series I shares.
(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. The Russell 1000--Registered Trademark-- Value Index is a trademark/service mark of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company.
(5) The Lipper VUF Large-Cap Value Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Large-Cap Value Funds category. These funds typically have a below average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P 500--Registered Trademark-- Index.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees(2) % Other Expenses Acquired Fund Fees and Expenses(3) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(2,4) Net Annual Fund Operating Expenses -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Through December 31, 2009, the fund's advisor has contractually agreed to
waive a portion of its advisory fees to the extent necessary so that the
advisory fees payable by the fund does not exceed a specified maximum annual
advisory fee rate, wherein the fee rate includes breakpoints and is based
upon net asset levels. The fund's maximum annual advisory fee ranges from
0.695% (for average net assets up to $250 million) to 0.52% (for average net
assets over $10 billion).
(3) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but are expenses of the investment companies in which the fund
invests. You incur these fees and expenses indirectly through the valuation
of the fund's investment in those investment companies. As a result, the Net
Annual Fund Operating Expenses listed above may exceed the limit on Total
Annual Fund Operating Expenses, if any. The impact of the acquired fund fees
and expense are included in the total returns of the fund.
(4) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 1.30% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series I shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Basic Value Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 ----------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- |
(1) Your actual expenses may be higher or lower than those shown above.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- 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 Invesco Aim and/or its affiliates since 1998. As the lead manager, Mr. Stanley generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Stanley may perform these functions, and the nature of these functions, may change from time to time.
- R. Canon Coleman II, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 1999.
- Matthew W. Seinsheimer, Senior Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with Invesco Aim and/or its affiliates since 1998.
- Michael J. Simon, Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with Invesco Aim and/or its affiliates since 2001.
More information on the portfolio managers and the team, including biographies of members of the team, may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance
company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the
principal market where a foreign security trades is not the current market value
as of the close of the NYSE. For foreign securities where the advisor believes,
at the approved degree of certainty, that the price is not reflective of current
market value, the advisor will use the indication of fair value from the pricing
service to determine the fair value of the security. The pricing vendor, pricing
methodology or degree of certainty may change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis
over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales- Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES I
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- -------- -------
Net asset value, beginning of period $ $ $ $ $
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
========================================================================================================================
Total from investment operations
========================================================================================================================
Less distributions:
Dividends from net investment income
------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
========================================================================================================================
Total distributions
========================================================================================================================
Net asset value, end of period $ $ $ $ $
________________________________________________________________________________________________________________________
========================================================================================================================
Total return % % % % %
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % % %
------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % % % %
========================================================================================================================
Ratio of net investment income to average net assets % % % % %
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate % % % % %
________________________________________________________________________________________________________________________
========================================================================================================================
|
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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
|
Because you cannot purchase shares of the fund directly, these documents have not been made available on our website.
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Form N-Q 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 duplicating 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.
invescoaim.com VIBVA-PRO-1
AIM V.I. BASIC VALUE FUND
PROSPECTUS
MAY 1, 2008
|
Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Basic Value Fund's investment objective is long-term growth of capital.
This prospectus contains important information about the Series II class shares (Series II Shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 6 Portfolio Managers 6 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 7 Trade Activity Monitoring 7 Fair Value Pricing 8 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 9 Distribution Plan 9 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is long-term growth of capital. The investment
objective of the fund may be changed by the Board of Trustees (the Board)
without shareholder approval.
The fund seeks to meet this objective by investing, normally, at least 65%
of its total assets in equity securities of U.S. issuers that have market
capitalizations in excess of $5 billion. In complying with the fund's 65%
investment requirement, the fund will invest primarily in marketable equity
securities the portfolio managers believe have the potential for capital growth,
and its investments may include synthetic and derivative instruments. Synthetic
and derivative instruments are investments that have economic characteristics
similar to the fund's direct investments. Synthetic and derivative instruments
that the fund may invest in include futures contracts, option contracts, and
equity linked derivatives. Synthetic and derivative instruments may have the
effect of leveraging the fund's portfolio.
In selecting securities, the portfolio managers emphasize the following
characteristics, although not all investments will have these attributes:
- Buy businesses trading at a significant discount to portfolio managers' estimate of intrinsic value. A company's market price must generally offer 50% appreciation potential to estimated intrinsic value over a 2 to 3 year time period.
- Emphasize quality businesses with potential to grow intrinsic value over time. They seek established companies which they believe have solid growth prospects, the ability to earn an attractive return on invested capital and a management team that exhibits intelligent capital allocation skills.
They estimate a company's intrinsic value primarily by taking the present
value of projected future free cash flows (i.e. the excess cash generated by the
business after considering all cash inflows and outflows to operate the
business). They believe this intrinsic value represents the fair economic worth
of the business and a value that an informed buyer would pay to acquire the
entire company for cash. They check this valuation method with long-run absolute
valuation characteristics (including price-to-earnings ratio and price-to-book
value ratio) adjusted for the prevailing inflation and interest rate
environment.
The portfolio managers will consider selling a security to capitalize on a
more attractive investment opportunity, if a security is trading significantly
above the portfolio managers' estimate of intrinsic value or if there is a
permanent, fundamental deterioration in business prospects that results in
inadequate upside potential to estimated intrinsic value.
The portfolio managers seek to achieve strong long-term performance by
constructing a diversified portfolio of typically 40-60 stocks that offers value
content greater than the broad market, as measured by the portfolio's aggregate
discount to the portfolio managers' estimated intrinsic value of the portfolio.
The investment process is fundamental in nature and focused on individual
companies as opposed to macro economic forecasts or specific industry exposure.
The portfolio construction process is intended to preserve and grow the
estimated intrinsic value of the fund's portfolio rather than mirror the
composition or sector weights of any benchmark.
The fund may also invest up to 25% if its total assets in foreign
securities.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and at any time, the fund may not be invested
in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
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 historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
The principal risks of investing in the fund are:
Market Risk--The prices of and the income generated by securities held by
the fund may decline in response to certain events, including those directly
involving the companies whose securities are owned by the fund; general economic
and market conditions;
Value Investing Risk--Value stocks can react differently to issuer,
political, market and economic developments than the market as a whole and other
types of stocks. Value stocks tend to be currently out-of-favor with many
investors and can continue to be undervalued for long periods of time and may
not ever realize their full value.
Equity Securities Risk--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.
Derivatives Risk--The value of "derivatives"--so-called because their value
"derives" from the value of an underlying asset (including an underlying
security), reference rate or index--may rise or fall more rapidly than other
investments. For some derivatives, it is possible to lose more than the amount
invested in the derivative. If the fund uses derivatives to "hedge" the overall
risk of its portfolio, it is possible that the hedge may not succeed. This may
happen for various reasons, including unexpected changes in the value of the
rest of the fund's portfolio.
Counterparty Risk--Individually negotiated, or over-the-counter, derivatives
are also subject to counterparty risk, which is the risk that the other party to
the contract will not fulfill its contractual obligation to complete the
transaction with the fund.
Leveraging Risk--The fund may engage in transactions, including the use of
synthetic instruments and derivatives, which may give rise to a form of
leverage. Leverage may cause the fund's portfolio to be more volatile than if
the portfolio had not been leveraged because leverage can exaggerate the effect
of any increase or decrease in the value of securities held by the fund.
Foreign Securities Risk--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.
Management Risk--There is no guarantee that the investment techniques and
risk analyses used by the fund's portfolio managers will produce the desired
results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product, if it did, the performance shown would be lower.
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
----------- -------
2002................................................................... -22.34%
2003................................................................... 33.29%
2004................................................................... 10.84%
2005................................................................... 5.43%
2006................................................................... 12.94%
2007...................................................................
|
During the period shown in the bar chart, the highest quarterly return was
[20.48% (quarter ended June 30, 2003)] and the lowest quarterly return was
[-20.09% (quarter ended September 30, 2002)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2007) 1 YEAR 5 YEARS INCEPTION DATE --------------------------------------------------------------------------------------- AIM V.I. Basic Value Fund % % % 09/10/01 S&P 500--Registered Trademark-- Index(1,2) 08/31/01(3) Russell 1000--Registered Trademark-- Value Index(1,2,4) 08/31/01(3) Lipper VUF Large-Cap Value Funds Index(1,2,5) 08/31/01(3) --------------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is a market capitalization weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. 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 Variable Underlying Funds (VUF) Large-Cap Value Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(2) The indices may not reflect payment of fees, expenses or taxes.
(3) The average annual total return given is since the month-end closest to the
inception date of the fund's Series II shares.
(4) The Russell 1000--Registered Trademark-- Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 1000--Registered Trademark-- Index is a trademark/service mark of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company..
(5) The Lipper VUF Large-Cap Value Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Large-Cap Value Funds Category. These funds typically have a below-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P 500--Registered Trademark-- Index.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product and if it did, expenses would be higher.
SHAREHOLDER FEES ---------------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES ---------------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A ---------------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) ---------------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES ---------------------------------------------------------------------------------------- Management Fees(2) % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(3) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(2,4) Net Annual Fund Operating Expenses ---------------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Through December 31, 2009, the fund's advisor has contractually agreed to
waive a portion of its advisory fees to the extent necessary so that the
advisory fees payable by the fund does not exceed a specified maximum annual
advisory fee rate, wherein the fee rate includes breakpoints and is based
upon net asset levels. The fund's maximum annual advisory fee rate ranges
from 0.695% (for average net assets up to $250 million) to 0.52% (for
average net assets up to $10 billion).
(3) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but are expenses of the investment companies in which the fund
invests. You incur these fees and expenses indirectly through the valuation
of the fund's investment in those investment companies. As a result, the Net
Annual Fund Operating Expenses listed above may exceed the limit on Total
Annual Fund Operating Expenses, if any. The impact of the acquired fund fees
and expense are included in the total returns of the fund.
(4) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.45% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each
year; and
(iii) incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily, 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. Basic Value Fund $ $ $ $ ------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 ----------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- |
(1) Your actual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds, Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- 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 Invesco Aim and/or its affiliates since 1998. As the lead manager, Mr. Stanley generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Stanley may perform these functions, and the nature of these functions, may change from time to time.
- R. Canon Coleman II, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 1999.
- Matthew W. Seinsheimer, Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with Invesco Aim 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 Invesco Aim and/or its affiliates since 2001.
More information on the portfolio managers and the team, including biographies of members of the team, may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance
company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the
principal market where a foreign security trades is not the current market value
as of the close of the NYSE. For foreign securities where the advisor believes,
at the approved degree of certainty, that the price is not reflective of current
market value, the advisor will use the indication of fair value from the pricing
service to determine the fair value of the security. The pricing vendor, pricing
methodology or degree of certainty may change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II shares. The plan allows the fund 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 fund). Because the fund pays this fee out of its assets on an ongoing basis, over time this fee will increase the cost of your investment and may cost you more than paying other types of charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates is motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal year ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES II
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- -------- --------
Net asset value, beginning of period $ $ $ $ $
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
-------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
=========================================================================================================================
Total from investment operations
=========================================================================================================================
Less distributions:
Dividends from net investment income
-------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
=========================================================================================================================
Total distributions $ $ $ $ $
=========================================================================================================================
Net asset value, end of period % % % % %
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return $ $ $ $ $
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted)
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements
-------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements
=========================================================================================================================
Ratio of net investment income (loss) to average net assets
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI, or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VIBVA-PRO-2
AIM V.I. CAPITAL APPRECIATION FUND
PROSPECTUS
May 1, 2008
|
Series I shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Capital Appreciation Fund's investment objective is growth of capital.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 3 ------------------------------------------------------ Fees and Expenses of the Fund 3 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 4 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 4 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 5 Portfolio Managers 6 OTHER INFORMATION 6 ------------------------------------------------------ Purchase and Redemption of Shares 6 Excessive Short-Term Trading Activity Disclosures 6 Trade Activity Monitoring 7 Fair Value Pricing 7 Risks 7 Pricing of Shares 7 Taxes 8 Dividends and Distributions 9 Share Classes 9 Payments to Insurance Companies 9 FINANCIAL HIGHLIGHTS 10 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is growth of capital. The investment objective of the fund may be changed by the Board of Trustees (the Board) without shareholder approval.
The fund seeks to meet this objective by investing primarily in common stocks of companies of all market capitalizations. The fund may invest up to 25% of its total assets in foreign securities.
The fund's investments in the types of securities described in this
prospectus varies from time to time, and at any time, the fund may not be
invested in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
The portfolio managers focus on stocks of companies exhibiting long-term,
sustainable earnings and cash flow growth that is not yet reflected in investor
expectations or equity valuations.
The portfolio managers actively manage the fund using a two-step stock
selection process that combines quantitative and fundamental analyses. The
quantitative analysis involves using a stock ranking model to rank stocks based
primarily upon earnings growth, revenue growth, earnings quality and earnings
sustainability.
The fundamental analysis focuses on identifying and analyzing both
industries and companies with strong characteristics of revenue, earnings and
cash flow growth. Valuation metrics are also incorporated in the analysis.
The portfolio managers look for key company-specific attributes including:
- market leadership position with the potential for additional growth;
- value added products or services with pricing power;
- superior growth in revenue, earnings and cash flow;
- potential to improve profitability and return on capital; and
- a strong balance sheet, appropriate financial leverage and a prudent use
of capital.
The portfolio managers also focus on other industry attributes such as a
rational competitive environment, pricing flexibility and differentiation of
products and services.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
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. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay.
When suitable opportunities are available, the fund may invest in initial public offerings (IPOs) of securities.
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 equity securities of larger, more-established
companies. Also, since common stocks of smaller 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 desirable price.
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.
There is no guarantee that the investment techniques and risk analyses used
by the fund's portfolio managers will produce the desired results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The prices of IPO securities may go up and down more than prices of equity securities of companies with longer trading histories. In addition, companies offering securities in IPOs may have less experienced management or limited operating histories. There can be no assurance that the fund will have favorable IPO investment opportunities.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
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
----------- -------
1998................................................................... 19.30%
1999................................................................... 44.61%
2000................................................................... -10.91%
2001................................................................... -23.28%
2002................................................................... -24.35%
2003................................................................... 29.52%
2004................................................................... 6.62%
2005................................................................... 8.83%
2006................................................................... 6.30%
2007................................................................... %
|
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)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended INCEPTION December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE ------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund % % % 05/05/93 S&P 500--Registered Trademark-- Index(1,2) -- Russell 1000--Registered Trademark-- Growth Index(1,2,3) -- Lipper VUF Multi-Cap Growth Funds Category Average(1,2,4) -- ------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is a market capitalization weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. 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 Variable Underlying Funds (VUF) Multi-Cap Growth Funds Category Average (which may or may not include the fund) is included for comparison to a peer group.
(2) The indices may not reflect payment of fees, expenses or taxes.
(3) The Russell 1000--Registered Trademark-- Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000--Registered Trademark--Index is a trademark/service mark of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company.
(4) The Lipper VUF Multi-Cap Growth Funds Category Average represents the average of all the variable insurance underlying funds in the Lipper Multi-Cap Growth Funds category. These funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P SuperComposite 1500 Index. The S&P SuperComposite 1500 Index is a market cap weighted index made up of 1500 liquid securities of companies with market capitalizations of $300 million and above, and represents the small-, mid-, and large-cap markets.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) --------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES --------------------------------------------------------------------------------- Management Fees % Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses(3) --------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expense are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 1.30% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series I shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Capital Appreciation Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
|
(1) Your actual expenses may be higher or lower than those shown above.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot
purchase shares of the fund directly, these documents have not been made
available on our website. However, these documents are available on the SEC's
website at http://www.sec.gov. In addition, the fund's portfolio holdings as of
each calendar quarter-end are made available to insurance companies issuing
variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the
disclosure of the fund's portfolio holdings is available in the fund's Statement
of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Robert J. Lloyd, (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 2000. As the lead manager, Mr. Lloyd generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Lloyd may perform these functions, and the nature of these functions, may change from time to time.
- Ryan A. Amerman, Portfolio Manager, who has been responsible for the fund since 2008 and has been associated with Invesco Aim and/or its affiliates since 1996.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive short-term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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
fund. Variable product owners should refer to the prospectus for their variable
products for information regarding the tax consequences of owning such variable
products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statement, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES I
----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
2007 2006 2005 2004 2003
---------- -------- -------- -------- --------
Net asset value, beginning of period $ $ $ $ $
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized)
============================================================================================================================
Total from investment operations
============================================================================================================================
Less dividends from net investment income
============================================================================================================================
Net asset value, end of period $ $ $ $ $
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return % % % % %
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % % %
============================================================================================================================
Ratio of net investment income (loss) to average
net assets % % % % %
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate % % % % %
____________________________________________________________________________________________________________________________
============================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VICAP-PRO-1
AIM V.I. CAPITAL APPRECIATION FUND
PROSPECTUS
MAY 1, 2008
|
Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Capital Appreciation Fund's investment objective is growth of capital.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 6 Portfolio Managers 6 OTHER INFORMATION 6 ------------------------------------------------------ Purchase and Redemption of Shares 6 Excessive Short-Term Trading Activity Disclosures 7 Trade Activity Monitoring 7 Fair Value Pricing 7 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 9 Distribution Plan 9 Payment to Insurance Companies 9 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is growth of capital. The investment objective of the fund may be changed by the Board of Trustees (the Board) without shareholder approval.
The fund seeks to meet this objective by investing primarily in common stocks of companies of all market capitalizations. The fund may invest up to 25% of its total assets in foreign securities.
The fund's investments in the types of securities described in this prospectus varies from time to time, and at any time, the fund may not be invested in all types of securities described in this prospectus. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The portfolio managers focus on stocks of companies exhibiting long-term, sustainable earnings and cash flow growth that is not yet reflected in investor expectations or equity valuations.
The portfolio managers actively manage the fund using a two-step stock selection process that combines quantitative and fundamental analyses. The quantitative analysis involves using a stock ranking model to rank stocks based primarily upon earnings growth, revenue growth, earnings quality and earnings sustainability.
The fundamental analysis focuses on identifying and analyzing both industries and companies with strong characteristics of revenue, earnings and cash flow growth. Valuation metrics are also incorporated in the analysis.
The portfolio managers look for key company-specific attributes including:
- market leadership position with the potential for additional growth;
- value added products or services with pricing power;
- superior growth in revenue, earnings and cash flow;
- potential to improve profitability and return on capital; and
- a strong balance sheet, appropriate financial leverage and a prudent use of capital.
The portfolio managers also focus on other industry attributes such as a rational competitive environment, pricing flexibility and differentiation of products and services.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
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. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay.
When suitable opportunities are available, the fund may invest in initial public offerings (IPOs) of securities.
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 equity securities of larger, more-established
companies. Also, since common stocks of smaller 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 desirable price.
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.
There is no guarantee that the investment techniques and risk analyses used
by the fund's portfolio managers will produce the desired results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The prices of IPO securities may go up and down more than prices of equity securities of companies with longer trading histories. In addition, companies offering securities in IPOs may have less experienced management or limited operating histories. There can be no assurance that the fund will have favorable IPO investment opportunities.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
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 the fund). All performance shown assumes the reinvestment of dividends and capital gains.
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
----------- --------
1998*................................................................. 19.01%
1999*................................................................. 44.26%
2000*................................................................. -11.13%
2001**................................................................ -23.47%
2002.................................................................. -24.52%
2003.................................................................. 29.18%
2004.................................................................. 6.33%
2005.................................................................. 8.58%
2006.................................................................. 6.06%
2007..................................................................
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* The returns shown for these periods are 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 return shown for this period is the blended return 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 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)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------
SERIES I
(for the periods ended INCEPTION
December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE
-------------------------------------------------------------------------------
AIM V.I. Capital Appreciation
Fund(1) % % % 05/05/93
S&P 500--Registered
Trademark-- Index(2,3) --
Russell 1000--Registered
Trademark-- Growth
Index(2,3,4) --
Lipper VUF Multi-Cap Growth
Funds Category
Average(2,3,5) --
-------------------------------------------------------------------------------
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(1) The returns shown for the one year and five year periods are the historical performance of the fund's Series II shares. The return shown for the ten year period is 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 a market capitalization weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. 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 Variable Underlying Funds (VUF) Multi-Cap Growth Funds Category Average (which may or may not include the fund) is included for comparison to a peer group.
(3) The indices may not reflect payment of fees, expenses or taxes.
(4) The Russell 1000--Registered Trademark-- Index is a trademark/service mark of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company.
(5) The Lipper VUF Multi-Cap Growth Funds Category Average represents the average of all the variable insurance underlying funds in the Lipper Multi-Cap Growth Funds category. These funds typically have an above-average price-to-earning ratio, and three-year sales-per-share growth value, compared to the S&P SuperComposite 1500 Index. The S&P SuperComposite 1500 Index is a market cap weighted index made up of 1500 liquid securities of companies with market capitalizations of $300 million and above, and represents the small-, mid-, and large-cap markets.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES -------------------------------------------------------------------------------- Management Fees % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses(3) -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.45% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Capital Appreciation Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
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(1) Your actual expenses may be higher or lower than those shown above.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's last fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Robert J. Lloyd, (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 2000. As the lead manager, Mr. Lloyd generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Lloyd may perform these functions, and the nature of these functions, may change from time to time.
- Ryan A. Amerman, Portfolio Manager, who has been responsible for the fund since 2008 and has been associated with Invesco Aim and/or its affiliates since 1996.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in
cash, the fund reserves the right to determine, in its sole discretion, whether
to satisfy redemption requests by making payment in securities or other property
(known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may
offer them to pension and retirement plans that qualify for special federal income tax treatment. The fund and Invesco Aim have applied for regulatory relief to enable the fund's shares to be sold to and held by one or more fund of funds (open-end management investment companies or series thereof that offer their shares exclusively to insurance companies, their separate accounts and/or qualified plans). The fund plans to offer its shares to fund of funds following receipt of the requested regulatory relief. Due to differences in tax treatment and other considerations, the interests of fund shareholders, including variable product owners and plan participants investing in the fund (whether directly or indirectly through fund of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board of Trustees.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices.
In addition, if the price provided by the pricing service is unreliable, the
advisor valuation committee may fair value the security using procedures
approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II shares. The plan allows the fund 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 fund). Because the fund pays these fees out of its 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 charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the
level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates makes may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board of the fund. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES II
------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- -------- -------
Net asset value, beginning of period $ $ $ $
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
=================================================================================================================================
Total from investment operations
=================================================================================================================================
Net asset value, end of period $ $ $ $
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return % % % %
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % %
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets % % % %
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate % % % %
_________________________________________________________________________________________________________________________________
=================================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VICAP-PRO-2
AIM V.I. CAPITAL DEVELOPMENT FUND
PROSPECTUS
May 1, 2008
|
Series I shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Capital Development Fund's investment objective is long-term growth of capital.
This prospectus contains important information about the Series I Class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 2 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 5 ------------------------------------------------------ Fees and Expenses of the Fund 5 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 6 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 7 ------------------------------------------------------ The Advisors 7 Advisor Compensation 7 Portfolio Managers 7 OTHER INFORMATION 8 ------------------------------------------------------ Purchase and Redemption of Shares 8 Excessive Short-Term Trading Activity Disclosures 8 Trade Activity Monitoring 9 Fair Value Pricing 9 Risks 9 Pricing of Shares 9 Taxes 10 Dividends and Distributions 11 Share Classes 11 Payments to Insurance Companies 11 FINANCIAL HIGHLIGHTS 12 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is long-term growth of capital. The investment
objective of the fund may be changed by the Board of Trustees (the Board)
without shareholder approval.
The fund seeks to meet its objective by investing primarily in equity
securities of mid-capitalization companies. The principal type of equity
securities purchased by the fund is common stocks.
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 Mid Cap(R) Index during the most recent 11-month period (based on month-end data) plus the most recent data during the current month. The Russell Mid Cap(R) Index measures the performance of the 800 smallest companies with the lowest market capitalization in the Russell 1000(R) Index. The Russell 1000(R) Index measures the performance of the 1,000 largest companies domiciled in the United States based on total market capitalization. The companies in the Russell Mid Cap(R) Index are considered representative of medium-sized companies and constitute approximately 25% of the total market capitalization of the Russell 1000(R) Index.
The fund's investments in the types of securities described in this prospectus vary from time to time, and at any time, the fund may not be invested in all types of securities described in this prospectus. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The portfolio managers actively manage the fund using a two-step stock selection process that combines quantitative and fundamental analyses. The quantitative analysis involves using a stock ranking model to rank stocks based primarily upon: (1) earning; (2) quality; and (3) valuation. The fundamental analysis focuses on identifying both industries and mid-capitalization companies that in, the portfolio managers' view, have high growth potential and are also favorably priced relative to the growth expectations for that company.
The resulting portfolio contains two types of companies: (1) consistent
growth companies and (2) earnings-acceleration companies. Consistent growth
companies are companies with a history of strong returns and, in the portfolio
managers' opinion, are industry leaders serving growth, non-cyclical markets
whose performance tends to remain constant regardless of economic conditions.
Earning-acceleration companies are companies that are driven by near-term
catalysts such as new products, improved processes and/or specific economic
conditions that may lead to rapid sales and earnings growth. The portfolio
managers strive to control the fund's volatility and risk by diversifying fund
holdings across sectors as well as by building a portfolio with approximately
equal weightings among security holdings.
The portfolio managers consider selling or reducing the fund's holdings in a
stock if: (1) it no longer meets their investment criteria; (2) a company's
fundamentals deteriorate; (3) a stock's price reaches its valuation target; (4)
a company is no longer considered a mid-capitalization company; and/or (5) a
more attractive investment option is identified.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective.
When suitable opportunities are available, the fund may invest in initial public offerings (IPOs) of securities.
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 historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
The principal risks of investing in the fund are:
Market Risk--The prices of, and the income generated by, securities held by the fund may decline in response to certain events, including those directly involving the companies whose securities are owned by the fund; general economic and market conditions; regional or global economic instability; and currency and interest rate fluctuations. Certain securities selected for the fund's portfolio may decline in value more than the overall stock market. In general, the securities of mid-size companies are more volatile than those of large companies.
Growth Investing Risk--Growth stocks can perform differently from the market as a whole than other types of stocks and tend to be more expensive relative to their earnings or assets compared with other types of stocks. As a result, growth stocks tend to be more sensitive to changes in their earnings and can be more volatile that other types of stocks.
Equity Securities Risk--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.
Market Capitalization Risk--Stocks fall into three broad market capitalization categories--large, medium and small. Investing primarily in one category carries the risk that, due to current market conditions, that category may be out of favor with investors. Mid-capitalization companies tend to be more vulnerable to adverse developments and more volatile than larger companies. Investments in mid-capitalization sized companies may involve special risks, including those associated with dependence on a small management group, little or no operating history, little or no track record of success, and limited product lines, markets and financial resources. Also, there may be less publicly available information about the issuers of the securities or less market interest in such securities than in the case of larger companies, each of which can cause significant price volatility. The securities of mid-capitalization companies may be illiquid, restricted as to resale, or may trade less frequently and in smaller volume than more widely held securities, which may make it difficult for the fund to establish or close out a position in these securities at prevailing market prices.
Foreign Securities Risk--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.
Active Trading Risk--The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If a fund does trade in this way, it may incur increasing costs, which can lower the actual return of the fund. Active Trading may also increase short term gains and losses, which may affect the taxes that must be paid.
Management Risk--There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio managers will produce the desired results.
An investment in the fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The prices of IPO securities may go up and down more than prices of equity securities of companies with longer trading histories. In addition, companies offering securities in IPOs may have less experienced management or limited operating histories. There can be no assurance that the fund will have favorable IPO investment opportunities.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with variable products; if it did, the performance shown would be lower.
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%
2003................................................................... 35.36%
2004................................................................... 15.50%
2005................................................................... 9.61%
2006................................................................... 16.52%
2007...................................................................
|
During the period 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).]
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with variable products; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2007) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------ AIM V.I. Capital Development Fund % % % 05/01/98 S&P 500--Registered Trademark-- Index(1,2) (3) 04/30/98(3) Russell Midcap--Registered Trademark-- Growth Index(1,2,4) (3) 04/30/98(3) Lipper VUF Mid-Cap Growth Funds Index(1,2,5) (3) 04/30/98(3) ------------------------------------------------------------------------------ |
(1) The Standard & Poor's 500 Index is a market capitalization weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. The fund has also included the Russell Midcap--Registered Trademark-- Growth Index, which the fund believes more closely reflects the performance of the types of securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) Mid-Cap Growth Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(2) The indices may not reflect payment of fees, expenses or taxes.
(3) The average annual total return given is since the month end closest to the
inception date of the fund's Series I shares.
(4) The Russell Midcap--Registered Trademark-- Growth Index measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The Russell MidCap--Registered Trademark-- Index is a trademark/service mark of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company.
(5) The Lipper VUF Mid-Cap Growth Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Mid-Cap Growth Funds category. These funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three year sales-per-share growth value, compared to the S&P MidCap 400 Index. The S&P Mid-Cap 400 Index is a market capitalization weighted index that is widely used for mid-sized companies. The index accounts for approximately 7% of the U.S. equities market.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES
--------------------------------------------------------------------------------
SERIES I
(fees paid directly from your investment) SHARES
--------------------------------------------------------------------------------
Maximum Sales Charge (Load) N/A
Maximum Deferred Sales Charge (Load) N/A
--------------------------------------------------------------------------------
|
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) ------------------------------------------------------------ (expenses that are deducted from Series I share assets) SERIES I SHARES ------------------------------------------------------------ Management Fees(2) % Other Expenses Acquired Fund Fees and Expenses(3) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(2,4) Net Annual Fund Operating Expenses ------------------------------------------------------------ |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Through April 30, 2008, the fund's advisor has contractually agreed to waive
a portion of its advisory fees to the extent necessary so that the advisory
fees payable by the fund does not exceed a specified maximum annual advisory
fee rate, wherein the fee rate includes breakpoints and is based upon net
asset levels. The fund's maximum annual advisory fee rate ranges from 0.745%
(for average net assets up to $250 million) to 0.64% (for average net assets
over $10 billion).
(3) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but are expenses of the investment companies in which the fund
invests. You incur these fees and expenses indirectly through the valuation
of the fund's investment in those investment companies. As a result, the Net
Annual Fund Operating Expenses listed above may exceed the limit on Total
Annual Fund Operating Expenses, if any. The impact of the acquired fund fees
and the expenses are included in the total returns of the fund.
(4) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 1.30% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees, and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series I shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Capital Development Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 -------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ -------------------------------------------------------------------------------------------- SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ -------------------------------------------------------------------------------------------- |
(1) Your actual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
FUND MANAGEMENT
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursement.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Paul J. Rasplicka (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with Invesco Aim and/or its affiliates since 1994. As the lead manager, Mr. Rasplicka generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree of these functions, may change from time to time.
- Karl F. Farmer, Portfolio Manager, who has been responsible for the fund since 2007 and has been associated with Invesco Aim and/or its affiliates since 1998.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board. Each of these tools is described in more detail below. In addition, restrictions designed to discourage or curtail excessive short-term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely
compares closing market prices, the next day's opening prices for the security
in its primary market if available, and indications of fair value from other
sources. Fair value pricing methods and pricing services can change from time to
time as approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually to separate accounts of insurance companies issuing the variable products.
At the election of insurance companies issuing the variable products, dividends and distributions are automatically reinvested at net asset value in shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES I
------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- ------- -------
Net asset value, beginning of period $ $ $ $ $
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
======================================================================================================================
Total from investment operations
======================================================================================================================
Less distributions from net realized gains
======================================================================================================================
Net asset value, end of period $ $ $ $ $
______________________________________________________________________________________________________________________
======================================================================================================================
Total return % % % % %
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets % % % % %
======================================================================================================================
Ratio of net investment income (loss) to average net assets % % % % %
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate % % % % %
______________________________________________________________________________________________________________________
======================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: INVESCO AIM DISTRIBUTORS, INC.
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VICDV-PRO-1
AIM V.I. CAPITAL DEVELOPMENT FUND
PROSPECTUS
MAY 1, 2008
|
SERIES II SHARES
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Capital Development Fund's investment objective is long-term growth of capital.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 5 ------------------------------------------------------ Fees and Expenses of the Fund 5 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 6 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 7 Portfolio Managers 7 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 8 Trade Activity Monitoring 8 Fair Value Pricing 9 Risks 9 Pricing of Shares 9 Taxes 10 Dividends and Distributions 10 Share Classes 10 Distribution Plan 10 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 12 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is long-term growth of capital. The investment
objective of the fund may be changed by the Board of Trustees (the Board)
without shareholder approval.
The fund seeks to meet its objective by investing primarily in equity
securities of mid-capitalization companies. The principal type of equity
securities purchased by the fund is common stocks.
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 Mid Cap(R) Index during the most recent 11-month period (based on month-end data) plus the most recent data during the current month. The Russell 1000(R) Index measures the performance of the 1,000 largest companies domiciled in the United States based on total market capitalization. The companies in the Russell Mid Cap(R) Index are considered representative of medium-sized companies and constitute approximately 25% of the total market capitalization of the Russell 1000(R) Index.
The fund's investments in the types of securities described in this prospectus vary from time to time, and at any time, the fund may not be invested in all types of securities described in this prospectus. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The portfolio managers actively manage the fund using a two-step stock selection process that combines quantitative and fundamental analyses. The quantitative analysis involves using a stock ranking model to rank stocks based primarily upon: (1) earning; (2) quality; and (3) valuation. The fundamental analysis focuses on identifying both industries and mid-capitalization companies that in, the portfolio managers' view, have high growth potential and are also favorably priced relative to the growth expectations for that company.
The resulting portfolio contains two types of companies: (1) consistent
growth companies and (2) earnings-acceleration companies. Consistent growth
companies are companies with a history of strong returns and, in the portfolio
managers' opinion, are industry leaders serving growth, non-cyclical markets
whose performance tends to remain constant regardless of economic conditions.
Earning-acceleration companies are companies that are driven by near-term
catalysts such as new products, improved processes and/or specific economic
conditions that may lead to rapid sales and earnings growth. The portfolio
managers strive to control the fund's volatility and risk by diversifying fund
holdings across sectors as well as by building a portfolio with approximately
equal weightings among security holdings.
The portfolio managers consider selling or reducing the fund's holdings in a
stock if: (1) it no longer meets their investment criteria; (2) a company's
fundamentals deteriorate; (3) a stock's price reaches its valuation target; (4)
a company is no longer considered a mid-capitalization company; and/or (5) a
more attractive investment option is identified.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
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. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay.
When suitable opportunities are available, the fund may invest in initial public offerings (IPOs) of securities.
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 historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
The principal risks of investing in the fund are:
Market Risk--The prices of, and the income generated by, securities held by
the fund may decline in response to certain events, including those directly
involving the companies whose securities are owned by the fund; general economic
and market conditions; regional or global economic instability; and currency and
interest rate fluctuations. Certain securities selected for the fund's portfolio
may decline in value more than the overall stock market. In general, the
securities of mid-size companies are more volatile than those of large
companies.
Growth Investing Risk--Growth stocks can perform differently from the market
as a whole than other types of stocks and tend to be more expensive relative to
their earnings or assets compared with other types of stocks. As a result,
growth stocks tend to be more sensitive to changes in their earnings and can be
more volatile than other types of stocks.
Equity Securities Risk--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.
PRINCIPAL RISKS OF INVESTING IN THE FUND (CONTINUED)
Market Capitalization Risk--Stocks fall into three broad market
capitalization categories--large, medium and small. Investing primarily in one
category carries the risk that, due to current market conditions, that category
may be out of favor with investors. Mid-capitalization companies tend to be more
vulnerable to adverse developments and more volatile than larger companies.
Investments in mid-capitalization sized companies may involve special risks,
including those associated with dependence on a small management group, little
or no operating history, little or no track record of success, and limited
product lines, markets and financial resources. Also, there may be less publicly
available information about the issuers of the securities or less market
interest in such securities than in the case of larger companies, each of which
can cause significant price volatility. The securities of mid-capitalization
companies may be illiquid, restricted as to resale, or may trade less frequently
and in smaller volume than more widely held securities, which may make it
difficult for the fund to establish or close out a position in these securities
at prevailing market prices.
Foreign Securities Risk--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.
Active Trading Risk--The fund may engage in active and frequent trading of
portfolio securities to achieve its investment objective. If a fund does trade
in this way, it may incur increasing costs, which can lower the actual return of
the fund. Active Trading may also increase short term gains and losses, which
may affect the taxes that must be paid.
Management Risk--There is no guarantee that the investment techniques and
risk analyses used by the fund's portfolio managers will produce the desired
results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The prices of IPO securities may go up and down more than prices of equity securities of companies with longer trading histories. In addition, companies offering securities in IPOs may have less experienced management or limited operating histories. There can be no assurance that the fund will have favorable IPO investment opportunities.
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The 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 chart shown does not
reflect charges assessed in connection with your variable product; if it did,
the performance shown would be lower.
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 the fund).
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%
2003................................................................... 35.04%
2004................................................................... 15.27%
2005................................................................... 9.27%
2006................................................................... 16.26%
2007...................................................................
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* The returns shown for these periods are 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 return shown for this period is the blended return 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 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 period 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)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS
------------------------------------------------------------------------------------------
SERIES I
(for the periods ended SINCE INCEPTION
December 31, 2007) 1 YEAR 5 YEARS INCEPTION DATE
------------------------------------------------------------------------------------------
AIM V.I. Capital Development Fund(1) % % % 05/01/98
S&P 500--Registered Trademark--
Index(2,3) 04/30/98(4)
Russell Midcap--Registered Trademark--
Growth Index(2,3,5) 04/30/98(4)
Lipper VUF Mid-Cap Growth Funds
Index(2,3,6) 04/30/98(4)
------------------------------------------------------------------------------------------
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(1) The returns shown for the one year and five year periods are the historical performance of the fund's Series II shares. The return shown since inception is 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 a market capitalization weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. The fund has also included the Russell Midcap--Registered Trademark-- Growth Index, which the fund believes more closely reflects the performance of the types of securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) Mid-Cap Growth Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(3) The indices may not reflect payment of fees, expenses or taxes.
(4) The average annual total return given is since the month-end closest to the
inception date of the fund's Series I shares.
(5) The Russell Midcap--Registered Trademark-- Growth Index measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The Russell Midcap--Registered Trademark-- Growth Index is a trademark/service mark of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company.
(6) The Lipper VUF Mid-Cap Growth Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Mid-Cap Growth Funds category. These funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P MidCap 400 Index. The S&P MidCap 400 Index is a market capitalization weighted index that is widely used for mid-sized companies. The index accounts for approximately 7% of the U.S. equities market.
FEE TABLE AND EXPENSE EXAMPLE
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES -------------------------------------------------------------------------------- Management Fees(2) % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(3) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(2,4) Net Annual Fund Operating Expenses -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Through April 30, 2008, the fund's advisor has contractually agreed to waive
a portion of its advisory fees to the extent necessary so that the advisory
fees payable by the fund does not exceed a specified maximum annual advisory
fee rate, wherein the fee rate includes breakpoints and is based upon net
asset levels. The fund's maximum annual advisory fee ranges from 0.745% (for
average net assets up to $250 million) to 0.64% (for average net assets over
$10 billion).
(3) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but are expenses of the investment companies in which the fund
invests. You incur these fees and expenses indirectly through the valuation
of the fund's investment in those investment companies. As a result, the Net
Annual Fund Operating Expenses listed above may exceed the limit on Total
Annual Fund Operating Expenses, if any. The impact of the acquired fund fees
and expenses are included in the total returns of the fund.
(4) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.45% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and or expenses are reimbursed voluntarily, 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. Capital Development Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
--------------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
--------------------------------------------------------------------------------------------------
SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
--------------------------------------------------------------------------------------------------
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(1) Your actual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its
semi-annual and annual reports to shareholders, and on Form N-Q, which is filed
with the Securities and Exchange Commission (SEC) within 60 days of the fund's
first and third quarter-ends. Due to the fact that you cannot purchase shares of
the fund directly, these documents have not been made available on our website.
However, these documents are available on the SEC's website at
http://www.sec.gov. In addition, the fund's portfolio holdings as of each
calendar quarter-end are made available to insurance companies issuing variable
products that invest in the fund.
A description of the fund's policies and procedures with respect to the
disclosure of the fund's portfolio holdings is available in the fund's Statement
of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Paul J. Rasplicka (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with Invesco Aim and/or its affiliates since 1994. As the lead manager, Mr. Rasplicka generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual portfolio construction techniques, securities, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Rasplicka may perform these functions, and the nature of these functions, may change from time to time.
- Karl F. Farmer, Portfolio Manager, who has been responsible for the fund since 2007 and has been associated with Invesco Aim and/or its affiliates since 1998.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional
information about the portfolio managers' investments in the fund, a description
of their compensation structure, and information regarding other accounts they
manage.
OTHER INFORMATION
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's
next computed net asset value after it receives an order. Insurance companies
participating in the fund serve as the fund's designee for receiving orders of
separate accounts that invest in the fund. The fund may
postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For
example, violation of the federal tax laws by one insurance company separate
account investing directly or indirectly in a fund could cause variable products
funded through another insurance company separate account to lose their
tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of Trustees of
the fund. Fair value pricing may reduce the ability of frequent traders to take
advantage of arbitrage opportunities resulting from potentially "stale" prices
of portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II shares. The plan allows the fund 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 fund). Because the fund pays these fees out of its 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 charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors
Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES II
---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
2007 2006 2005 2004 2003
-------- ------- ------- ------- -------
Net asset value, beginning of period $ $ $ $ $
-----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
-----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
-----------------------------------------------------------------------------------------------------------------------------
Total from investment operations
-----------------------------------------------------------------------------------------------------------------------------
Less distributions from net realized gains
-----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ $ $ $ $
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Total return % % % % %
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratio of expenses to average net assets % % % % %
-----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets % % % % %
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Portfolio turnover rate % % % % %
_____________________________________________________________________________________________________________________________
=============================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
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You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VICDV-PRO-2
AIM V.I. CORE EQUITY FUND
PROSPECTUS
MAY 1, 2008
|
SERIES I SHARES
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Core Equity Fund's investment objective is growth of capital.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 6 Portfolio Managers 6 OTHER INFORMATION 6 ------------------------------------------------------ Purchase and Redemption of Shares 6 Excessive Short-Term Trading Activity Disclosures 7 Trade Activity Monitoring 7 Fair Value Pricing 7 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 9 Payments to Insurance Companies 9 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is growth of capital. The investment objective
of the fund may be changed by the Board of Trustees (the Board) without
shareholder approval.
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 growth companies that
the portfolio managers believe have the potential for above-average growth in
earnings. 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.
The fund's investments in the types of securities described in this prospectus vary from time to time, and at any time, the fund may not be invested in all types of securities described in this prospectus. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The fund employs a risk management strategy to reduce volatility. Pursuant to this strategy, the fund generally invests a substantial amount of its assets in cash and cash equivalents. In anticipation of or in response to adverse market or other conditions, or atypical circumstances such as unusually large cash inflows or redemptions, the fund may temporarily increase the portion of its assets held in cash, cash equivalents (including shares of affiliated money market funds) or high quality debt instruments. As a result the fund may not achieve its investment objective.
A larger position in cash or cash equivalents could also detract from achieving the fund's objective, but could also reduce the fund's exposure in the event of a market downturn.
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.
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 the fund holds cash or cash equivalents rather than equity
securities for risk management purposes, the fund may not achieve its investment
objective.
There is no guarantee that the investment techniques and risk analyses used
by the fund's portfolio managers will produce the desired results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
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
----------- -------
1998................................................................... 27.68%
1999................................................................... 34.25%
2000................................................................... -14.56%
2001................................................................... -22.83%
2002................................................................... -15.58%
2003................................................................... 24.42%
2004................................................................... 8.97%
2005................................................................... 5.31%
2006................................................................... 16.70%
2007...................................................................
|
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
fund changed its investment objective. Performance shown for the fund reflects
the investment objective of the fund in effect during the periods shown.
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------ (for the periods ended INCEPTION December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE ------------------------------------------------------------------------------ AIM V.I. Core Equity Fund(1) % % % 05/02/94 S&P 500--Registered Trademark-- Index(2,3) Russell 1000--Registered Trademark-- Index(2,3,4) Lipper VUF Large-Cap Core Funds Index(2,3,5) ------------------------------------------------------------------------------ |
(1) Effective September 30, 2002, the fund changed its investment objective. As a result, performance shown for the fund reflects the investment objective of the fund in effect during the periods shown.
(2) The Standard & Poor's 500 Index is a market capitalization weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. 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 Variable Underlying Funds (VUF) Large-Cap Core Funds Index (which may or may not include the fund) is included for comparison to a peer-group.
(3) The indices may not reflect payment of fees, expenses or taxes.
(4) The Russell 1000--Registered Trademark-- Index is comprised of 1000 of the largest capitalized U.S. domiciled companies whose common stock is traded in the United States. The Russell 1000--Registered Trademark-- Index is a trademark/service mark of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company.
(5) The Lipper VUF Large-Cap Core Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Large-Cap Core Funds category. These funds typically have an average price-to-earnings ratio, price-to-book ratio, and three year sales-per-share growth value, compared to the S&P 500--Registered Trademark-- Index.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees % Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses(3) -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but by the expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 1.30% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series I shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Core Equity Fund $ $ $ $ ------------------------------------------------------------------------ |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed. There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
--------------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
--------------------------------------------------------------------------------------------------
SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
--------------------------------------------------------------------------------------------------
|
(1) Your actual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its
semi-annual and annual reports to shareholders, and on Form N-Q, which is filed
with the Securities and Exchange Commission (SEC) within 60 days of the fund's
first and third quarter-ends. Due to the fact that you cannot purchase shares of
the fund directly, these documents have not been made available on our website.
However, these documents are available on the SEC's website at
http://www.sec.gov. In addition, the fund's portfolio holdings as of each
calendar quarter-end are made available to insurance companies issuing variable
products that invest in the fund.
A description of the fund's policies and procedures with respect to the
disclosure of the fund's portfolio holdings is available in the fund's Statement
of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's fiscal year ended December 31, 2007, the advisor received compensation of % of the average daily net assets.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Ronald S. Sloan, (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with Invesco Aim and/or its affiliates since 1998. As lead manager, Mr. Sloan generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Sloan may perform these functions, and the nature of these functions, may change from time to time.
- Tyler Dann II, Portfolio Manager, who has been responsible for the fund since 2007 and has been associated with Invesco Aim and/or its affiliates since 2004. From 1998 to 2004, Mr. Dann was a principal and senior research analyst at Banc of America Securities LLC.
- Brian Nelson, Portfolio Manager, who has been responsible for the fund since 2007 and has been associated with Invesco Aim and/or its affiliates since 2004. From 2000 to 2004, Mr. Nelson was a senior telecommunications analyst for RCM Global investors.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not a part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board. Each of these tools is described in more detail below. In addition, restrictions designed to discourage or curtail excessive short-term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable contract owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data.
Prices received from pricing services are fair value prices. In addition, if the
price provided by the pricing service is unreliable, the advisor valuation
committee may fair value the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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
fund. Variable product owners should refer to the prospectus for their variable
products for information regarding the tax consequences of owning such variable
products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf "). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not
exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES I
-----------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------
2007 2006 2005 2004 2003
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ $ $ $ $
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized)
=================================================================================================================================
Total from investment operations
=================================================================================================================================
Less dividends from net investment income
=================================================================================================================================
Net asset value, end of period $ $ $ $ $
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return % % % % %
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets % % % % %
=================================================================================================================================
Ratio of net investment income to average
net assets % % % % %
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate % % % % %
_________________________________________________________________________________________________________________________________
=================================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VICEQ-PRO-1
AIM V.I. CORE EQUITY FUND
PROSPECTUS
MAY 1, 2008
|
SERIES II SHARES
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Core Equity Fund's investment objective is growth of capital.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 6 Portfolio Managers 6 OTHER INFORMATION 6 ------------------------------------------------------ Purchase and Redemption of Shares 6 Excessive Short-Term Trading Activity Disclosures 7 Trade Activity Monitoring 7 Fair Value Pricing 7 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 9 Distribution Plan 9 Payments to Insurance Companies 9 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is growth of capital. The investment objective
of the fund may be changed by the Board of Trustees (the Board) without
shareholder approval.
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 growth companies that
the portfolio managers believe have the potential for above-average growth in
earnings. 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.
The fund's investments in the types of securities described in this prospectus vary from time to time, and at any time, the fund may not be invested in all types of securities described in this prospectus. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The fund employs a risk management strategy to reduce volatility. Pursuant to this strategy, the fund generally invests a substantial amount of its assets in cash and cash equivalents. In anticipation of or in response to adverse market or other conditions, or atypical circumstances such as unusually large cash inflows or redemptions, the fund may temporarily increase the portion of its assets held in cash, cash equivalents (including shares of affiliated money market funds) or high quality debt instruments. As a result the fund may not achieve its investment objective.
A larger position in cash or cash equivalents could also detract from achieving the fund's objective, but could also reduce the fund's exposure in the event of a market downturn.
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.
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 the fund holds cash or cash equivalents rather than equity
securities for risk management purposes, the fund may not achieve its investment
objective.
There is no guarantee that the investment techniques and risk analyses used
by the fund's portfolio managers will produce the desired results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The 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 chart shown does not
reflect charges assessed in connection with your variable product; if it did,
the performance shown would be lower. All performance shown assumes the
reinvestment of dividends and capital gains.
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 the fund).
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
----------- -------
12/31/98*.............................................................. 27.36%
12/31/99*.............................................................. 33.91%
12/31/00*.............................................................. -14.77%
12/31/01**............................................................. -23.03%
12/31/02............................................................... -15.79%
12/31/03............................................................... 24.15%
12/31/04............................................................... 8.67%
12/31/05............................................................... 5.08%
12/31/06............................................................... 16.42%
12/31/07...............................................................
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* The returns shown for these periods are 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 return shown for this period is the blended return 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 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
fund changed its investment objective. Performance shown for the fund reflects
the investment objective of the fund in effect during the periods shown.
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------
SERIES I
(for the periods ended INCEPTION
December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE
--------------------------------------------------------------------------
AIM V.I. Core Equity Fund(1) % % % 05/02/94
S&P 500--Registered
Trademark-- Index(2,3) --
Russell 1000--Registered
Trademark-- Index(2,3,4) --
Lipper VUF Large-Cap Core
Funds Index(2,3,5) --
--------------------------------------------------------------------------
|
(1) Effective September 30, 2002, the fund changed its investment objective. As a result, performance shown for the fund reflects the investment objective of the fund in effect during the periods shown. The returns shown for the one year and five year periods are the historical performance of the fund's Series II shares. The return shown for the ten year period is 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 a market capitalization weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. 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 Variable Underlying Funds (VUF) Large-Cap Core Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(3) The indices may not reflect payment of fees, expenses or taxes.
(4) The Russell 1000--Registered Trademark-- Index is comprised of 1000 of the largest capitalized U.S. domiciled companies whose common stock is traded in the United States. The Russell 1000--Registered Trademark-- Index is a trademark/service mark of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company.
(5) The Lipper VUF Large-Cap Core Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Large-Cap Core Funds category. These funds typically have an average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P 500--Registered Trademark-- Index.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES -------------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) -------------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES -------------------------------------------------------------------------------------- Management Fees % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses(3) -------------------------------------------------------------------------------------- |
([1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.45% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each
year; and
(iii) incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Core Equity Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed. There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
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(1) Your actual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Ronald S. Sloan (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with Invesco Aim and/or its affiliates since 1998. As the lead manager, Mr. Sloan generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Sloan may perform these functions, and the nature of these functions, may change from time to time.
- Tyler Dann, II, Portfolio Manager, who has been responsible for the fund since 2007 and has been associated with Invesco Aim and/or its affiliates since 2004. From 1998 to 2004, Mr. Dann was a principal and senior research analyst for Banc of America Securities LLC.
- Brian Nelson, Portfolio Manager, who has been responsible for the fund since 2007 and has been associated with Invesco Aim and/or its affiliates since 2004. From 2000 to 2004, Mr. Nelson was a senior telecommunications analyst for RCM Global investors.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not a part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in
cash, the fund reserves the right to determine, in its sole discretion, whether
to satisfy redemption requests by making payment in securities or other property
(known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may
offer them to pension and retirement plans that qualify for special federal income tax treatment. The fund and Invesco Aim have applied for regulatory relief to enable the fund's shares to be sold to and held by one or more fund of funds (open-end management investment companies or series thereof that offer their shares exclusively to insurance companies, their separate accounts and/or qualified plans). The fund plans to offer its shares to fund of funds following receipt of the requested regulatory relief. Due to differences in tax treatment and other considerations, the interests of fund shareholders, including variable product owners and plan participants investing in the fund (whether directly or indirectly through fund of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board. Each of these tools is described in more detail below. In addition, restrictions designed to discourage or curtail excessive short-term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices.
In addition, if the price provided by the pricing service is unreliable, the
advisor valuation committee may fair value the security using procedures
approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performances.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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
fund. Variable product owners should refer to the prospectus for their variable
products for information regarding the tax consequences of owning such variable
products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II
shares. The plan allows the fund 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 fund). Because the fund pays
these fees out of its 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 charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors compensates insurance companies differently depending typically on the level and/
or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates is motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES II
------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
2007 2006 2005 2004 2003
------- ------ ------ ------ -------
Net asset value, beginning of period $ $ $ $ $
--------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
--------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
==========================================================================================================================
Total from investment operations
==========================================================================================================================
Less dividends from net investment income
==========================================================================================================================
Net asset value, end of period $ $ $ $ $
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return % % % % %
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets % % % % %
==========================================================================================================================
Ratio of net investment income to average net assets % % % % %
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate % % % % %
__________________________________________________________________________________________________________________________
==========================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
|
Because you cannot purchase shares of the fund directly, these documents have not been made available on our website.
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VICEQ-PRO-2
AIM V.I. DIVERSIFIED INCOME FUND
PROSPECTUS
MAY 1, 2008
|
Series I shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Diversified Income Fund's investment objective is to achieve a high level of current income.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 6 Portfolio Managers 6 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 7 Trade Activity Monitoring 7 Fair Value Pricing 8 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 9 Payments to Insurance Companies 9 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is to achieve a high level of current income.
The investment objective of the fund may be changed by the Board of Trustees
(the Board) without shareholder approval.
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 and
up to 15% in securities of companies located in developing markets. 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 fund may also invest in
synthetic and derivative instruments, provided such investments are consistent
with the fund's investment objective. Synthetic and derivative instruments are
investments that have economic characteristics similar to the fund's direct
investments. Synthetic and derivative instruments that the fund may invest in
include swap agreements (including but not limited to, interest rate, currency,
total return and credit default swaps), put options, call options, futures
contracts, options on future contracts and forward currency contracts. The fund
may engage in these transactions for hedging and non-hedging purposes.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and at any time, the fund may not be invested
in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
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.
The fund typically maintains a portion of its assets in cash, cash equivalents, high quality debt instruments, and/or money market funds advised by the fund's advisor. Depending upon the then-current investment environment, holding a relatively larger percentage of portfolio assets in such instruments may either assist or hinder the fund's relative performance and its ability to achieve its investment objective. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. In order to respond to adverse market, economic or other conditions, the fund may assume a temporary defensive position and invest a relatively larger percentage of the fund's portfolio assets in cash, cash equivalents or high quality debt instruments.
- 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.
The value of "derivatives"--so-called because their value "derives" from the
value of an underlying asset (including an underlying security), reference rate
or index--may rise or fall more rapidly than other investments. For some
derivatives, it is possible to lose more than the amount invested in the
derivative. If the fund uses derivatives to "hedge" a portfolio risk, it is
possible that the hedge may not succeed. This may happen for various reasons,
including unexpected changes in the value of the rest of the fund's portfolio.
Over the counter derivatives are also subject to counterparty risk, which is the
risk that the other party to the contract will not fulfill its contractual
obligation to complete the transaction with the fund.
There is no guarantee that the investment techniques and risk analyses used
by the fund's portfolio managers will produce the desired results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
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
----------- -------
1998................................................................... 3.58%
1999................................................................... -1.92%
2000................................................................... 0.69%
2001................................................................... 3.59%
2002................................................................... 2.30%
2003................................................................... 9.24%
2004................................................................... 5.03%
2005................................................................... 2.90%
2006................................................................... 4.48%
2007...................................................................
|
During the periods shown in the bar chart, the highest quarterly return was
[5.32% (quarter ended June 30, 2003)] and the lowest quarterly return was
[-2.43% (quarter ended June 30, 2004)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended INCEPTION December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE -------------------------------------------------------------------------------- AIM V.I. Diversified Income Fund % % % 05/05/93 Lehman Brothers U.S. Aggregate Bond Index(1,2) -- Lehman Brothers U.S. Credit Index(1,2,3) -- Lipper VUF Corporate Debt BBB-Rated Funds Index(1,2,4) -- -------------------------------------------------------------------------------- |
(1) The Lehman Brothers U.S. Aggregate Bond Index covers U.S. investment-grade fixed-rate bonds with components for government and corporate securities, mortgage pass-throughs, and asset-backed securities. The fund has also included the Lehman Brothers U.S. Credit Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) Corporate Debt BBB-Rated Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(2) The indices may not reflect payment of fees, expenses or taxes.
(3) The Lehman Brothers U.S. Credit Index is an unmanaged index that consists of publicly issued, SEC-registered U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity and quality requirements.
(4) The Lipper VUF Corporate Debt BBB-Rated Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Corporate Debt BBB-Rated Funds category. The funds invest at least 65% of assets in corporate and government debt issues rated in the top four grades.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees % Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(3) Net Annual Fund Operating Expenses -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expense are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 0.75% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees, and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series I shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Diversified Income Fund $ $ $ $ ---------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 ----------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- |
(1) Your actual expenses may be higher or lower than those shown above.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's fiscal year ended December 31, 2007, the advisor received compensation of % of the fund's average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Jan H. Friedli (lead manager), Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with Invesco Aim and/or its affiliates since 1999. As the lead manager, Mr. Friedli generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Friedli may perform these functions, and the nature of these functions, may change from time to time.
- Peter Ehret, Portfolio Manager, who has been responsible for the fund since 2006 and has been associated with Invesco Aim and/or its affiliates since 2001.
- Brendan D. Gau, Portfolio Manager, who has been responsible for the fund since 2006 and has been associated with Invesco Aim and/or its affiliates since 1996.
- Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for various high yield (or non-investment grade) bond holdings in the fund since 2000 and has been otherwise associated with the fund since 1995. She has been associated with Invesco Aim and/or its affiliates since 1992.
- Darren Hughes, Portfolio Manager, who has been responsible for the fund since 2006 and has been associated with Invesco Aim and/or its affiliates since 1992.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board. Each of these tools is described in more detail below. In addition, restrictions designed to discourage or curtail excessive short-term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance
company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the
principal market where a foreign security trades is not the current market value
as of the close of the NYSE. For foreign securities where the advisor believes,
at the approved degree of certainty, that the price is not reflective of current
market value, the advisor will use the indication of fair value from the pricing
service to determine the fair value of the security. The pricing vendor, pricing
methodology or degree of certainty may change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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
fund. Variable product owners should refer to the prospectus for their variable
products for information regarding the tax consequences of owning such variable
products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the
fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES I
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
2007 2006 2005 2004 2003
------- ------- ------- ------- -------
Net asset value, beginning of period $ $ $ $
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
========================================================================================================================
Total from investment operations
========================================================================================================================
Less dividends from net investment income
========================================================================================================================
Net asset value, end of period $ $ $ $
________________________________________________________________________________________________________________________
========================================================================================================================
Total return % % % %
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets % % % %
========================================================================================================================
Ratio of net investment income to average net assets % % % %
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate % % % %
________________________________________________________________________________________________________________________
========================================================================================================================
|
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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI, or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
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You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VIDIN-PRO-1
AIM V.I. DIVERSIFIED INCOME FUND
PROSPECTUS
MAY 1, 2008
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Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Diversified Income Fund's investment objective is to achieve a high level of current income.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 5 ------------------------------------------------------ Fees and Expenses of the Fund 5 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 6 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 7 Portfolio Managers 7 OTHER INFORMATION 8 ------------------------------------------------------ Purchase and Redemption of Shares 8 Excessive Short-Term Trading Activity Disclosures 8 Trade Activity Monitoring 8 Fair Value Pricing 9 Risks 9 Pricing of Shares 9 Taxes 10 Dividends and Distributions 10 Share Classes 10 Distribution Plan 10 Payments to Insurance Companies 11 FINANCIAL HIGHLIGHTS 12 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is to achieve a high level of current income.
The investment objective of the fund may be changed by the Board of Trustees
(the Board) without shareholder approval.
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 and
up to 15% in securities of companies located in developing markets. 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 fund may also invest in
synthetic and derivative instruments, provided such investments are consistent
with the fund's investment objective. Synthetic and derivative instruments are
investments that have economic characteristics similar to the fund's direct
investments. Synthetic and derivative instruments that the fund may invest in
include swap agreements (including but not limited to, interest rate, currency,
total return and credit default swaps), put options, call options, futures
contracts, options on future contracts and forward currency contracts. The fund
may engage in these transactions for hedging and non-hedging purposes.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and at any time, the fund may not be invested
in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
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.
The fund typically maintains a portion of its assets in cash, cash equivalents, high quality debt instruments, and/or money market funds advised by the fund's advisor. Depending upon the then-current investment environment, holding a relatively larger percentage of portfolio assets in such instruments may either assist or hinder the fund's relative performance and its ability to achieve its investment objective. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. In order to respond to adverse market, economic or other conditions, the fund may assume a temporary defensive position and invest a relatively larger percentage of the fund's portfolio assets in cash, cash equivalents or high quality debt instruments.
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 risk associated with a rise in the general level of interest rates
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 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.
The value of "derivatives"--so-called because their value "derives" from the
value of an underlying asset (including an underlying security), reference rate
or index--may rise or fall more rapidly than other investments. For some
derivatives, it is possible to lose more than the amount invested in the
derivative. If the fund uses derivatives to "hedge" a portfolio risk, it is
possible that the hedge may not succeed. This may happen for various reasons,
including unexpected changes in the value of the rest of the fund's portfolio.
Over the counter derivatives are also subject to counterparty risk, which is the
risk that the other party to the contract will not fulfill its contractual
obligation to complete the transaction with the fund.
There is no guarantee that the investment techniques and risk analyses used
by the fund's portfolio managers will produce the desired results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
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 the fund).
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
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1998*.................................................................. 3.32%
1999*.................................................................. -2.16%
2000*.................................................................. 0.44%
2001*.................................................................. 3.33%
2002**................................................................. 2.03%
2003................................................................... 9.02%
2004................................................................... 4.69%
2005................................................................... 2.67%
2006................................................................... 4.17%
2007................................................................... %
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* The returns shown for these periods are 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 return shown for this period is the blended return 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 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
[5.33% (quarter ended June 30, 2003)] and the lowest quarterly return was
[-2.55% (quarter ended June 30, 2004)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS
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SERIES I
(for the periods ended INCEPTION
December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE
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AIM V.I. Diversified Income
Fund(1) % % % 05/05/93
Lehman Brothers U.S.
Aggregate Bond Index(2,3) --
Lehman Brothers U.S. Credit
Index(2,3,4) --
Lipper VUF Corporate Debt
BBB-Rated Funds
Index(2,3,5) --
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(1) The returns shown for the one year and five year periods are the historical performance of the fund's Series II shares. The return shown for the ten year period is the blended return 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 covers U.S. investment-grade fixed-rate bonds with components for government and corporate securities, mortgage pass-throughs and asset-backed securities. The fund has also included the Lehman Brothers U.S. Credit Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) Corporate Debt BBB-Rated Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(3) The indices may not reflect payment of fees, expenses or taxes.
(4) The Lehman Brothers U.S. Credit Index is an unmanaged index that consists of publicly issues, SEC-registered U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity and quality.
(5) The Lipper VUF Corporate Debt BBB-Rated Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Corporate Debt BBB-Rated Funds category. These funds invest at least 65% of assets in corporate and government debt issuers rated in the top four grades.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES ------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES ------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A ------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) ------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES ------------------------------------------------------------------------------- Management Fees % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(3) Net Annual Fund Operating Expenses ------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expense are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.00% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Diversified Income Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates makes any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
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SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
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(1) Your actual expenses may be higher or lower than those shown above.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Jan H. Friedli (lead manager), Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with Invesco Aim and/or its affiliates since 1999. As the lead manager, Mr. Friedli generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Friedli may perform these functions, and the nature of these functions, may change from time to time.
- Peter Ehret, Portfolio Manager, who has been responsible for the fund since 2006 and has been associated with Invesco Aim and/or its affiliates since 2001.
- Brendan D. Gau, Portfolio Manager, who has been responsible for the fund since 2006 and has been associated with Invesco Aim and/or its affiliates since 1996.
- Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for various high yield (or non-investment grade) bond holdings in the fund since 2000 and has been otherwise associated with the fund since 1995. She has been associated with Invesco Aim and/or its affiliates since 1992.
- Darren Hughes, Portfolio Manager, who has been responsible for the fund since 2006 and has been associated with Invesco Aim and/or its affiliates since 1992.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board. Each of these tools is described in more detail below. In addition, restrictions designed to discourage or curtail excessive short-term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that
are significant and may make the closing price unreliable, the fund may fair
value the security. If an issuer specific event has occurred that the advisor
determines, in its judgment, is likely to have affected the closing price of a
foreign security, it will price the security at fair value. The advisor also
relies on a screening process from a pricing vendor to indicate the degree of
certainty, based on historical data, that the closing price in the principal
market where a foreign security trades is not the current market value as of the
close of the NYSE. For foreign securities where the advisor believes, at the
approved degree of certainty, that the price is not reflective of current market
value, the advisor will use the indication of fair value from the pricing
service to determine the fair value of the security. The pricing vendor, pricing
methodology or degree of certainty may change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and,
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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
fund. Variable product owners should refer to the prospectus for their variable
products for information regarding the tax consequences of owning such variable
products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II
shares. The plan allows the fund 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 fund). Because the fund pays these fees out of its 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 charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf "). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to ADI Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES II
----------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------
2007 2006 2005 2004 2003
------ ------ ------ ------ ------
Net asset value, beginning of period $ $ $ $ $
------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
==================================================================================================================
Total from investment operations
==================================================================================================================
Less dividends from net investment income
==================================================================================================================
Net asset value, end of period
__________________________________________________________________________________________________________________
==================================================================================================================
Total return % % % % %
__________________________________________________________________________________________________________________
==================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
__________________________________________________________________________________________________________________
==================================================================================================================
Ratio of expenses to average net assets % % % % %
==================================================================================================================
Ratio of net investment income to average net assets % % % % %
__________________________________________________________________________________________________________________
==================================================================================================================
Portfolio turnover rate % % % % %
__________________________________________________________________________________________________________________
==================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI, or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
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You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VIDIN-PRO-2
AIM V.I. DYNAMICS FUND
PROSPECTUS
MAY 1, 2008
|
Series I shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Dynamics Fund's investment objective is long-term capital growth.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 7 Portfolio Managers 7 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 7 Trade Activity Monitoring 8 Fair Value Pricing 8 Risks 8 Pricing of Shares 8 Taxes 10 Dividends and Distributions 10 Share Classes 10 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 12 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is long-term capital growth.
The fund's investment objective may be changed by the Board of Trustees (the Board) without shareholder approval.
The fund seeks to meet is objective by investing, normally, at least 65% of its assets in equity securities of mid-capitalization companies. The principal type of equity securities purchased by the fund is common stock.
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 Mid Cap--Registered 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 Mid Cap--Registered Trademark-- Index measures the performance of the 800 smallest companies with the lowest market capitalization in the Russell 1000--Registered Trademark-- Index. Russell 1000--Registered Trademark-- Index is a widely recognized, unmanaged index of common stocks 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. the companies in the Russell Mid Cap--Registered Trademark-- Index are considered representative of medium-sized companies and constitute approximately 25% of the total market capitalization of the Russell 1000--Registered Trademark-- Index.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and at any time, the fund may not be invested
in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
The portfolio managers actively manage the fund using a two-step stock
selection process that combines quantitative and fundamental analyses. The
quantitative analysis involves using a stock ranking model to rank stocks based
primarily upon: (1) earning, (2) quality; and (3) valuation. The fundamental
analysis focuses on identifying both industries and companies that, in the
portfolio managers' view, have high growth potential and are also favorably
priced relative to the growth expectations for that company. The portfolio
managers base their selection of stocks for the fund on analysis of individual
companies. The investment process involves:
- Applying fundamental research, including financial statement analysis and management visits to identify stocks of companies believed to have large potential markets, cash-generating business models, improving balance sheets and solid management teams; and
- Using a variety of valuation techniques to determine target buy and sell prices as well as a stock's valuation upside and downside potential.
The resulting portfolio contains two types of companies: (1) consistent
growth companies and (2) earnings-acceleration companies. Consistent growth
companies are companies with a history of strong returns and, in the portfolio
manager's opinion, are industry leaders serving growth, non-cyclical markets
whose performance tends to remain constant regardless of economic conditions.
Earning-acceleration companies are companies that are driven by near-term
catalysts such as new products, improved processes and/or specific economic
conditions that may lead to rapid sales and earnings growth.
The portfolio managers strive to control the fund's volatility and risk by
varying individual stock position sizes and diversifying fund holdings across
sectors.
The portfolio managers considers selling or reducing the fund's holdings in
a stock if: (1) it no longer meets the investment criteria; (2) a company's
fundamentals deteriorate; (3) a stock's price reaches its valuation target; (4)
a company is no longer considered a mid-capitalization company; and/or (5) a
more attractive investment option is identified.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
When suitable opportunities are available, the fund may invest in initial public offerings (IPOs) of securities.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective.
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 historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
The principal risks of investing in the fund are:
Market Risk--The prices of and the income generated by securities held by
the fund may decline in response to certain events, including those directly
involving the companies whose securities are owned by the fund; general economic
and market conditions; regional or global economic
instability; and currency and interest rate fluctuations. Certain securities
selected for the fund's portfolio many decline in value more than the overall
stock market. In general, the securities of mid-size companies are more volatile
than those of large companies.
Growth Investing Risk--Growth stocks can perform differently from the market
as a whole and other types of stocks and tend to be more expensive relative to
their earnings or assets compared with other types of stocks. As a result,
growth stocks tend to be more sensitive to changes in their earnings and can be
more volatile than other types of stocks.
Equity Securities Risk--The prices of equity securities change in response
to many factors including the historical and prospective earning of the issuer,
the value of its assets, general economic conditions, interest rates, investor
perceptions and market liquidity.
Market Capitalization Risk--Stocks fall into three broad market
capitalization categories--large, medium and small. Investing primarily in one
category carries the risk that, due to current market conditions, that category
may be out of favor with investors. Small and mid-sized companies tend to be
more vulnerable to adverse developments and more volatile than large companies.
Investments in small and mid-sized companies may involve special risks,
including those associated with dependence on a small management group, little
or no operating history, little or no track record of success, and limited
product lines, markets and financial resources. Also, there may be less publicly
available information about the issuers of the securities or less market
interest in such securities than in the case of larger companies, each of which
can cause significant price volatility. The securities of small and mid-sized
companies may be illiquid, restricted as to resale, or may trade less frequently
and in smaller volume than more widely held securities, which may make it
difficult for the fund to establish or close out a position in these securities
at prevailing market prices.
Foreign Securities Risk--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.
Active Trading Risk--The fund may engage in active and frequent trading of
portfolio securities to achieve its investment objective. If a fund does trade
in this way, it may incur increasing costs, which can lower the actual return of
the fund. Active trading may also increase short term gains and losses, which
may affect the taxes that must be paid.
Management Risk--There is no guarantee that the investment techniques and
risk analyses used by the fund's portfolio managers will produce the desired
results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The prices of IPO securities may go up and down more than prices of equity securities of companies with longer trading histories. In addition, companies offering securities in IPOs may have less experienced management or limited operating histories. There can be no assurance that the fund will have favorable IPO investment opportunities.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1998................................................................... 19.35%
1999................................................................... 55.60%
2000................................................................... -3.55%
2001................................................................... -31.14%
2002................................................................... -31.90%
2003................................................................... 37.82%
2004................................................................... 13.34%
2005................................................................... 10.72%
2006................................................................... 16.11%
2007...................................................................
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During the periods shown in the bar chart, the highest quarterly return was
[33.23% (quarter ended December 31, 1999)] and the lowest quarterly return was
[-34.19% (quarter ended September 30, 2001)]. For periods prior to April 30,
2004, performance shown above relates to a predecessor fund advised by INVESCO
Funds Group, Inc. (IFG), an affiliate of Invesco Aim Advisors, Inc.
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------- (for the periods ended 10 INCEPTION December 31, 2007) 1 YEAR 5 YEARS YEARS DATE ------------------------------------------------------------------------------------ AIM V.I. Dynamics Fund(1) % % % 08/22/97(2) S&P 500--Registered Trademark-- Index(3,4) 08/31/97(2) Russell Midcap--Registered Trademark-- Growth Index(3,4,5) 08/31/97(2) Lipper VUF Mid-Cap Growth Funds Index(3,4,6) 08/31/97(2) ------------------------------------------------------------------------------------ |
(1) For periods prior to April 30, 2004, performance shown relates to a predecessor fund advised by IFG. Total return figures include reinvested dividends and capital gain distributions and the effect of the fund's expenses.
(2) The fund commenced investment operations on August 22, 1997. Index comparison began on August 31, 1997.
(3) The Standard & Poor's 500 Index is a market capitalization weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity and their industry. The fund has also included the Russell Midcap--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 Variable Underlying Funds (VUF) Mid-Cap Growth Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(4) The indices may not reflect payment of fees, expenses or taxes.
(5) The Russell Midcap--Registered Trademark-- Growth Index measures the performance of those securities in the Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The Russell Midcap--Registered Trademark-- Growth Index is a trademark/service mark of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company.
(6) The Lipper VUF Mid-Cap Growth Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Mid-Cap Growth Funds category. These funds have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P MidCap 400 Index. The S&P MidCap 400 Index is a market capitalization weighted index that is widely used for mid-sized companies. The index accounts for approximately 7% of the U.S. equity market.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees(2) % Other Expenses Acquired Fund Fees and Expenses(3) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursement(2,4) Net Annual Fund Operating Expenses -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Through April 30, 2008, the fund's advisor has contractually agreed to waive
a portion of its advisory fees to the extent necessary so that the advisory
fees payable by the fund does not exceed a specified maximum annual advisory
fee rate, wherein the fee rate includes breakpoints and is based upon net
asset levels. The fund's maximum annual advisory fee rate ranges from 0.745%
(for average net assets up to $250 million) to 0.64% (for average net assets
over $10 billion).
(3) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but by the expenses of the investment companies in which the
fund invests. You incur these fees and expenses indirectly through the
valuation of the fund's investment in those investment companies. As a
result, the Net Annual Fund Operating Expenses listed above may exceed the
limit on Total Annual Fund Operating Expenses, if any. The impact of the
acquired fund fees and expenses are included in the total returns of the
fund.
(4) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 1.30% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
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.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Dynamics Fund $ $ $ $ ---------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6
---------------------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % % %
Cumulative Return Before
Expenses % % % % % %
Cumulative Return After
Expenses % % % % % %
End of Year Balance $ $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $ $
---------------------------------------------------------------------------------------------------------
SERIES I YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1) % % % %
Cumulative Return Before
Expenses % % % %
Cumulative Return After
Expenses % % % %
End of Year Balance $ $ $ $
Estimated Annual Expenses $ $ $ $
------------------------------------------------------------------------------------------
|
(1) Your annual expenses may be higher or lower than these shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Paul J. Rasplicka (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2004 and has been associated with Invesco Aim and/or its affiliates since 1994. As the lead manager, Mr. Rasplicka generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Rasplicka may perform these functions, and the nature of these functions, may change from time to time.
- Karl Farmer, Portfolio Manager, who has been responsible for the fund since 2005 and has been associated with Invesco Aim and/or its affiliates since 1998.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are not designed to accommodate excessive short-term trading activity in violation of our policies described below. Excessive short-term trading activity in the fund's shares (i.e., purchases of fund shares followed shortly thereafter by redemptions of such shares, or vice versa) may hurt the long-term performance of the fund by requiring it to maintain an excessive amount of cash or to liquidate portfolio holdings at a disadvantageous time, thus interfering with the efficient management of the fund by causing it to incur increased brokerage and administrative costs. Where excessive short-term trading activity seeks to take advantage of arbitrage opportunities from stale prices for portfolio securities, the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage excessive short-term trading of fund shares. The fund may alter its policies and procedures at any time without giving prior notice to fund shareholders, if the advisor believes the change would be in the best interests of long-term investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund values portfolio securities for which market quotations are readily available at market value. The fund values all other securities and assets for which market quotations are not readily available at their fair value in good faith using procedures approved by the Board of the fund. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities--Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities--If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities--Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board of Trustees.
Short-term Securities--The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options--Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds--To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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
fund. Variable product owners should refer to the prospectus for their variable
products for information regarding the tax consequences of owning such variable
products contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse
insurance companies for certain administrative services provided to variable
product owners. Under a Master Administrative Services Agreement, between the
fund and the advisor, the advisor is entitled to receive from the fund
reimbursement of its costs or such reasonable compensation as may be approved by
the Board. Under this arrangement, the advisor provides, or assures that
insurance companies issuing variable products will provide, certain variable
product owner-related services. These services, include, but are not limited to,
facilitation of variable product owners' purchase and redemption requests;
distribution to existing variable product owners of copies of fund prospectuses,
proxy materials, periodic fund reports, and other materials; maintenance of
variable product owners' records; and fund services and communications.
Currently, these administrative service payments made by the fund to the advisor
are subject to an annual limit of 0.25% of the average net assets invested in
the fund by each insurance company. Any amounts paid by the advisor to an
insurance company in excess of 0.25% of the average net assets invested in the
fund are paid by the advisor out of its own financial resources, and not out of
the fund's assets. Insurance companies may earn profits on these payments for
these services, since the amount of the payments may exceed the cost of
providing the service.
You can find further details in the Statement of Additional Information
about these payments and the services provided by insurance companies. In
certain cases these payments could be significant to the insurance company. Your
insurance company may charge you additional fees or
commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
This information has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
SERIES I
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- -------- --------
Net asset value, beginning of period $ $ $ $
---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
===========================================================================================================================
Total from investment operations
===========================================================================================================================
Net asset value, end of period $ $ $ $
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return % % % %
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % %
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Without fee waivers and/or expense reimbursements % % % %
===========================================================================================================================
Ratio of net investment income (loss) to average net assets % % % %
___________________________________________________________________________________________________________________________
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Portfolio turnover rate % % % %
___________________________________________________________________________________________________________________________
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AIM V.I. DYNAMICS FUND
PROSPECTUS
May 1, 2008
Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Dynamics Fund's investment objective is long-term capital growth.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 6 Portfolio Managers 6 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 7 Trading Activity Monitoring 8 Fair Value Pricing 8 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 10 Distribution Plan 10 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective may be changed by the Board of Trustees (the Board) without shareholder approval.
The fund seeks to meet is objective by investing, normally, at least 65% of its assets in equity securities of mid-capitalization companies. The principal type of equity securities purchased by the fund is common stock.
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 Mid Cap--Registered 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 Mid Cap--Registered Trademark-- Index measures the performance of the 800 smallest 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 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. The companies in the Russell Mid Cap--Registered Trademark-- Index are considered representative of medium-sized companies and constitute approximately 25% of the total market capitalization of the Russell 1000--Registered Trademark-- Index.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and at any time, the fund may not be invested
in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
The portfolio managers actively manage the fund using a two-step stock
selection process that combines quantitative and fundamental analyses. The
quantitative analysis involves using a stock ranking model to rank stocks based
primarily upon: (1) earning, (2) quality; and (3) valuation. The fundamental
analysis focuses on identifying both industries and companies that, in portfolio
managers' view, have high growth potential and are also favorably priced
relative to growth expectations for that company. The portfolio managers base
their selection of stocks for the fund on analysis of individual companies. The
investment process involves:
- Applying fundamental research, including financial statement analysis and management visits to identify stocks of companies believed to have large potential markets, cash-generating business models, improving balance sheets and solid management teams; and
- Using a variety of valuation techniques to determine target buy and sell prices as well as a stock's valuation upside and downside potential. The resulting portfolio contains two types of companies: (1) consistent growth companies and (2) earnings-acceleration companies. Consistent growth companies are companies with a history of strong returns and, in the portfolio manager's opinion, are industry leaders serving growth, non-cyclical markets whose performance tends to remain constant regardless of economic conditions. Earning-acceleration companies are companies that are driven by near-term catalysts such as new products, improved processes and/or specific economic conditions that may lead to rapid sales and earnings growth. The portfolio managers strive to control the fund's volatility and risk by varying individual stock position sizes and diversifying fund holdings across sectors. The portfolio managers considers selling or reducing the fund's holdings in a stock if: (1) it no longer meets the investment criteria; (2) a company's fundamentals deteriorate; (3) a stock's price reaches its valuation target; (4) a company is no longer considered a mid-capitalization company; and/or (5) a more attractive investment option is identified.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
When suitable opportunities are available, the fund may invest in initial public offerings (IPOs) of securities.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective.
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 historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
The principal risks of investing in the fund are:
Market Risk--The prices of and the income generated by securities held by
the fund may decline in response to certain events, including those directly
involving the companies whose securities are owned by the fund; general economic
and market conditions; regional or global economic
instability; and currency and interest rate fluctuations. Certain securities
selected for the fund's portfolio many decline in value more than the overall
stock market. In general, the securities of mid-size companies are more volatile
than those of large companies.
Growth Investing Risk--Growth stocks can perform differently from the market
as a whole and other types of stocks and tend to be more expensive relative to
their earnings or assets compared with other types of stocks. As a result,
growth stocks tend to be more sensitive to changes in their earnings and can be
more volatile than other types of stocks.
Equity Securities Risk--The prices of equity securities change in response
to many factors including the historical and prospective earning of the issuer,
the value of its assets, general economic conditions, interest rates, investor
perceptions and market liquidity.
Market Capitalization Risk--Stocks fall into three broad market
capitalization categories--large, medium and small. Investing primarily in one
category carries the risk that, due to current market conditions, that category
may be out of favor with investors. Small and mid-sized companies tend to be
more vulnerable to adverse developments and more volatile than large companies.
Investments in small and mid-sized companies may involve special risks,
including those associated with dependence on a small management group, little
or no operating history, little or no track record of success, and limited
product lines, markets and financial resources. Also, there may be less publicly
available information about the issuers of the securities or less market
interest in such securities than in the case of larger companies, each of which
can cause significant price volatility. The securities of small and mid-sized
companies may be illiquid, restricted as to resale, or may trade less frequently
and in smaller volume than more widely held securities, which may make it
difficult for the fund to establish or close out a position in these securities
at prevailing market prices.
Foreign Securities Risk--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.
Active Trading Risk--The fund may engage in active and frequent trading of
portfolio securities to achieve its investment objective. If a fund does trade
in this way, it may incur increasing costs, which can lower the actual return of
the fund. Active trading may also increase short term gains and losses, which
may affect the taxes that must be paid.
Management Risk--There is no guarantee that the investment techniques and
risk analyses used by the fund's portfolio managers will produce the desired
results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The prices of IPO securities may go up and down more than prices of equity securities of companies with longer trading histories. In addition, companies offering securities in IPOs may have less experienced management or limited operating histories. There can be no assurance that the fund will have favorable IPO investment opportunities.
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The 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 chart shown does not
reflect charges assessed in connection with your variable product; if it did,
the performance shown would be lower.
Series I shares are not offered by this prospectus. The Series I shares 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 the fund).
The following bar chart shows changes in the performance of the fund's shares from year to year.
(PERFORMANCE GRAPH)
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1998*.................................................................. 19.05%
1999*.................................................................. 55.21%
2000*.................................................................. -3.79%
2001*.................................................................. -31.31%
2002*.................................................................. -32.07%
2003*.................................................................. 37.48%
2004**................................................................. 13.07%
2005................................................................... 10.44%
2006................................................................... 15.84%
2007................................................................... %
|
* The returns shown for these periods are 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 return shown for this period is the blended return 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 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 30, 2004.
During the periods shown in the bar chart, the highest quarterly return was
[33.15% (quarter ended December 31, 1999)] and the lowest quarterly return was
[-34.23% (quarter ended September 30, 2001)]. For periods prior to April 30,
2004, performance shown above relates to a predecessor fund advised by INVESCO
Funds Group, Inc. (IFG), an affiliate of Invesco Aim Advisors, Inc.
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------
SERIES I
(for the periods ended INCEPTION
December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE
--------------------------------------------------------------------------------------------
AIM V.I. Dynamics Fund(1) % % % 08/22/97
S&P 500--Registered Trademark--
Index(3,4) (2) --
Russell Midcap(R) Growth Index(3,4,5) (2) --
Lipper VUF Mid-Cap Growth Funds
Index(3,4,6) (2) --
--------------------------------------------------------------------------------------------
|
(1) The return shown for the one year period is the historical performance of the fund's Series II shares. The returns shown for other 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 Predecessor 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 30, 2004. For periods prior to April 30, 2004, performance shown relates to a predecessor fund advised by IFG. Total return figures include reinvested dividends and capital gain distributions and the effect of the fund's expenses.
(2) Series I shares of the fund commenced investment operations on August 22, 1997. Index comparison began on August 31, 1997.
(3) The Standard & Poor's 500 Index is a market capitalization weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity and their industry. The fund has also included the Russell Midcap--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 Variable Underlying Funds (VUF) Mid-Cap Growth Funds Index (which may or may not include the Fund) is included for comparison to a peer group.
(4) The indices may not reflect payment of fees, expenses or taxes.
(5) The Russell Midcap--Registered Trademark-- Growth Index measures the performance of those securities in the Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The Russell Midcap--Registered Trademark-- Growth Index is a trademark/service mark of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company.
(6) The Lipper VUF Mid-Cap Growth Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Mid-Cap Growth Funds category. These funds have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P MidCap 400 Index. The S&P MidCap 400 Index is a market capitalization weighted index that is widely used for mid-sized companies. The index accounts for approximately 7% of the U.S. equity market.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES -------------------------------------------------------------------------------- Management Fees(2) % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(3) Total Annual Fund Operating Expenses Fee Waiver and/or Expense(2,4) Net Annual Fund Operating Expenses -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Through April 30, 2008, the fund's advisor contractually agreed to waive a
portion of its advisory fees to the extent necessary so that the advisory
fees payable by the fund does not exceed a specified maximum annual advisory
fee rate, wherein the fee rate includes breakpoints and is based upon net
asset levels. The fund's maximum annual advisory fee rate ranges from 0.745%
(for average net assets up to $250 million) to 0.64% (for average net assets
over $10 billion).
(3) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but by the expenses of the investment companies in which the
fund invests. You incur these fees and expenses indirectly through the
valuation of the fund's investment in those investment companies. As a
result, the Net Annual Fund Operating Expenses listed above may exceed the
limit on Total Annual Fund Operating Expenses, if any. The impact of the
acquired fund fees and expenses are included in the total returns of the
fund.
(4) The fund's advisor has contractually agreed to waive advisory fees and/or
reimburse expenses of Series II shares to the extent necessary to limit
Total Annual Fund Operating Expenses (excluding certain items discussed
below) of Series II shares to 1.45% of average daily net assets. In
determining the advisor's obligation to waive advisory fees and/or reimburse
expenses, the following expenses are not taken into account, and could cause
the Total Annual Fund Operating Expenses to exceed the number reflected; (i)
interest; (ii) taxes; (iii) dividend expense on short sales; (iv)
extraordinary items; (v) expenses related to a merger or reorganization, as
approved by the fund's Board of Trustees; and (vi) expenses that the fund
has incurred but did not actually pay because of an expense offset
arrangement. Currently, the expense offset arrangements from which the fund
may benefit are in the form of credits that the fund receives from banks
where the fund or its transfer agent has deposit accounts in which it holds
uninvested cash. In addition, the fund may also benefit from a one
time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on you investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Dynamics Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
--------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
--------------------------------------------------------------------------------------------
SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
--------------------------------------------------------------------------------------------
|
(1) Your annual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Paul J. Rasplicka (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2004 and has been associated with Invesco Aim and/or its affiliates since 1994. As the lead manager, Mr. Rasplicka generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment,
and the management of daily cash flows in accordance with portfolio holdings.
The degree to which Mr. Rasplicka may perform these functions, and the nature
of these functions, may change from time to time.
- Karl Farmer, Portfolio Manager, who has been responsible for the fund since 2005 and has been associated with Invesco Aim and/or its affiliates since 1998.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the funds will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely
compares closing market prices, the next day's opening prices for the security
in its primary market if available, and indications of fair value from other
sources. Fair value pricing methods and pricing services can change from time to
time as approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities--Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities--If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities--Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities--The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options--Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds--To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually to separate accounts of insurance companies issuing the variable products.
At the election of insurance companies issuing the variable products, dividends and distributions are automatically reinvested at net asset value in shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II
shares. The plan allows the fund 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 fund). Because the fund pays
these fees out of its 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 charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during the fiscal years (or period) indicated.
This information has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
SERIES II
---------------------------------------------------------------
APRIL 30,
2004
(DATE SALES
YEAR ENDED DECEMBER 31, COMMENCED) TO
---------------------------------------------- DECEMBER 31,
2007 2006 2005 2004
----------- ----------- ----------- -------------
Net asset value, beginning of period $ $ $
-----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
-----------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized)
=============================================================================================================================
Total from investment operations
=============================================================================================================================
Net asset value, end of period $ $ $
=============================================================================================================================
Total return % % %
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % %
-----------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % %
=============================================================================================================================
Ratio of net investment income (loss) to average net assets % % %
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Portfolio turnover rate % % %
_____________________________________________________________________________________________________________________________
=============================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com I-VIDYN-PRO-2
AIM V.I. FINANCIAL SERVICES FUND
PROSPECTUS
MAY 1, 2008
|
Series I shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Financial Services Fund's investment objective is capital growth.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 5 ------------------------------------------------------ Fees and Expenses of the Fund 5 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 6 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 7 Portfolio Managers 7 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 8 Trade Activity Monitoring 8 Fair Value Pricing 8 Risks 9 Pricing of Shares 9 Taxes 10 Dividends and Distributions 10 Share Classes 10 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 12 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is capital growth.
The fund's investment objective may be changed by the Board of Trustees (the Board) without shareholder approval.
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 of issuers engaged primarily in financial services-related industries.
The fund considers a company to be doing business in financial
services-related industries if it meets at least one of the following tests: (1)
at least 50% of its gross income or its net sales come from activities in
financial services-related industries; (2) at least 50% of its assets are
devoted to producing revenues in the financial services-related industries; or
(3) based on other available information, the portfolio managers determine that
its primary business is within the financial services-related industries. The
principal type of equity securities purchased by the fund is common stocks.
Companies in financial services-related industries include, but are not limited
to, banks, insurance companies, investment banking and brokerage companies,
credit finance companies, asset management companies and companies providing
other financial-related services.
The fund may invest up to 25% of its total assets in securities of non-U.S.
issuers doing business in the financial services sector. Securities of Canadian
issuers and American Depositary Receipts are not subject to this 25% limitation.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and, at any time, the fund may not be
invested in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
In selecting securities, the portfolio managers primarily focus on (1)
companies trading at a significant discount to the portfolio managers' estimate
of intrinsic value; and (2) companies that the portfolio managers expect to
exhibit capital discipline by returning meaningful excess capital to
shareholders through dividends and share repurchases. Emphasis is placed on
financial services companies that the portfolio managers expect to profitably
grow cash flows over time. The portfolio managers consider a 2 to 3-year
investment horizon when selecting investments. Given the inherent limitations of
investing within a single sector, not all investments will have these
attributes.
The portfolio managers will consider selling a security for the following
reasons: (1) a more attractive investment opportunity is identified; (2) if a
stock is trading significantly above the portfolio managers' estimate of
intrinsic value; or (3) if there is an adverse change in capital allocation
activities or business fundamentals that is change in capital allocation
activities or business fundamentals that is not adequately reflected in the
stock's valuations.
The portfolio managers seek to achieve strong long-term performance by
constructing a portfolio of financial companies that are significantly
undervalued on an absolute basis and that exhibit superior capital discipline.
The investment process is fundamental in nature and focused on individual
companies rather than macro economic forecasts. The portfolio managers normally
construct a portfolio of 35 to 50 stocks while striving to diversify within the
financial sector. Under normal market conditions, the fund's top ten holdings
may comprise over 50% of the fund's total assets.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
Market Risk--The prices of and the income generated by securities held by the fund may decline in response to certain events, including those directly involving the companies whose securities are owned by the fund; general economic and market conditions; regional or global economic instability, and currency and interest rate fluctuations. Certain securities selected for the fund's portfolio may decline in value more than the overall stock market. In general, the securities of small companies are more volatile than those of mid-size companies or large companies.
Equity Securities Risk--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. These factors will probably affect the equity securities of smaller companies more than the equity securities of larger, more-established companies. Also, because equity securities of smaller 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 desirable price.
Sector Fund Risk--The fund's investments are concentrated in a comparatively narrow segment of the economy, the financial services sector. This means that the fund's investment concentration in the financial services sector is higher than most mutual funds and the broad securities market. Consequently, the fund may tend to be more volatile than other mutual funds, and the value of the fund's investments and consequently the value of an investment in the fund may tend to rise and fall more rapidly.
Financial Services Industry Risk--The financial services sector is subject to extensive government regulation, which may change frequently. In addition, the profitability of businesses in the financial services sector depends heavily on the availability and cost of money and may fluctuate significantly in response to changes in interest rates, as well as changes in general economic conditions. The financial services industry is exposed to several risks that may impact the value of investments in the financial services sector more severely than investments outside the sector. Businesses in the financial sector often operate with substantial financial leverage.
Concentration Risk--Since a large percentage of the fund's assets may be invested in the securities of a limited number of companies, each investment has a greater effect on the fund's overall performance and any change in the value of those securities could significantly affect the value of your investment in the fund.
Foreign Securities Risk--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.
There is no guarantee that the investment techniques and risk analyses used
by the fund's portfolio managers will produce the desired results.
An investment in the fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2000................................................................... 24.80%
2001................................................................... -9.88%
2002................................................................... -14.90%
2003................................................................... 29.58%
2004................................................................... 8.68%
2005................................................................... 5.91%
2006................................................................... 16.44%
2007................................................................... %
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During the periods shown in the bar chart, the highest quarterly return was
[22.11% (quarter ended September 30, 2000)] and the lowest quarterly return was
[-15.56% (quarter ended September 30, 2002)]. For periods prior to April 30,
2004, performance shown above relates to a predecessor fund advised by INVESCO
Funds Group, Inc. (IFG), an affiliate of Invesco Aim Advisors, Inc.
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2007) 1 YEAR 5 YEARS INCEPTION DATE --------------------------------------------------------------------------------- AIM V.I. Financial Services Fund(1) % % % 09/20/99 S&P 500--Registered Trademark-- Index(3,4) (2) 09/30/99(2) S&P 500 Financials Index(3,4,5) (2) 09/30/99(2) Lipper VUF Financial Services Funds Category Average(3,4,6) (2) 09/30/99(2) -------------------------------------------------------------------------------------------------- |
(1) For periods to April 30, 2004, performance shown relates to a predecessor fund advised by IFG. Total return figures include reinvested dividends and capital gain distributions and the effect of the fund's expenses.
(2) The fund commenced investment operations on September 20, 1999. Index comparisons began on September 30, 1999.
(3) The Standard & Poor's 500 Index is a market capitalization weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity and their industry. The fund has also included the Standard & Poor's 500 Financials Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) Financial Services Funds Category Average (which may or may not include the fund) is included for comparison to a peer group.
(4) The indices may not reflect payment of fees, expenses or taxes.
(5) The Standard & Poor's 500 Financials Index is a market capitalization weighted index of companies involved in activities such as banking, consumer finance, investment banking and brokerage, asset management, insurance and investment and real estate, including REITs.
(6) The Lipper VUF Financial Services Funds Category Average represents the average of all the variable insurance underlying funds in the Lipper Financial Services Funds category. These funds invest at least 65% of their portfolios in equity securities of companies engaged in providing financial services.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees % Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses(3) -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are the expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 1.30% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
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.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Financial Services Fund $ $ $ $ ---------------------------------------------------------------------------------- |
The settlement agreement between Invesco AIM Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco AIM Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco AIM Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 ----------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 ----------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- |
(1) Your annual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management, Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the retail AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Michael J. Simon (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2004 and has been associated with Invesco Aim and/or its affiliates since 2001. As the lead manager, Mr. Simon generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Simon may perform these functions, and the nature of these functions, may change from time to time.
- Meggan M. Walsh, Senior Portfolio Manager, who has been responsible for the fund since 2004 and has been associated with Invesco Aim and/or its affiliates since 1991.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for
regulatory relief to enable the fund's shares to be sold to and held by one or
more fund of funds (open-end management investment companies or series thereof
that offer their shares exclusively to insurance companies, their separate
accounts and/or qualified plans). The fund plans to offer its shares to fund of
funds following receipt of the requested regulatory relief. Due to differences
in tax treatment and other considerations, the interests of fund shareholders,
including variable product owners and plan participants investing in the fund
(whether directly or indirectly through fund of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For
example, violation of the federal tax laws by one insurance company separate
account investing directly or indirectly in a fund could cause variable products
funded through another insurance company separate account to lose their
tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices.
In addition, if the price provided by the pricing service is unreliable, the
advisor valuation committee may fair value the security using procedures
approved by the Board of Trustees.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of
the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates or its affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
This information has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
SERIES I
---------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- -------- --------
Net asset value, beginning of period $ $ $ $ $
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
=================================================================================================================================
Total from investment operations
=================================================================================================================================
Less distributions:
Dividends from net investment income
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
=================================================================================================================================
Total distributions
=================================================================================================================================
Net asset value, end of period $ $ $ $ $
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return % % % % %
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets % % % % %
=================================================================================================================================
Ratio of net investment income to average net assets % % % % %
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate % % % % %
_________________________________________________________________________________________________________________________________
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
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You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com I-VIFSE-PRO-1
AIM V.I. FINANCIAL SERVICES FUND
PROSPECTUS
MAY 1, 2008
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Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Financial Services Fund's investment objective is capital growth.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 5 ------------------------------------------------------ Fees and Expenses of the Fund 5 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 6 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 7 Portfolio Managers 7 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 8 Trading Activity Monitoring 8 Fair Value Pricing 8 Risks 9 Pricing of Shares 9 Taxes 10 Dividends and Distributions 10 Share Classes 10 Distribution Plan 10 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 12 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is capital growth.
The fund's investment objective may be changed by the Board of Trustees (the Board) without shareholder approval.
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 of issuers engaged primarily in financial services-related industries.
The fund considers a company to be doing business in financial
services-related industries if it meets at least one of the following tests: (1)
at least 50% of its gross income or its net sales come from activities in
financial services-related industries; (2) at least 50% of its assets are
devoted to producing revenues in the financial services-related industries; or
(3) based on other available information, the portfolio managers determine that
its primary business is within the financial services-related industries. The
principal type of equity securities purchased by the fund is common stocks.
Companies in financial services-related industries include, but are not limited
to, banks, insurance companies, investment banking and brokerage companies,
credit finance companies, asset management companies and companies providing
other finance-related services.
The fund may invest up to 25% of its total assets in securities of non-U.S.
issuers doing business in the financial services sector. Securities of Canadian
issuers and American Depositary Receipts are not subject to this 25% limitation.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and, at any time, the fund may not be
invested in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
In selecting securities, the portfolio managers primarily focus on (1)
companies trading at a significant discount to the portfolio managers' estimate
of intrinsic value; and (2) companies that the portfolio managers expect to
exhibit capital discipline by returning meaningful excess capital to
shareholders through dividends and share repurchases. Emphasis is placed on
financial services companies that the portfolio managers expect to profitably
grow cash flows over time. The portfolio manager considers a 2 to 3-year
investment horizon when selecting investments. Given the inherent limitations of
investing within a single sector, not all investments will have these
attributes.
The portfolio managers will consider selling a security for the following
reasons: (1) a more attractive investment opportunity is identified; (2) if a
stock is trading significantly above the portfolio managers' estimate of
intrinsic value; or (3) if there is an adverse change in capital allocation
activities or business fundamentals that is not adequately reflected in the
stock's valuation.
The portfolio managers seek to achieve strong long-term performance by
constructing a portfolio of financial companies that are significantly
undervalued on an absolute basis and that exhibit superior capital discipline.
The investment process is fundamental in nature and focused on individual
companies rather than macro economic forecasts. The portfolio managers normally
construct a portfolio of 35 to 50 stocks while striving to diversify within the
financial sector. Under normal market conditions, the fund's top ten holdings
may comprise over 50% of the fund's total assets.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
Market Risk--The prices of and the income generated by securities held by the fund may decline in response to certain events, including those directly involving the companies whose securities are owned by the fund; general economic and market conditions; regional or global economic instability, and currency and interest rate fluctuations. Certain securities selected for the fund's portfolio may decline in value more than the overall stock market. In general, the securities of small companies are more volatile than those of mid-size companies or large companies.
Equity Securities Risk--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. These factors will probably affect the equity securities of smaller companies more-than the equity securities of larger, more-established companies. Also, because equity
securities of smaller 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 desirable price.
Sector Fund Risk--The fund's investments are concentrated in a comparatively narrow segment of the economy, the financial services sector. This means that the fund's investment concentration in the financial services sector is higher than most mutual funds and the broad securities market. Consequently, the fund may tend to be more volatile than other mutual funds, and the value of the fund's investments and consequently the value of an investment in the fund may tend to rise and fall more rapidly.
Financial Services Industry Risk--The financial services sector is subject to extensive government regulation, which may change frequently. In addition, the profitability of businesses in the financial services sector depends heavily on the availability and cost of money and may fluctuate significantly in response to changes in interest rates, as well as changes in general economic conditions. The financial services industry is exposed to several risks that may impact the value of investments in the financial services sector more severely than investments outside the sector. Businesses in the financial sector often operate with substantial financial leverage.
Concentration Risk--Since a large percentage of the fund's assets may be invested in the securities of a limited number of companies, each investment has a greater effect on the fund's overall performance and any change in the value of those securities could significantly affect the value of your investment in the fund.
Foreign Securities Risk--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.
There is no guarantee that the investment techniques and risk analyses used
by the fund's portfolio managers will produce the desired results.
An investment in the fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The 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 chart shown does not
reflect charges assessed in connection with your variable product; if it did,
the performance shown would be lower.
Series I shares are not offered by this prospectus. The Series I shares 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 the fund).
The following bar chart shows changes in the performance of the fund's shares from year to year.
(PERFORMANCE GRAPH)
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
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2000*.................................................................. 24.49%
2001*.................................................................. -10.11%
2002*.................................................................. -15.11%
2003*.................................................................. 29.26%
2004**................................................................. 8.44%
2005................................................................... 5.61%
2006................................................................... 16.22%
2007...................................................................
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* The returns shown for these periods are 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 return shown for this period is the blended return 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 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 30, 2004.
During the periods shown in the bar chart, the highest quarterly return was
[22.04% (quarter ended September 30, 2000)] and the lowest quarterly return was
[-15.62% (quarter ended September 30, 2002)]. For periods prior to April 30,
2004, performance shown above relates to a predecessor fund advised by INVESCO
Funds Group, Inc. (IFG), an affiliate of Invesco Aim Advisors, Inc.
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS
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SERIES I
(for the periods ended SINCE INCEPTION
December 31, 2007) 1 YEAR 5 YEARS INCEPTION DATE
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AIM V.I. Financial Services Fund(1) % % % 09/20/99
S&P 500(R) Index(3,4) (2) 09/30/99(2)
S&P 500 Financials Index(3,4,5) (2) 09/30/99(2)
Lipper VUF Financial Services Funds
Category Average(3,4,6) (2) 09/30/99(2)
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(1) The return shown for the one year period is the historical performance of the fund's Series II shares. The returns shown for other 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 Predecessor fund's Series I (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 shares is April 30, 2004. For periods prior to April 30, 2004, performance shown relates to a predecessor fund advised by IFG. Total return figures include reinvested dividends and capital gain distributions and the effect on the fund's expenses.
(2) Series I shares of the fund commenced investment operations on September 20, 1999. Index comparisons began on September 30, 1999.
(3) The Standard & Poor's 500 Index is a market capitalization weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity and their industry. The fund has also included the Standard & Poor's 500 Financials Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) Financial Services Funds Category Average (which may or may not include the fund) is included for comparison to a peer group.
(4) The indices may not reflect payment of fees, expenses or taxes.
(5) The Standard & Poor's 500 Financials Index is a market capitalization weighted index of companies involved in activities such as banking, consumer finance, investment banking and brokerage, asset management, insurance and investment and real estate, including REITs.
(6) The Lipper VUF Financial Services Funds Category Average represents the average of all the variable insurance underlying funds in the Lipper Financial Services Funds category. These funds invest at least 65% of their portfolios in equity securities of companies engaged in providing financial services.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES ------------------------------------------------------------------------------------ (fees paid directly from your investment) SERIES II SHARES ------------------------------------------------------------------------------------ Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A ------------------------------------------------------------------------------------ |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES -------------------------------------------------------------------------------- Management Fees % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses(3) -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are the expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.45% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Financial Services Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
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Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
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SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
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(1) Your annual expenses may be higher or lower than these shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Michael J. Simon (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2004 and has been associated with Invesco Aim and/or its affiliates since 2001. As the lead manager, Mr. Simon generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Simon may perform these functions, and the nature of these functions, may change from time to time.
- Meggan M. Walsh, Senior Portfolio Manager, who has been responsible for the fund since 2004 and has been associated with Invesco Aim and/or its affiliates since 1991.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the funds will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices.
In addition, if the price provided by the pricing service is unreliable, the
advisor valuation committee may fair value the security using procedures
approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II
shares. The plan allows the fund 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 fund). Because the fund pays
these fees out of its 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 charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the
level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during the fiscal years (or period) indicated.
This information has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
SERIES II
----------------------------------------------------------
YEAR ENDED APRIL 30, 2004
DECEMBER 31, (DATE SALES
------------------------------------ COMMENCED) TO
2007 2006 2005 DECEMBER 31,
------ ------ ------ 2004
Net asset value, beginning of period $ $ $ $
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized)
========================================================================================================================
Total from investment operations
========================================================================================================================
Less distributions:
Dividends from net investment income
------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
========================================================================================================================
Total distributions
========================================================================================================================
Net asset value, end of period $ $ $ $
________________________________________________________________________________________________________________________
========================================================================================================================
Total return % % % %
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets % % % %
========================================================================================================================
Ratio of net investment income to average net assets % % % %
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate % % % %
________________________________________________________________________________________________________________________
========================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors,
Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have not been made
available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com I-VIFSE-PRO-2
AIM V.I. GLOBAL HEALTH CARE FUND
PROSPECTUS
MAY 1, 2008
|
Series I shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Global Health Care Fund's investment objective is capital growth.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 5 ------------------------------------------------------ Fees and Expenses of the Fund 5 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 6 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 7 Portfolio Manager 7 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 8 Trade Activity Monitoring 8 Fair Value Pricing 8 Risks 8 Pricing of Shares 9 Taxes 10 Dividends and Distributions 10 Share Classes 10 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 12 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is capital growth.
The fund's investment objective may be changed by the Board of Trustees (the Board) without shareholder approval.
The fund seeks to meet its objective by investing, normally, at least 80% of
its assets in securities of health care industry companies. 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, and may include warrants, futures, options, exchange-traded funds
and American Depositary Receipts. The fund considers a health care industry
company to be one that (1) derives at least 50% of its revenues or earnings from
health care activities; or (2) devotes at least 50% of its assets to such
activities, based on its most recent fiscal year. Such companies include those
that design, manufacture, or sell products or services used for or in connection
with health care or medicine (such as pharmaceutical companies, biotechnology
research firms, companies that sell medical products, and companies that own or
operate health care facilities). The fund may invest in debt securities issued
by health care industry companies, or in equity and debt securities of other
companies the portfolio managers believe will benefit from developments in the
health care industry.
The fund will normally invest in the securities of companies located in at
least three different countries, including the United States, and may invest a
significant portion of its assets in the securities of U.S. issuers. However,
the fund will invest no more than 50% of its total assets in the securities of
issuers in any one country, other than the U.S.
The fund may invest up to 20% of its total assets in companies located in
developing countries, i.e., those countries that are in the initial stages of
their industrial cycles.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and at any time, the fund may not be invested
in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
The portfolio managers allocate the fund's assets among securities of
countries and in currency denominations that are expected to provide the best
opportunities for meeting the fund's investment objective. 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 and 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 typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
When suitable opportunities are available, the fund may invest in initial public offerings (IPOs) of securities.
The value of the fund's shares is particularly vulnerable to factors
affecting the health care industry, such as substantial government regulation.
Government regulation may impact the demand for products and services offered by
health care companies. Also, the products and services offered by health care
companies may be subject to rapid obsolescence caused by scientific advances and
technological innovations.
The fund's investments are concentrated in a comparatively narrow segment of
the economy. This means that the fund's investment concentration in the health
care industry is higher than most mutual funds and the broad securities market.
Consequently, the fund tends to be more volatile than other mutual funds, and
the value of the fund's investments and consequently an investment in the fund
tends to go up and down more rapidly.
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 their prices may be more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign
companies and governments 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 devalued 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.
IPOs of securities issued by unseasoned companies with little or no
operating history are risky and their prices are highly volatile, but they can
result in very large gains in their initial trading. There can be no assurance
that the fund will have favorable IPO investment opportunities in the future.
Attractive IPOs are often oversubscribed and may not be available to the fund,
or may be available in only very limited quantities.
There is no guarantee that the investment techniques and risk analyses used
by the fund's portfolio manager will produce the desired results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The prices of IPO securities may go up and down more than prices of equity securities of companies with longer trading histories. In addition, companies offering securities in IPOs may have less experienced management or limited operating histories. There can be no assurance that the fund will have favorable IPO investment opportunities.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1998................................................................... 42.85%
1999................................................................... 4.87%
2000................................................................... 30.54%
2001................................................................... -12.59%
2002................................................................... -24.45%
2003................................................................... 27.78%
2004................................................................... 7.57%
2005................................................................... 8.15%
2006................................................................... 5.24%
2007...................................................................
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During the periods shown in the bar chart, the highest quarterly return was
[15.79% (quarter ended December 31, 1998)] and the lowest quarterly return was
[-21.45% (quarter ended March 31, 2001)]. For periods prior to April 30, 2004,
performance shown above relates to a predecessor fund advised by INVESCO Funds
Group, Inc. (IFG), an affiliate of Invesco Aim Advisors, Inc.
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS ----------------------------------------------------------------------- (for the periods ended INCEPTION December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE --------------------------------------------------------------------------------------- AIM V.I. Global Health Care Fund(1) % % % 05/21/97(2) MSCI World Index--Servicemark--(4,5) (2) -- MSCI World Health Care Index(4,5,6) (2) -- Lipper VUF Health/Biotechnology Funds Category Average(4,5,7) (2) -- ----------------------------------------------------------------------- |
(1) For periods prior to April 30, 2004, performance shown relates to a predecessor fund advised by IFG. Total return figures include reinvested dividends and capital gain distributions and the effect of the fund's expenses.
(2) The fund commenced investment operations on May 21, 1997. Index comparisons
began on May 31, 1997.
(3) The average annual total return given is since the inception dated of the
MSCI World Health Care Index.
(4) The Morgan Stanley Capital International World Index is a free float-adjusted market capitalization index that is designed to measure global developed market equity performance. The fund has also included the Morgan Stanley Capital International World Healthcare Index as its style specific index because the fund believe it better represents the global investments of the fund. In addition, the fund has elected to use the Lipper Variable Underlying Funds (VUF) Health/Biotechnology Funds Category Average (which may or may not include the fund) for comparison to a peer group.
(5) The indices may not reflect payment of fees, expenses or taxes.
(6) The MSCI World Health Care Index is a free float-adjusted market capitalization index that represents the health care segment in global developed market equity performance.
(7) The Lipper VUF Health/Biotechnology Funds Category Average represents an average of all the variable insurance underlying funds in the Lipper Health/Biotechnology Funds category. These funds invest at least 65% of their portfolios in equity securities of companies engaged in healthcare, medicine and biotechnology.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees(2) % Other Expenses Acquired Fund Fees and Expenses(3) Total Annual Fund Operating Expenses(2,4) -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Through April 30, 2008, the advisor has contractually agreed to waive a
portion of its advisory fees to the extent necessary so that the advisory
fees payable by the fund does not exceed a specified maximum annual advisory
fee rate, wherein the fee rate includes breakpoints and is based upon net
asset levels. The fund's maximum annual advisory fee rate ranges from 0.75%
(for average net assets up to $250 million) to 0.68% (for average net assets
over $10 billion).
(3) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but by the expenses of the investment companies in which the
fund invests. You incur these fees and expenses indirectly through the
valuation of the fund's investment in those investment companies. As a
result, the Net Annual Fund Operating Expenses listed above may exceed the
limit on Total Annual Fund Operating Expenses, if any. The impact of the
acquired fund fees and expenses are included in the total returns of the
fund.
(4) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 1.30% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
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.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Global Health Care Fund $ $ $ $ ---------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 ----------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- |
(1) Your annual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets.
Invesco Aim, not the fund, pays for the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGER
Derek M. Taner, Portfolio Manager, is primarily responsible for the day-to-day management of the fund's portfolio. He has been responsible for the fund since 2005 and has been associated with Invesco Aim and/or its affiliates since 2005. From 2000 to 2005, he was a portfolio manager and analyst for Franklin Advisers, Inc.
More information on the portfolio manager may be found on the advisor's website http://www.invescoaim.com. The website is not a part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio manager's investments in the fund, a description of his compensation structure, and information regarding other accounts he manages.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or
all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board of Trustees.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
This information has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
SERIES I
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- -------- --------
Net asset value, beginning of period $ $ $ $ $
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
-------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
=========================================================================================================================
Total from investment operations
=========================================================================================================================
Net asset value, end of period
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return % % % % %
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets % % % % %
=========================================================================================================================
Ratio of net investment income (loss) to average net assets % % % % %
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate % % % % %
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com I-VIGHC-PRO-1
AIM V.I. GLOBAL HEALTH CARE FUND
PROSPECTUS
May 1, 2008
|
Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Global Health Care Fund's investment objective is capital growth.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 5 ------------------------------------------------------ Fees and Expenses of the Fund 5 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 6 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 7 Portfolio Manager 7 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosure 8 Trading Activity Monitoring 8 Fair Value Pricing 8 Risks 8 Pricing of Shares 9 Taxes 10 Dividends and Distributions 10 Share Classes 10 Distribution Plan 10 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management, Group Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is capital growth.
The fund's investment objective may be changed by the Board of Trustees (the
Board) without shareholder approval. The fund seeks to meet its objective by
investing, normally, at least 80% of its assets in securities of health care
industry companies. 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, and may include
warrants, futures, options, exchange-traded funds and American Depositary
Receipts. The fund considers a health care industry company to be one that (1)
derives at least 50% of its revenues or earnings from health care activities; or
(2) devotes at least 50% of its assets to such activities, based on its most
recent fiscal year. Such companies include those that design, manufacture, or
sell products or services used for or in connection with health care or medicine
(such as pharmaceutical companies, biotechnology research firms, companies that
sell medical products, and companies that own or operate health care
facilities). The fund may invest in debt securities issued by health care
industry companies, or in equity and debt securities of other companies the
portfolio managers believe will benefit from developments in the health care
industry.
The fund will normally invest in the securities of companies located in at
least three different countries, including the United States, and may invest a
significant portion of its assets in the securities of U.S. issuers. However,
the fund will invest no more than 50% of its total assets in the securities of
issuers in any one country, other than the U.S.
The fund may invest up to 20% of its total assets in companies located in
developing countries, i.e., those countries that are in the initial stages of
their industrial cycles.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and at any time, the fund may not be invested
in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
The portfolio managers allocate the fund's assets among securities of
countries and in currency denominations that are expected to provide the best
opportunities for meeting the fund's investment objective. 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 and 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 typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
When suitable opportunities are available, the fund may invest in initial public offerings (IPOs) of securities.
The value of the fund's shares is particularly vulnerable to factors
affecting the health care industry, such as substantial government regulation.
Government regulation may impact the demand for products and services offered by
health care companies. Also, the products and services offered by health care
companies may be subject to rapid obsolescence caused by scientific advances and
technological innovations.
The fund's investments are concentrated in a comparatively narrow segment of
the economy. This means that the fund's investment concentration in the health
care industry is higher than most mutual funds and the broad securities market.
Consequently, the fund tends to be more volatile than other mutual fund, and the
value of the fund's investments and consequently an investment in the fund tends
to go up and down more rapidly.
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 their prices may be more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies
and governments 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 devalued 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.
IPOs of securities issued by unseasoned companies with little or no
operating history are risky and their prices are highly volatile, but they can
result in very large gains in their initial trading. There can be no assurance
that the fund will have favorable IPO investment opportunities in the future.
Attractive IPOs are often oversubscribed and may not be available to the fund,
or may be available in only very limited quantities.
There is no guarantee that the investment techniques and risk analyses used
by the fund's portfolio managers will produce the desired results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The prices of IPO securities may go up and down more than prices of equity
securities of companies with longer trading histories. In addition, companies
offering securities in IPOs may have less experienced management or limited
operating histories. There can be no assurance that the fund will have favorable
IPO investment opportunities.
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The 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 chart shown does not
reflect charges assessed in connection with your variable product; if it did,
the performance shown would be lower.
Series I shares are not offered by this prospectus. The Series I shares 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 the fund).
The following bar chart shows changes in the performance of the fund's shares from year to year.
(PERFORMANCE GRAPH)
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1998*.................................................................. 42.50%
1999*.................................................................. 4.60%
2000*.................................................................. 30.22%
2001*.................................................................. -12.80%
2002*.................................................................. -24.64%
2003*.................................................................. 27.46%
2004**................................................................. 7.25%
2005................................................................... 7.90%
2006................................................................... 4.96%
2007...................................................................
|
* The returns shown for these periods are 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 return shown for this period is the blended return 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 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 30, 2004.
During the periods shown in the bar chart, the highest quarterly return was
[15.72% (quarter ended December 31, 1998)] and the lowest quarterly return was
[-21.49% (quarter ended March 31, 2001)]. For periods prior to April 30, 2004,
performance shown above relates to a predecessor fund advised by INVESCO Funds
Group, Inc. (IFG), an affiliate of Invesco Aim Advisors, Inc.
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS
------------------------------------------------------------------------------------------
SERIES I
(for the periods ended INCEPTION
December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE
------------------------------------------------------------------------------------------
AIM V.I. Global Health Care Fund(1) % % %(2) 05/21/97(2)
MSCI World Index--Servicemark--(4,5) (2) --
MSCI World Health Care Index(4,5,6) (3) --
Lipper VUF Health/Biotechnology Funds
Category Average(4,5,7) (2) --
------------------------------------------------------------------------------------------
|
(1) The return shown for the one year period is the historical performance of the fund's Series II shares. The returns shown for other 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 Predecessor 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 30, 2004. For periods prior to April 30, 2004, performance shown relates to a predecessor fund advised by IFG. Total return figures include reinvested dividends and capital gain distributions and the effect of the fund's expenses.
(2) Series I shares of the Fund commenced investment operations on May 21, 1997.
Index comparisons began on May 31, 1997.
(3) The average annual total return given is since the inception date of the
MSCI World Health Care Index.
(4) The Morgan Stanley Capital International World Index is a free float-adjusted market capitalization index that is designed to measure global developed market equity performance. The fund has also included the Morgan Stanley Capital International World Healthcare Index as its style-specific index because the fund believe it better represents the global investments of the fund. In addition, the fund has elected to use the Lipper Variable Underlying Funds (VUF) Health/Biotechnology Funds Category Average (which may or may not include the fund) for comparison to a peer group.
(5) The indices may not reflect payment of fees, expenses or taxes.
(6) The MSCI World Health Care Index is a free float-adjusted market capitalization index that represents the health care segment in global developed market equity performance.
(7) The Lipper VUF Health/Biotechnology Funds Category Average is a equally weighted representation of the largest funds in the Lipper Health/Biotechnology Funds category. These funds invest at least 65% of their portfolios in equity securities of companies engaged in healthcare, medicine and biotechnology.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES -------------------------------------------------------------------------------- Management Fees(2) % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(3) Total Annual Fund Operating Expenses(2,4) -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Through April 30, 2008, the advisor contractually agreed to waive a portion
of its advisory fees to the extent necessary so that the advisory fees
payable by the fund does not exceed a specified maximum annual advisory fee
rate, wherein the fee rate includes breakpoints and is based upon net asset
levels. The fund's maximum annual advisory fee rate ranges from 0.75% (for
average net assets up to $250 million) to 0.68% (for average net assets over
$10 billion).
(3) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but by the expenses of the investment companies in which the
fund invests. You incur these fees and expenses indirectly through the
valuation of the fund's investment in those investment companies. As a
result, the Net Annual Fund Operating Expenses listed above may exceed the
limit on Total Annual Fund Operating Expenses, if any. The impact of the
acquired fund fees and expenses are included in the total returns of the
fund.
(4) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.45% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each
year; and
(iii) incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Global Health Care Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
--------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
--------------------------------------------------------------------------------------------
SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
--------------------------------------------------------------------------------------------
|
(1) Your annual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGER
Derek M. Taner, Portfolio Manager, is primarily responsible for the day-to-day management of the fund's portfolio. He has been responsible for the fund since 2005 and has been associated with Invesco Aim and/or its affiliates since 2005. From 2000 to 2005, he was a portfolio manager and analyst for Franklin Advisers, Inc.
More information on the portfolio manager may be found on the advisor's website http://www.invescoaim.com. The website is not a part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio manager's investments in the fund, a description of his compensation structure, and information regarding other accounts he manages.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the funds will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or
all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II shares. The plan allows the fund 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 fund). Because the fund pays these fees out of its 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 charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not
exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during the fiscal years (or period) indicated.
This information has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
SERIES II
----------------------------------------
APRIL 30, 2004,
YEAR ENDED (DATE SALES
DECEMBER 31, COMMENCED) TO
--------------------- DECEMBER 31,
2006 2005 2004
------- ------- ---------------
Net asset value, beginning of period $ $ $
------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized)
======================================================================================================
Total from investment operations
======================================================================================================
Net asset value, end of period $ $ $
______________________________________________________________________________________________________
======================================================================================================
Total return % % %
______________________________________________________________________________________________________
======================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $
______________________________________________________________________________________________________
======================================================================================================
Ratio of expenses to average net assets % % %
======================================================================================================
Ratio of net investment income (loss) to average net assets % % %
______________________________________________________________________________________________________
======================================================================================================
Portfolio turnover rate % % %
______________________________________________________________________________________________________
======================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: INVESCO AIM DISTRIBUTORS, INC.
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
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You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com I-VIGHC-PRO-2
AIM V.I. GLOBAL REAL ESTATE FUND
PROSPECTUS
MAY 1, 2008
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Series I shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Global Real Estate Fund's investment objective is high total return through growth of capital and current income.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
--Registered Trademark--
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 2 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 6 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 7 Portfolio Managers 7 OTHER INFORMATION 8 ------------------------------------------------------ Purchase and Redemption of Shares 8 Excessive Short-Term Trading Activity Disclosures 8 Trade Activity Monitoring 8 Fair Value Pricing 9 Risks 9 Pricing of Shares 9 Taxes 10 Dividends and Distributions 10 Share Classes 10 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 12 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund will invest, normally, at least 80% of its assets in securities of real estate and real estate-related companies, including real estate investment trusts (REITs). A REIT is a real estate company that pools funds for investment primarily in income-producing real estate or in real estate related loans (such as mortgages) or other interests.
The principal type of securities purchased by the fund is common stock which is a type of equity security. The fund may purchase debt securities including U.S. Treasury and agency bonds and notes.
The fund considers a company to be a real estate or real estate-related company if at least 50% of its assets, gross income or net profits are attributable to ownership, construction, management or sale of residential, commercial or industrial real estate. These companies include (i) REITs or other real estate operating companies that (a) own property, (b) make or invest in short term construction and development mortgage loans, or (c) invest in long-term mortgages or mortgage pools, and (ii) companies whose products and services are related to the real estate industry, such as manufacturers and distributors of building supplies and financial institutions that issue or service mortgages.
The fund will normally invest in securities of companies located in at least three different countries, including the United States.
The fund may invest in non-investment grade debt securities (commonly known as "junk bonds").
The fund may engage in short sales of securities. A short sale occurs when the fund sells a security, but does not deliver a security it owns when the sale settles. Instead, it borrows that security for delivery when the sale settles. The fund may engage in short sales with respect to securities it owns (short sales against the box) or securities it does not own. Generally, the fund may sell a security short to (1) take advantage of an expected decline in the security price in anticipation of purchasing the same security at a later date at a lower price, or (2) to protect a profit in a security that it owns (short sale against the box). The fund will not sell a security short, if as a result of such short sale, the aggregate market value of all securities sold short exceeds 10% of the fund's total assets.
The fund may invest in equity and debt securities of companies unrelated to the real estate industry that the portfolio managers believe are undervalued and have potential for growth of capital. The fund limits its investments in debt securities unrelated to the real estate industry to those that are investment-grade or deemed by the fund's portfolio managers to be of comparable quality.
The fund's investments in the types of securities described in this prospectus varies from time to time, and at any time, the fund may not be invested in all types of securities described in this prospectus. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
When constructing the portfolio, the portfolio managers use a fundamentals-driven investment process, including an evaluation of factors such as real property market cycle analysis, real property evaluation and management and structure review to identify securities with characteristics including (i) quality underlying properties, (ii) solid management teams with the ability to effectively manage capital structure decisions, and (iii) attractive valuations relative to peer investment alternatives.
The portfolio managers and investment team focus on equity REITs and real estate operating companies. Equity REITs generally invest a majority of their assets in income-producing real estate properties in order to generate cash flow from rental income and a gradual asset appreciation. Each potential investment is analyzed using fundamental research and pricing components to identify attractively priced securities that appear to have relatively favorable long-term prospects. Some of the fundamental factors that are evaluated in screening potential investments for the fund include: forecasted occupancy and rental rates of the various property markets in which a firm may operate, property locations, physical attributes and cash flow generating capacity of a company's properties and calculating relative return potential, asset quality, management depth and skill, insider ownership, overall debt levels, percentage of variable rate financing and fixed charge coverage ratios.
The market and company research available to the investment team helps the portfolio managers in their efforts to identify REITs and real estate companies operating in the most attractive markets that represent quality properties, solid management teams with the ability to effectively manage capital structure decisions. The companies that are believed to have the most attractive fundamental attributes are then screened according to pricing factors that allow the management team to assess stock valuations relative to one another and relative to the investment teams' assessment of underlying asset value.
The fundamental research and pricing factors are combined to identify attractively priced securities of companies that appear to have relatively favorable long-term prospects. The portfolio managers also consider the relative liquidity of each security in the construction of the fund.
The portfolio managers seek to construct a portfolio with risk characteristics similar to the FTSE EPRA/NAREIT Global Real Estate Index (the benchmark index). The fund seeks to limit risk through various controls, such as diversifying the portfolio property types and geographic areas as well as by limiting the size of any one holding. Various factors may lead to overweighting or underweighting of particular property types and/or geographic areas from time to time. The fund uses the benchmark index as a guide in structuring the portfolio, but the fund is not an index fund.
The portfolio managers will consider selling a security if they conclude (1) its relative valuation falls below desired levels, (2) its risk/return profile change significantly, (3) its fundamentals change, or (4) a more attractive investment opportunity is identified.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it
could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
RISKS
The principal risks of investing in the fund are:
Market Risk--The prices of and the income generated by securities held by the fund may decline in response to certain events, including those directly involving the companies whose securities are owned by the fund; general economic and market conditions; regional or global economic instability; and currency and interest rate fluctuations. Certain securities selected for the fund's portfolio may decline in value more than the overall stock market. In general, the securities of small companies are more volatile than those of mid-size companies or large companies.
Equity Securities Risk--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.
Real Estate Risk--Because the fund concentrates its assets in the real estate industry, an investment in the fund will be closely linked to the performance of the real estate markets. Property values may fall due to increasing vacancies or declining rents resulting from economic, legal, cultural or technological developments.
Real estate company share prices may drop because of the failure of borrowers to pay their loans and poor management. Many real estate companies, including REITs, utilize leverage (and some may be highly leveraged), which increases investment risk and could adversely affect a real estate company's operations and market value in periods of rising interest rates. Financial covenants related to real estate company leveraging may affect the company's ability to operate effectively. Real estate risks may also arise where real estate companies fail to carry adequate insurance, or where a real estate company may become liable for removal or other costs related to environmental contamination.
Real estate companies tend to be small to medium-sized companies. Real estate company shares, like other smaller company shares, can be more volatile than, and perform differently from, larger company shares. There may be less trading in a smaller company's shares, which means that buy and sell transactions in those shares could have a larger impact on the share's price than is the case with larger company shares.
The fund could conceivably hold real estate directly if a company defaults on debt securities the fund owns. In that event, an investment in the fund may have additional risks relating to direct ownership in real estate, including environmental liabilities, difficulties in valuing and selling real estate, declines in the value of the properties, risks relating to general and local economic conditions, changes in the climate for real estate, increases in taxes, expenses and costs, changes in laws, casualty and condemnation losses, rent control limitations and increases in interest rates.
The value of a fund's investment in REITs is affected by the factors listed above, as well as the management skill of the persons managing the REIT. Because REITs have expenses of their own, the fund will bear a proportionate share of those expenses.
Foreign Securities Risk--Foreign securities have additional risks, including fluctuations in the value of the U.S. dollar relative to the values of other currencies, relatively low market liquidity, decreased publicly available information about issuers, inconsistent and potentially less stringent accounting, auditing and financial reporting requirements and standards of practice comparable to those applicable to domestic issuers, expropriation, nationalization or other adverse political or economic developments and the difficulty of enforcing obligations in other countries. Investments in foreign securities may also be subject to dividend withholding or confiscatory taxes, currency blockage and/or transfer restrictions.
Interest Rate Risk--Interest rate risk is the risk that fixed-income investments such as preferred stocks and debt securities, and to a lesser extent dividend-paying common stocks such as REIT common shares, will decline in value because of changes in interest rates. When market interest rates rise, the market value of such securities generally will fall. The fund's investment in such securities means that the net asset value its shares will tend to decline if market interest rates rise.
U.S. Government Obligations Risk--The fund invests in obligations issued by agencies and instrumentalities of the U.S. Government. These obligations vary in the level of support they receive from the U.S. Government. They may be: (i) supported by the full faith and credit of the U.S. Treasury, such as those of the Government National Mortgage Association; (ii) supported by the right of the issuer to borrow from the U.S. Treasury, such as those of the Federal National Mortgage Association; (iii) supported by the discretionary authority of the U.S. Government to purchase the issuer's obligation, such as those of the former Student Loan Marketing Association; or (iv) supported only by the credit of the issuer, such as those of the Federal Farm Credit Bureau. The U.S. Government may choose not to provide financial support to the U.S. Government sponsored agencies or instrumentalities if it is not legally obligated to do so, in which case, if the issuer defaulted, the fund holding securities of such issuer might not be able to recover its investment from the U.S. Government.
Short Sales Risk--If the fund sells a security short that it does not own, and the security increases in value, the fund will have to pay the higher price to purchase the security. Since there is no limit on how much the price of the security can increase, the fund's exposure is unlimited. The more the fund pays to purchase the security, the more it will lose on the transaction and the more the price of your shares will be affected. If the fund sells a security short that it owns (short sale against the box), any future losses in the 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 fund will also incur transaction costs to engage short sales.
Credit Risk--Credit risk is the risk of loss on an investment due to the deterioration of an issuer's financial health. Such a deterioration of financial health may result in a reduction of the credit rating of the issuer's securities and may lead to the issuer's inability to honor its contractual obligations including making timely payment of interest and principal. Credit ratings are a measure of credit quality. Although a downgrade or upgrade of a bond's credit ratings may or may not affect its price, a decline in credit quality may make bonds less attractive, thereby driving up the yield on the bond and driving down the price. Declines in credit quality may result in bankruptcy for the issuer and permanent loss of investment.
High Yield Risk--High yield risk is a form of credit risk. High yield bonds or "junk bonds" are bonds rated below investment grade or deemed to be of comparable quality. They are considered to be speculative investments with greater risk of failure to make timely payment of interest and principal (to default on their contractual obligations) than their investment grade counterparts. High yield bonds may exhibit increased price sensitivity and reduced liquidity generally and particularly during times of economic downturn or volatility in the capital markets.
Concentration Risk--Because the fund concentrates its investments in REITs and other companies related to the real estate industry, the value of your shares may rise and fall more than the value of shares of a fund that invests in a broader range of companies.
Management Risk--There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio managers will produce the desired results.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999................................................................... 0.35%
2000................................................................... 28.63%
2001................................................................... -0.76%
2002................................................................... 6.37%
2003................................................................... 38.82%
2004................................................................... 36.58%
2005................................................................... 14.24%
2006................................................................... 42.60%
2007...................................................................
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During the periods shown in the bar chart, the highest quarterly return was
[17.14% (quarter ended December 31, 2004)] and the lowest quarterly return was
[-8.32% (quarter ended September 30, 1999)]. For period prior to April 30, 2004,
performance shown relates to a predecessor fund advised by INVESCO Funds Group,
Inc. (IFG), an affiliate of Invesco Aim Advisors, Inc. Additionally, effective
April 30, 2004 and, again on July 3, 2006, the fund changed its investment
objective. Performance shown for the fund reflects the investment objective of
the fund in effect during the periods shown.
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2007) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------ AIM V.I. Global Real Estate Fund(1) % % % 03/31/98 MSCI World Index(SM)(2,3) 03/31/98(4) FTSE EPRA/NAREIT Global Real Estate Index(2,3,6) 12/31/99(5) Lipper VUF Real Estate Funds Category Average(2,3,7) 03/31/98(4) ------------------------------------------------------------------------------------------ |
(1) For periods prior to April 30, 2004, performance shown relates to a predecessor fund advised by IFG. Additionally, on April 30, 2004, and, again on July 3, 2006, the fund changed its investment objective. As a result, performance shown for the fund reflects the investment objective of the fund in effect during the periods shown. Total return figures include reinvested dividends and capital gain distributions and the effect of the fund's expenses.
(2) The Morgan Stanley Capital Investment World Index is a free float-adjusted market capitalization index that is designed to measure global developed market equity performance. The fund has also included the FTSE European Public Real Estate Association/National Association of Real Estate Investment Trusts Global Real Estate Index, which the fund believes more closely reflects the performance of the types of securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) Real Estate Funds Category Average (which may or may not include the fund) is included for comparison to a peer group.
(3) The indices may not reflect payment of fees, expenses or taxes.
(4) The average annual total return given is since the month-end closest to the inception date of the fund's Series I shares.
(5) The average annual total return given is since the inception date of the FTSE EPRA/NAREIT Global Real Estate Index.
(6) The FTSE EPRA/NAREIT Global Real Estate Index is designed to track the performance of listed real estate companies and REITs worldwide. It is compiled by FTSE Group, National Association of Real Estate Trusts and European Public Real Estate Association.
(7) The Lipper VUF Real Estate Funds Category Average represents an average of all the variable insurance underlying funds in the Lipper Real Estate Funds category. These funds invest at least 65% of their portfolio in equity securities of domestic and foreign companies engaged in the real estate industry.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly
or indirectly, when a variable product owner buys, holds, or redeems interest in
an insurance company separate account that invests in the Series I shares of the
fund but does not represent the effect of any fees or other expenses assessed in
connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) ------------------------------------------------------------ (expenses that are deducted from Series I share assets) SERIES I SHARES ------------------------------------------------------------ Management Fees(2) % Other Expenses Acquired Fund Fees and Expenses(3) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(2,4) Net Annual Fund Operating Expenses ------------------------------------------------------------ |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Through April 30, 2008, the advisor has contractually agreed to waive a
portion of its advisory fees to the extent necessary so that the advisory
fees payable by the fund does not exceed a specified maximum annual advisory
fee rate, wherein the fee rate includes breakpoints and is based upon net
asset levels. The fund's maximum annual advisory fee rate ranges from 0.75%
(for average net assets up to $250 million) to 0.68% (for average net assets
over $10 billion).
(3) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but by the expenses of the investment companies in which the
fund invests. You incur these fees and expenses indirectly through the
valuation of the fund's investment in those investment companies. As a
result, the Net Annual Fund Operating Expenses listed above may exceed the
limit on Total Annual Fund Operating Expenses, if any. The impact of the
acquired fund fees and expenses are included in the total returns of the
fund.
(4) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 1.30% of average daily nets assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form or credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series I shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Global Real Estate Fund $ $ $ $ ---------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
|
(1) Your annual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory agreements and the sub-advisory agreement of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Joe V. Rodriguez, Jr. (lead manager), Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Institutional and/or its affiliates since 1990. As the lead manager, Mr. Rodriguez generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Rodriguez may perform these functions, and the nature of these functions, may change from time to time.
- Mark Blackburn, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Institutional and/or its affiliates since 1998.
- James Cowen, Portfolio Manager, who has been responsible for the fund since 2008. Mr. Cowen previously managed the fund from January, 2006 to January, 2007, and has been a member of Invesco Institutional's Real Estate Team since 2001. Mr. Cowen has been associated with Invesco Asset Management and/or its affiliates since 2001.
- Paul S. Curbo, Portfolio Manager, who has been responsible for the fund since 2007 and has been associated with Invesco Institutional and/or its affiliates since 1998.
- James W. Trowbridge, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Institutional and/or its affiliates since 1989.
- Ping-Ying Wang, Portfolio Manager, who has been responsible for the fund since 2006 and has been associated with Invesco Institutional and/or its affiliates since 1998.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board. Each of these tools is described in more detail below. In addition, restrictions designed to discourage or curtail excessive short-term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the fund through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance
company to take action to stop such activities, or (ii) refusing to process future purchases in the insurance company's account with the fund related to such activities. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by the fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of the fund
for which market quotations are not readily available are to be valued at fair
value determined in good faith using procedures approved by the Board of the
fund. Fair value pricing may reduce the ability of frequent traders to take
advantage of arbitrage opportunities resulting from potentially "stale" prices
of portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the fund may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the
principal market where a foreign security trades is not the current market value
as of the close of the NYSE. For foreign securities where the advisor believes,
at the approved degree of certainty, that the price is not reflective of current
market value, the advisor will use the indication of fair value from the pricing
service to determine the fair value of the security. The pricing vendor, pricing
methodology or degree of certainty may change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times and with different
lag times to insurance companies issuing variable products that invest in the
fund, and in annual and semi-annual shareholder reports. Refer to such reports
to determine the types of securities in which a fund has invested. You may also
refer to the Statement of Additional Information to determine what types of
securities in which the fund may invest. You may obtain copies of these reports
or of the Statement of Additional Information from the insurance company that
issued your variable product, or from the advisor as described on the back cover
of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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
fund. Variable product owners should refer to the prospectus for their variable
products for information regarding the tax consequences of owning such variable
products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the
fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
This information has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
SERIES I
-------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
2007 2006 2005 2004 2003
-------- ------- ------- ------- -------
Net asset value, beginning of period $ $ $ $ $
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
---------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized)
=====================================================================================================================
Total from investment operations
=====================================================================================================================
Less distributions:
Dividends from net investment income
---------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
=====================================================================================================================
Total distributions
=====================================================================================================================
Net asset value, end of period $ $ $ $ $
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return % % % % %
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % % %
---------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % % % %
=====================================================================================================================
Ratio of net investment income to average net assets % % % % %
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate % % % % %
_____________________________________________________________________________________________________________________
=====================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VIGRE-PRO-1
AIM V.I. GLOBAL REAL ESTATE FUND
PROSPECTUS
May 1, 2008
|
Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Global Real Estate Fund's investment objective is high total return through growth of capital and current income.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 2 ------------------------------------------------------ PERFORMANCE INFORMATION 4 ------------------------------------------------------ Annual Total Returns 4 Performance Table 5 FEE TABLE AND EXPENSE EXAMPLE 6 ------------------------------------------------------ Fees and Expenses of the Fund 6 Expense Example 6 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 7 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 7 ------------------------------------------------------ FUND MANAGEMENT 7 ------------------------------------------------------ The Advisors 7 Advisor Compensation 8 Portfolio Managers 8 OTHER INFORMATION 9 ------------------------------------------------------ Purchase and Redemption of Shares 9 Excessive Short-Term Trading Activity Disclosures 9 Trade Activity Monitoring 9 Fair Value Pricing 10 Risks 10 Pricing of Shares 10 Taxes 11 Dividends and Distributions 11 Share Classes 11 Distribution Plan 11 Payments to Insurance Companies 12 FINANCIAL HIGHLIGHTS 13 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is high total return through growth of capital and current income. The investment objective of the fund may be changed by the Board of Trustees (the Board) without shareholder approval.
The fund will invest, normally, at least 80% of its assets in securities of real estate and real estate-related companies, including real estate investment trusts (REITs). A REIT is a real estate company that pools funds for investment primarily in income-producing real estate or in real estate related loans (such as mortgages) or other interests.
The principal type of securities purchased by the fund is common stock which is a type of equity security. The fund may purchase debt securities including U.S. Treasury and agency bonds and notes.
The fund considers a company to be a real estate or real estate-related company if at least 50% of its assets, gross income or net profits are attributable to ownership, construction, management or sale of residential, commercial or industrial real estate. These companies include (i) REITs or other real estate operating companies that (a) own property, (b) make or invest in short term construction and development mortgage loans, or (c) invest in long-term mortgages or mortgage pools, and (ii) companies whose products and services are related to the real estate industry, such as manufacturers and distributors of building supplies and financial institutions that issue or service mortgages.
The fund will normally invest in securities of companies located in at least three different countries, including the United States.
The fund may invest in non-investment grade debt securities (commonly known as "junk bonds").
The fund may engage in short sales of securities. A short sale occurs when the fund sells a security, but does not deliver a security it owns when the sale settles. Instead, it borrows that security for delivery when the sale settles. The fund may engage in short sales with respect to securities it owns (short sales against the box) or securities it does not own. Generally, the fund may sell a security short to (1) take advantage of an expected decline in the security price in anticipation of purchasing the same security at a later date at a lower price, or (2) to protect a profit in a security that it owns (short sale against the box). The fund will not sell a security short, if as a result of such short sale, the aggregate market value of all securities sold short exceeds 10% of the fund's total assets.
The fund may invest in equity and debt securities of companies unrelated to the real estate industry that the portfolio managers believe are undervalued and have potential for growth of capital. The fund limits its investments in debt securities unrelated to the real estate industry to those that are investment-grade or deemed by the fund's portfolio managers to be of comparable quality.
The fund's investments in the types of securities described in this prospectus varies from time to time, and at any time, the fund may not be invested in all types of securities described in this prospectus. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
When constructing the portfolio, the portfolio managers use a fundamentals-driven investment process, including an evaluation of factors such as real property market cycle analysis, real property evaluation and management and structure review to identify securities with characteristics including (i) quality underlying properties, (ii) solid management teams with the ability to effectively manage capital structure decisions, and (iii) attractive valuations relative to peer investment alternatives.
The portfolio managers and investment team focus on equity REITs and real estate operating companies. Equity REITs generally invest a majority of their assets in income-producing real estate properties in order to generate cash flow from rental income and a gradual asset appreciation. Each potential investment is analyzed using fundamental research and pricing components to identify attractively priced securities that appear to have relatively favorable long-term prospects. Some of the fundamental factors that are evaluated in screening potential investments for the fund include: forecasted occupancy and rental rates of the various property markets in which a firm may operate, property locations, physical attributes and cash flow generating capacity of a company's properties and calculating relative return potential, asset quality, management depth and skill, insider ownership, overall debt levels, percentage of variable rate financing and fixed charge coverage ratios.
The market and company research available to the investment team helps the portfolio managers in their efforts to identify REITs and real estate companies operating in the most attractive markets that represent quality properties, solid management teams with the ability to effectively manage capital structure decisions. The companies that are believed to have the most attractive fundamental attributes are then screened according to pricing factors that allow the management team to assess stock valuations relative to one another and relative to the investment teams' assessment of underlying asset value.
The fundamental research and pricing factors are combined to identify attractively priced securities of companies that appear to have relatively favorable long-term prospects. The portfolio managers also consider the relative liquidity of each security in the construction of the fund.
The portfolio managers seek to construct a portfolio with risk characteristics similar to the FTSE EPRA/NAREIT Global Real Estate Index (the benchmark index). The fund seeks to limit risk through various controls, such as diversifying the portfolio property types and geographic areas as well as by limiting the size of any one holding. Various factors may lead to overweighting or underweighting of particular property types and/or geographic areas from time to time. The fund uses the benchmark index as a guide in structuring the portfolio, but the fund is not an index fund.
The portfolio managers will consider selling a security if they conclude (1) its relative valuation falls below desired levels, (2) its risk/return profile change significantly, (3) its fundamentals change, or (4) a more attractive investment opportunity is identified.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it
could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
RISKS
The principal risks of investing in the fund are:
Market Risk--The prices of and the income generated by securities held by the fund may decline in response to certain events, including those directly involving the companies whose securities are owned by the fund; general economic and market conditions; regional or global economic instability; and currency and interest rate fluctuations. Certain securities selected for the fund's portfolio may decline in value more than the overall stock market. In general, the securities of small companies are more volatile than those of mid-size companies or large companies.
Equity Securities Risk--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.
Real Estate Risk--Because the fund concentrates its assets in the real estate industry, an investment in the fund will be closely linked to the performance of the real estate markets. Property values may fall due to increasing vacancies or declining rents resulting from economic, legal, cultural or technological developments.
Real estate company share prices may drop because of the failure of borrowers to pay their loans and poor management. Many real estate companies, including REITs, utilize leverage (and some may be highly leveraged), which increases investment risk and could adversely affect a real estate company's operations and market value in periods of rising interest rates. Financial covenants related to real estate company leveraging may affect the company's ability to operate effectively. Real estate risks may also arise where real estate companies fail to carry adequate insurance, or where a real estate company may become liable for removal or other costs related to environmental contamination.
Real estate companies tend to be small to medium-sized companies. Real estate company shares, like other smaller company shares, can be more volatile than, and perform differently from, larger company shares. There may be less trading in a smaller company's shares, which means that buy and sell transactions in those shares could have a larger impact on the share's price than is the case with larger company shares.
The fund could conceivably hold real estate directly if a company defaults on debt securities the fund owns. In that event, an investment in the fund may have additional risks relating to direct ownership in real estate, including environmental liabilities, difficulties in valuing and selling real estate, declines in the value of the properties, risks relating to general and local economic conditions, changes in the climate for real estate, increases in taxes, expenses and costs, changes in laws, casualty and condemnation losses, rent control limitations and increases in interest rates.
The value of a fund's investment in REITs is affected by the factors listed above, as well as the management skill of the persons managing the REIT. Because REITs have expenses of their own, the fund will bear a proportionate share of those expenses.
Foreign Securities Risk--Foreign securities have additional risks, including fluctuations in the value of the U.S. dollar relative to the values of other currencies, relatively low market liquidity, decreased publicly available information about issuers, inconsistent and potentially less stringent accounting, auditing and financial reporting requirements and standards of practice comparable to those applicable to domestic issuers, expropriation, nationalization or other adverse political or economic developments and the difficulty of enforcing obligations in other countries. Investments in foreign securities may also be subject to dividend withholding or confiscatory taxes, currency blockage and/or transfer restrictions.
Interest Rate Risk--Interest rate risk is the risk that fixed-income investments such as preferred stocks and debt securities, and to a lesser extent dividend-paying common stocks such as REIT common shares, will decline in value because of changes in interest rates. When market interest rates rise, the market value of such securities generally will fall. The fund's investment in such securities means that the net asset value its shares will tend to decline if market interest rates rise.
U.S. Government Obligations Risk--The fund invests in obligations issued by agencies and instrumentalities of the U.S. Government. These obligations vary in the level of support they receive from the U.S. Government. They may be: (i) supported by the full faith and credit of the U.S. Treasury, such as those of the Government National Mortgage Association; (ii) supported by the right of the issuer to borrow from the U.S. Treasury, such as those of the Federal National Mortgage Association; (iii) supported by the discretionary authority of the U.S. Government to purchase the issuer's obligation, such as those of the former Student Loan Marketing Association; or (iv) supported only by the credit of the issuer, such as those of the Federal Farm Credit Bureau. The U.S. Government may choose not to provide financial support to the U.S. Government sponsored agencies or instrumentalities if it is not legally obligated to do so, in which case, if the issuer defaulted, the fund holding securities of such issuer might not be able to recover its investment from the U.S. Government.
Short Sales Risk--If the fund sells a security short that it does not own, and the security increases in value, the fund will have to pay the higher price to purchase the security. Since there is no limit on how much the price of the security can increase, the fund's exposure is unlimited. The more the fund pays to purchase the security, the more it will lose on the transaction and the more the price of your shares will be affected. If the fund sells a security short that it owns (short sale against the box), any future losses in the 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 fund will also incur transaction costs to engage short sales.
Credit Risk--Credit risk is the risk of loss on an investment due to the deterioration of an issuer's financial health. Such a deterioration of financial health may result in a reduction of the credit rating of the issuer's securities and may lead to the issuer's inability to honor its contractual obligations including making timely payment of interest and principal. Credit ratings are a measure of credit quality. Although a downgrade or upgrade of a bond's credit ratings may or may not affect its price, a decline in credit quality may make bonds less attractive, thereby driving up the yield on the bond and driving down the price. Declines in credit quality may result in bankruptcy for the issuer and permanent loss of investment.
High Yield Risk--High yield risk is a form of credit risk. High yield bonds or "junk bonds" are bonds rated below investment grade or deemed to be of comparable quality. They are considered to be speculative investments with greater risk of failure to make timely payment of interest and principal (to default on their contractual obligations) than their investment grade counterparts. High yield bonds may exhibit increased price sensitivity and reduced liquidity generally and particularly during times of economic downturn or volatility in the capital markets.
Concentration Risk--Because the fund concentrates its investments in REITs and other companies related to the real estate industry, the value of your shares may rise and fall more than the value of shares of a fund that invests in a broader range of companies.
Management Risk--There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio managers will produce the desired results.
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The 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 chart and performance table
shown do not reflect charges assessed in connection with your variable product;
if they did, the performance shown would be lower.
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 the fund).
The following bar chart shows changes in the performance of the fund's shares from year to year.
(PERFORMANCE CHART)
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999*.................................................................. 0.10%
2000*.................................................................. 28.31%
2001*.................................................................. -1.01%
2002*.................................................................. 6.11%
2003*.................................................................. 38.48%
2004**................................................................. 36.40%
2005................................................................... 13.90%
2006................................................................... 42.24%
2007...................................................................
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* The returns shown for these periods are the restated historical performance of the predecessor 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 return shown for this period is the blended return 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 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 30, 2004.
During the periods shown in the bar chart, the highest quarterly return was
[17.08% (quarter ended December 31, 2004)] and the lowest quarterly return was
[-8.38% (quarter ended September 30, 1999)]. For periods prior to April 30,
2004, performance shown relates to a predecessor fund advised by INVESCO Funds
Group, Inc., (IFG), an affiliate of Invesco Aim Advisors, Inc. Additionally,
effective April 30, 2004 and, again on July 3, 2006, the fund changed its
investment objective. Performance shown for the fund reflects the investment
objective of the fund in effect during the periods shown.
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS
------------------------------------------------------------------------------------------
SERIES I
(for the periods ended SINCE INCEPTION
December 31, 2007) 1 YEAR 5 YEARS INCEPTION DATE
------------------------------------------------------------------------------------------
AIM V.I. Global Real Estate Fund(1) % % % 03/31/98
MSCI World Index(SM )(2,3) (4) 03/31/98(4)
FTSE EPRA/NAREIT Global Real Estate
Index(2,3,6) (5) 12/31/99(5)
Lipper VUF Real Estate Funds Category
Average(2,3,7) (4) 03/31/98(4)
------------------------------------------------------------------------------------------
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(1) For periods prior to April 30, 2004, performance shown relates to a predecessor fund advised by IFG. Additionally, (i) on April 30, 2004 and, again on July 3, 2006, the fund changed its investment objective (performance shown for the fund reflects the investment objective of the fund in effect during the periods shown), and (ii) the return shown for the one year period is the historical performance of the fund's Series II shares. The returns shown for other 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 Predecessor 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 30, 2004. Total return figures include reinvested dividends and capital gain distributions and the effect of the fund's expenses.
(2) The Morgan Stanley Capital Investment World Index is a free float-adjusted market capitalization index that is designed to measure global developed market equity performance. The fund has also included the FTSE European Public Real Estate Association/National Association of Real Estate Investment Trusts Global Real Estate Index, which the fund believes more closely reflects the performance of the types of securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) Real Estate Funds Category Average (which may or may not include the fund) is included for comparison to a peer group.
(3) The indices may not reflect payment of fees, expenses or taxes.
(4) The average annual total return given is since the month-end closest to the
inception date of the fund's Series I shares.
(5) The average annual total return given is since the inception date of the FTSE EPRA/NAREIT Global Real Estate Index.
(6) The FTSE EPRA/NAREIT Global Real Estate Index is designed to track the performance of listed real estate companies and REITs worldwide. It is compiled by FTSE Group, National Association of Real Estate Trusts and European Public Real Estate Association.
(7) The Lipper VUF Real Estate Funds Category Average represents an average of all the variable insurance underlying funds in the Lipper Real Estate Funds category. These funds invest at least 65% of their portfolio in equity securities of domestic and foreign companies engaged in the real estate industry.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES ------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES ------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A ------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) ------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES ------------------------------------------------------------------------------- Management Fees(2) % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(3) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(2,4) Net Annual Fund Operating Expenses ------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Through April 30, 2008, the advisor has contractually agreed to waive a
portion of its advisory fees to the extent necessary so that the advisory
fees payable by the fund does not exceed a specific maximum annual advisory
fee rate, wherein the fee rate includes breakpoints and is based upon net
asset levels. The fund's maximum annual advisory fee rate ranges from 0.75%
(for average net assets up to $250 million) to 0.68% (for average net assets
over $10 billion).
(3) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but by the expenses of the investment companies in which the
fund invests. You incur these fees and expenses indirectly through the
valuation of the fund's investment in those investment companies. As a
result, the Net Annual Fund Operating Expenses listed above may exceed the
limit on Total Annual Fund Operating Expenses, if any. The impact of the
acquired fund fees and expenses are included in the total returns of the
fund.
(4) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.45% of average daily nets assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Global Real Estate Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product, if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 -------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ -------------------------------------------------------------------------------------------- SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 -------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ -------------------------------------------------------------------------------------------- |
(1) Your annual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory agreement and the sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Joe V. Rodriguez, Jr. (lead manager), Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Institutional and/or its affiliates since 1990. As the lead manager, Mr. Rodriguez generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Rodriguez may perform these functions, and the nature of these functions, may change from time to time.
- Mark Blackburn, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Institutional and/or its affiliates since 1998.
- James Cowen, Portfolio Manager, who has been responsible for the fund since 2008. Mr. Cowen previously managed the fund from January, 2006 to January, 2007, and has been a member of Invesco Institutional's Real Estate Team since 2001. Mr. Cowen has been associated with Invesco Asset Management and/or its affiliates since 2001.
- Paul S. Curbo, Portfolio Manager, who has been responsible for the fund since 2007 and has been associated with Invesco Institutional and/or its affiliates since 1998.
- James W. Trowbridge, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Institutional and/or its affiliates since 1989.
- Ping-Ying Wang, Portfolio Manager, who has been responsible for the fund since 2006 and has been associated with Invesco Institutional and/or its affiliates since 1998.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the fund through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance
company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the fund. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by the fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of the fund
for which market quotations are not readily available are to be valued at fair
value determined in good faith using procedures approved by the Board of the
fund. Fair value pricing may reduce the ability of frequent traders to take
advantage of arbitrage opportunities resulting from potentially "stale" prices
of portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the fund may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the
principal market where a foreign security trades is not the current market value
as of the close of the NYSE. For foreign securities where the advisor believes,
at the approved degree of certainty, that the price is not reflective of current
market value, the advisor will use the indication of fair value from the pricing
service to determine the fair value of the security. The pricing vendor, pricing
methodology or degree of certainty may change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times and with different
lag times to insurance companies issuing variable products that invest in the
fund, and in annual and semi-annual shareholder reports. Refer to such reports
to determine the types of securities in which a fund has invested. You may also
refer to the Statement of Additional Information to determine what types of
securities in which the fund may invest. You may obtain copies of these reports
or of the Statement of Additional Information from the insurance company that
issued your variable product, or from the advisor as described on the back cover
of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II shares. The plan allows the fund 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 fund). Because the fund pays these fees out of its 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 charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors makes these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during the fiscal years (or period) indicated.
This information has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
SERIES II
-----------------------------------------------
APRIL 30, 2004
YEAR ENDED (DATE SALES
DECEMBER 31, COMMENCED) TO
----------------------------- DECEMBER 31,
2007 2006 2005 2004
------ ------ ------ --------------
Net asset value, beginning of period $ $ $ $
-------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
-------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized)
=============================================================================================================
Total from investment operations
=============================================================================================================
Less distributions:
Dividends from net investment income
-------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
=============================================================================================================
Total distributions
=============================================================================================================
Net asset value, end of period $ $ $ $
_____________________________________________________________________________________________________________
=============================================================================================================
Total return % % % %
_____________________________________________________________________________________________________________
=============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $
_____________________________________________________________________________________________________________
=============================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % %
-------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % % %
=============================================================================================================
Ratio of net investment income to average net assets % % % %
_____________________________________________________________________________________________________________
=============================================================================================================
Portfolio turnover rate % % % %
_____________________________________________________________________________________________________________
=============================================================================================================
|
AIM V.I. GOVERNMENT SECURITIES FUND
PROSPECTUS
MAY 1, 2008
SERIES I SHARES
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Government Securities Fund's investment objective is a high level of current income consistent with reasonable concern for safety of principal.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund;
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 5 ------------------------------------------------------ Fees and Expenses of the Fund 5 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 6 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 7 Portfolio Managers 7 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 8 Trade Activity Monitoring 8 Fair Value Pricing 9 Risks 9 Pricing of Shares 9 Taxes 10 Dividends and Distributions 10 Share Classes 10 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 12 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is a high level of current income consistent
with reasonable concern for safety of principal.
The fund's investment objective may be changed by the Board of Trustees (the
Board) without shareholder approval.
The fund seeks to meet its objective by investing, normally, at least 80% of
its assets in debt securities issued, guaranteed or otherwise backed by the U.S.
Government or its agencies and instrumentalities. These securities include: (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 principal type of fixed income securities purchased by the fund are
callable bonds that can be redeemed by the issuer prior to their stated
maturity, bullet-maturity debt bonds with a stated maturity date,
mortgage-backed securities consisting of interests in underlying mortgages with
maturities of up to thirty years, and Treasury and agency holdings.
The fund invests in securities of all maturities, but will maintain a
weighted average effective maturity for the portfolio of between three and ten
years.
The fund enters into reverse repurchase agreements and engages in dollar
roll transactions to enhance the fund's return on cash. The fund may also invest
in derivative instruments such as treasury futures and options on treasury
futures. The fund's investments in the types of securities described in this
prospectus varies from time to time, and at any time, the fund may not be
invested in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
The portfolio managers use a top-down and bottom-up investment approach to
construct the fund's portfolio. The top-down investment approach involves an
evaluation by the portfolio managers of the overall economic environment and its
potential impact on the level and direction of interest rates, and the shape of
the yield curve. Based on this information, the portfolio managers develop a
strategic outlook for the upcoming six to twelve months and a shorter-term
tactical outlook when market opportunities arise.
The portfolio managers seek to construct a portfolio risk with risk characteristics similar to the benchmark index. The fund seeks to limit risk through various controls, such as sector and issuer weightings and duration relative to the benchmark index. The fund uses the benchmark index as a guide in structuring the portfolio, but the fund is not an index fund. The fund typically holds a higher percentage of assets in seasoned, high-coupon, mortgage-backed securities than the benchmark index.
After the top down analysis has been completed, the portfolio managers
select securities believed to be undervalued given the prevailing market
environment or future developments. The security selection process includes
decisions such as (1) whether to buy callable securities; (2) how many months or
years of call protection (a provision that prohibits the issuer from calling
back the security) the fund should have; and (3) identifying mortgage-backed
securities that might exhibit faster or slower refinancing activity than other
mortgage securities with the same coupon and maturity.
The portfolio managers seek to limit credit and interest rate risk by
maintaining a duration of the fund's portfolio within a range around the
duration of the benchmark index.
The portfolio managers will consider selling a security if they conclude (1)
a change in the economic or market outlook indicates assets should be
reallocated; (2) a mortgage security is prepaying faster or slower than
expected; (3) a security is likely to be called and it is determined that the
fund should own a security with a longer maturity date; or (4) a security has
become fully valued.
The fund typically maintains a portion of its assets in cash, cash equivalents, high quality debt instruments, and/or money market funds advised by the fund's advisor. Depending upon the then-current investment environment, holding a relatively larger percentage of portfolio assets in such instruments may either assist or hinder the fund's relative performance and its ability to achieve its investment objective. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. In order to respond to adverse market, economic or other conditions, the fund may assume a temporary defensive position and invest a relatively larger percentage of the fund's portfolio assets in cash, cash equivalents or high quality debt instruments.
PRINCIPAL RISKS OF INVESTING IN THE FUND
number of factors including coupon rate, whether the coupon is fixed or
floating, time to maturity, call or put features, and various repayment
features.
Reinvestment Risk--Reinvestment risk is the risk that a bond's cash flows
(coupon income and principal repayment) will be reinvested at an interest rate
below that on the original bond. If interest rates decline, the underlying bond
may rise in value, but the cash flows received from that bond may have to be
invested at a lower interest rate.
U.S. Government Obligations Risk--The fund invests in obligations issued by
agencies and instrumentalities of the U.S. Government. These obligations vary in
the level of support they receive from the U.S. Government. They may be: (i)
supported by the full faith and credit of the U.S. Treasury, such as those of
the Government National Mortgage Association; (ii) supported by the right of the
issuer to borrow from the U.S. Treasury, such as those of the Federal National
Mortgage Association; (iii) supported by the discretionary authority of the U.S.
Government to purchase the issuer's obligation, such as those of the former
Student Loan Marketing Association; or (iv) supported only by the credit of the
issuer, such as those of the Federal Farm Credit Bureau. The U.S. Government may
choose not to provide financial support to the U.S. Government sponsored
agencies or instrumentalities if it is not legally obligated to do so, in which
case, if the issuer defaulted, the fund holding securities of such issuer might
not be able to recover its investment from the U.S. Government.
High-Coupon U.S. Government Agency Mortgage-Backed Securities
Risk--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 these securities
experience a faster principal prepayment rate than expected, both the market
value of and income from such securities will decrease. The prices of
high-coupon U.S. Government agency mortgage-backed securities fall more slowly
when interest rates rise than do prices of traditional fixed-rate securities.
Some of the securities purchased by the fund are not guaranteed by the U.S.
Government. The issuer of a security may default or otherwise be unable to honor
a financial obligation.
Derivatives Risk--The value of "derivatives"--so-called because their value
"derives" from the value of an underlying asset (including an underlying
security), reference rate or index--may rise or fall more rapidly than other
investments. For some derivatives, it is possible to lose more than the amount
invested in the derivative. Derivatives may be used to create synthetic exposure
to an underlying asset or to hedge portfolio risk. If the fund uses derivatives
to "hedge" a portfolio risk, it is possible that the hedge may not succeed. This
may happen for various reasons, including unexpected changes in the value of the
rest of the fund's portfolio. Over the counter derivatives are also subject to
counterparty risk, which is the risk that the other party to the contract will
not fulfill its contractual obligation to complete the transaction with the
fund.
Leverage Risk--The use of derivatives may give rise to a form of leverage.
Leverage may cause the fund's portfolio to be more volatile than if the
portfolio had not been leveraged because leverage can exaggerate the effect of
any increase or decrease in the value of securities held by the fund.
Reverse Repurchase Agreement Risk--Reverse repurchase agreements are
agreements that involve the sale by the fund of securities 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. 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 the fund 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. In the event the buyer of securities under a reverse repurchase
agreement 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.
Dollar Roll Transaction Risk--In a dollar roll transaction, the fund sells a
mortgage-backed security held by the fund to a financial institution such as a
bank or broker-dealer, and simultaneously agrees to purchase a substantially
similar security (same type, coupon and maturity) from the institution at an
agreed upon price and future date. Dollar roll transactions involve the risk
that the market value of securities to be purchased by the fund may decline
below the price at which the fund 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. 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.
Active Trading Risk--The fund may engage in active and frequent trading of
portfolio securities to achieve its investment objectives. If a fund does trade
in this way, it may incur increased costs, which can lower the actual return of
the fund. Active trading may also increase short term gains and losses, which
may affect taxes that must be paid.
Management Risk--There is no guarantee that the investment techniques and
risk analyses used by the fund's portfolio managers will produce the desired
results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
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
----------- -------
1998.................................................................. 7.73%
1999.................................................................. -1.32%
2000.................................................................. 10.12%
2001.................................................................. 6.41%
2002.................................................................. 9.59%
2003.................................................................. 1.07%
2004.................................................................. 2.56%
2005.................................................................. 1.66%
2006.................................................................. 3.55%
2007..................................................................
|
During the periods shown in the bar chart, the highest quarterly return was
[5.11% (quarter ended September 30, 2002)] and the lowest quarterly return was
[-1.45% (quarter ended June 30, 2004)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended INCEPTION December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE ------------------------------------------------------------------------------- AIM V.I. Government Securities Fund % % % 05/05/93 Lehman Brothers U.S. Aggregate Bond Index(1,2) -- Lehman Brothers U.S. Government Index(1,2,3) -- Lipper VUF General U.S. Government Funds Index(1,2,4) -- ------------------------------------------------------------------------------- |
(1) The Lehman Brothers U.S. Aggregate Bond Index covers U.S. investment-grade fixed-rate bonds with components for government and corporate securities, mortgage pass-throughs and asset-backed securities. The fund also included the Lehman Brothers U.S. Government Index as its style specific index because the fund believes the Lehman Brothers U.S. Government Index is better aligned with the Government Fund's Morningstar category classification in terms of its duration profile. In addition, the Lipper Variable Underlying Funds (VUF) General U.S. Government Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(2) The indices may not reflect payment of fees, expenses or taxes.
(3) The Lehman Brothers U.S. Government Index consists of securities issued by the U.S. Government including public obligations of the U.S. Treasury with a remaining maturity of one year or more or publicly issued debt of U.S. Government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. Government.
(4) The Lipper VUF General U.S. Government Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper General U.S. Government Funds category. These funds invest at least 65% of their assets in U.S. government and agency issues.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees % Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(3,4) Net Annual Fund Operating Expenses -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but are expenses of the investment companies in which the fund
invests. You incur these fees and expenses indirectly through the valuation
of the fund's investment in those investment companies. As a result, the Net
Annual Fund Operating Expenses listed above may exceed the limit on Total
Annual Fund Operating Expenses, if any. The impact of the acquired fund fees
and expenses are included in the total returns of the fund.
(3) The fund's advisor has voluntarily agreed to waive a portion of the advisory
fees payable by the fund equal to 25% of the advisory fee the advisor
received from certain affiliated money markets as a result of the fund's
investment of its cash balances in such affiliated money market funds. This
voluntary waiver resulted in an aggregate reduction in advisory fees of
0.02% of the fund for the year ended December 31, 2006.
(4) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 0.73% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series I shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Government Securities Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 ------------------------------------------------------------------------------------------------------ Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ------------------------------------------------------------------------------------------------------ SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ------------------------------------------------------------------------------------------------------ |
(1) Your actual expenses may be higher or lower than those shown above.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG)(the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors)(the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's fiscal year ended December 31, 2007, the advisor received compensation of of the fund's average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Jan H. Friedli (lead manager), Portfolio Manager, who has been responsible for the fund since 2007 and has been associated with Invesco Aim and/or its affiliates since 1999. As the lead manager, Mr. Friedli generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Friedli may perform these functions, and the nature of these functions, may change from time to time.
- Brendan D. Gau, Portfolio Manager, who has been responsible for the fund since 2007 and has been associated with Invesco Aim and/or its affiliates since 1996.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board. Each of these tools is described in more detail below. In addition, restrictions designed to discourage or curtail excessive short-term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value
from the pricing service to determine the fair value of the security. The
pricing vendor, pricing methodology or degree of certainty may change from time
to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of ordinary income.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the
fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES I
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- -------- --------
Net asset value, beginning of period $ $ $ $ $
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
-------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
=========================================================================================================================
Total from investment operations
=========================================================================================================================
Less distributions:
Dividends from net investment income
-------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
=========================================================================================================================
Total distributions
=========================================================================================================================
Net asset value, end of period $ $ $ $ $
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return % % % % %
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % % %
-------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % % % %
=========================================================================================================================
Ratio of net investment income to average net assets % % % % %
=========================================================================================================================
Ratio of interest expense to average net assets % % % % %
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate % % % % %
_________________________________________________________________________________________________________________________
=========================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VIGOV-PRO-1
AIM V.I. GOVERNMENT SECURITIES FUND
PROSPECTUS
May 1, 2008
|
Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Government Securities Fund's investment objective is a high level of current income consistent with reasonable concern for safety of principal.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund;
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 6 Portfolio Managers 7 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 7 Trade Activity Monitoring 8 Fair Value Pricing 8 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 10 Share Classes 10 Distribution Plan 10 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 12 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investments Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is a high level of current income consistent
with reasonable concern for safety of principal.
The fund's investment objective may be changed by the Board of Trustees (the
Board) without shareholder approval.
The fund seeks to meet its objective by investing, normally, at least 80% of
its assets in debt securities issued, guaranteed or otherwise backed by the U.S.
Government or its agencies and instrumentalities. These securities include: (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 principal type of fixed income securities purchased by the fund are
callable bonds that can be redeemed by the issuer prior to their stated
maturity, bullet-maturity debt bonds with a stated maturity date,
mortgage-backed securities consisting of interests in underlying mortgages with
maturities of up to thirty years, and Treasury and agency holdings.
The fund invests in securities of all maturities, but will maintain a
weighted average effective maturity for the portfolio of between three and ten
years.
The fund enters into reverse repurchase agreements and engages in dollar
roll transactions to enhance the fund's return on cash. The fund may also invest
in derivative instruments such as treasury futures and options on treasury
futures. The fund's investments in the types of securities described in this
prospectus varies from time to time, and at any time, the fund may not be
invested in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
The portfolio managers use a top-down and bottom-up investment approach to
construct the fund's portfolio. The top-down investment approach involves an
evaluation by the portfolio managers of the overall economic environment and its
potential impact on the level and direction of interest rates, and the shape of
the yield curve. Based on this information, the portfolio managers develop a
strategic outlook for the upcoming six to twelve months and a shorter-term
tactical outlook when market opportunities arise.
The portfolio managers seek to construct a portfolio risk with risk characteristics similar to the benchmark index. The fund seeks to limit risk through various controls, such as sector and issuer weightings and duration relative to the benchmark index. The fund uses the benchmark index as a guide in structuring the portfolio, but the fund is not an index fund. The fund typically holds a higher percentage of assets in seasoned, high-coupon, mortgage-backed securities than the benchmark index.
After the top down analysis has been completed, the portfolio managers
select securities believed to be undervalued given the prevailing market
environment or future developments. The security selection process includes
decisions such as (1) whether to buy callable securities; (2) how many months or
years of call protection (a provision that prohibits the issuer from calling
back the security) the fund should have; and (3) identifying mortgage-backed
securities that might exhibit faster or slower refinancing activity than other
mortgage securities with the same coupon and maturity.
The portfolio managers seek to limit credit and interest rate risk by
maintaining a duration of the fund's portfolio within a range around the
duration of the benchmark index.
The portfolio managers will consider selling a security if they conclude (1)
a change in the economic or market outlook indicates assets should be
reallocated; (2) a mortgage security is prepaying faster or slower than
expected; (3) a security is likely to be called and it is determined that the
fund should own a security with a longer maturity date; or (4) a security has
become fully valued.
The fund typically maintains a portion of its assets in cash, cash equivalents, high quality debt instruments, and/or money market funds advised by the fund's advisor. Depending upon the then-current investment environment, holding a relatively larger percentage of portfolio assets in such instruments may either assist or hinder the fund's relative performance and its ability to achieve its investment objective. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. In order to respond to adverse market, economic or other conditions, the fund may assume a temporary defensive position and invest a relatively larger percentage of the fund's portfolio assets in cash, cash equivalents or high quality debt instruments.
number of factors including coupon rate, whether the coupon is fixed or
floating, time to maturity, call or put features, and various repayment
features.
Reinvestment Risk--Reinvestment risk is the risk that a bond's cash flows
(coupon income and principal repayment) will be reinvested at an interest rate
below that on the original bond. If interest rates decline, the underlying bond
may rise in value, but the cash flows received from that bond may have to be
invested at a lower interest rate.
U.S. Government Obligations Risk--The fund invests in obligations issued by
agencies and instrumentalities of the U.S. Government. These obligations vary in
the level of support they receive from the U.S. Government. They may be: (i)
supported by the full faith and credit of the U.S. Treasury, such as those of
the Government National Mortgage Association; (ii) supported by the right of the
issuer to borrow from the U.S. Treasury, such as those of the Federal National
Mortgage Association; (iii) supported by the discretionary authority of the U.S.
Government to purchase the issuer's obligation, such as those of the former
Student Loan Marketing Association; or (iv) supported only by the credit of the
issuer, such as those of the Federal Farm Credit Bureau. The U.S. Government may
choose not to provide financial support to the U.S. Government sponsored
agencies or instrumentalities if it is not legally obligated to do so, in which
case, if the issuer defaulted, the fund holding securities of such issuer might
not be able to recover its investment from the U.S. Government.
High-Coupon U.S. Government Agency Mortgage-Backed Securities
Risk--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 these securities
experience a faster principal prepayment rate than expected, both the market
value of and income from such securities will decrease. The prices of
high-coupon U.S. Government agency mortgage-backed securities fall more slowly
when interest rates rise than do prices of traditional fixed-rate securities.
Some of the securities purchased by the fund are not guaranteed by the U.S.
Government. The issuer of a security may default or otherwise be unable to honor
a financial obligation.
Derivatives Risk--The value of "derivatives"--so-called because their value
"derives" from the value of an underlying asset (including an underlying
security), reference rate or index--may rise or fall more rapidly than other
investments. For some derivatives, it is possible to lose more than the amount
invested in the derivative. Derivatives may be used to create synthetic exposure
to an underlying asset or to hedge portfolio risk. If the fund uses derivatives
to "hedge" a portfolio risk, it is possible that the hedge may not succeed. This
may happen for various reasons, including unexpected changes in the value of the
rest of the fund's portfolio. Over the counter derivatives are also subject to
counterparty risk, which is the risk that the other party to the contract will
not fulfill its contractual obligation to complete the transaction with the
fund.
Leverage Risk--The use of derivatives may give rise to a form of leverage.
Leverage may cause the fund's portfolio to be more volatile than if the
portfolio had not been leveraged because leverage can exaggerate the effect of
any increase or decrease in the value of securities held by the fund.
Reverse Repurchase Agreement Risk--Reverse repurchase agreements are
agreements that involve the sale by the fund of securities 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. 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 the fund 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. In the event the buyer of securities under a reverse repurchase
agreement 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.
Dollar Roll Transaction Risk--In a dollar roll transaction, the fund sells a
mortgage-backed security held by the fund to a financial institution such as a
bank or broker-dealer, and simultaneously agrees to purchase a substantially
similar security (same type, coupon and maturity) from the institution at an
agreed upon price and future date. Dollar roll transactions involve the risk
that the market value of securities to be purchased by the fund may decline
below the price at which the fund 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. 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.
Active Trading Risk--The fund may engage in active and frequent trading of
portfolio securities to achieve its investment objectives. If a fund does trade
in this way, it may incur increased costs, which can lower the actual return of
the fund. Active trading may also increase short term gains and losses, which
may affect taxes that must be paid.
Management Risk--There is no guarantee that the investment techniques and
risk analyses used by the fund's portfolio managers will produce the desired
results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The 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 chart shown does not
reflect charges assessed in connection with your variable product; if it did,
the performance shown would be lower.
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 the fund).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1998*.................................................................. 7.46%
1999*.................................................................. -1.56%
2000*.................................................................. 9.85%
2001**................................................................. 6.13%
2002................................................................... 9.25%
2003................................................................... 0.93%
2004................................................................... 2.27%
2005................................................................... 1.41%
2006................................................................... 3.28%
2007...................................................................
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* The returns shown for these periods are 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 return shown for this period is the blended return 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 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
[5.04% (quarter ended September 30, 2002)] and the lowest quarterly return was
[-1.46% (quarter ended June 30, 2004)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS
------------------------------------------------------------------------------
SERIES I
(for the periods ended INCEPTION
December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE
------------------------------------------------------------------------------
AIM V.I. Government Securities
Fund(1) 05/05/93
Lehman Brothers U.S. Aggregate
Bond Index(2,3) --
Lehman Brothers U.S.
Government Index(2,3,4) --
Lipper VUF General U.S.
Government Funds
Index(2,3,5) --
------------------------------------------------------------------------------
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(1) The returns shown for the one year and five year periods are historical performance of the fund's Series II shares. The return shown for the ten year period is the blended return 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 U.S. Aggregate Bond Index covers U.S. investment-grade fixed-rate bonds with components for government and corporate securities, mortgage pass-throughs and asset-backed securities. The fund also included the Lehman Brothers U.S. Government Index as its style specific index because the fund believes the Lehman Brothers U.S. Government Index is better aligned with the Government Funds' Morningstar category classification in terms of its duration profile. In addition, the Lipper Variable Underlying Funds (VUF) General U.S. Government Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(3) The indices may not reflect payment of fees, expenses or taxes.
(4) The Lehman Brothers U.S. Government Index consists of securities issued by the U.S. Government including public obligations of the U.S. Treasury with a remaining maturity of one year or more or publicly issued debt of U.S. Government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. Government.
(5) The Lipper VUF General U.S. Government Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper General U.S. Government Funds category. These funds invest at least 65% of their assets in U.S. government and agency issues.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES -------------------------------------------------------------------------------- Management Fees Distributions and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(3,4) Net Annual Fund Operating Expenses -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but are expenses of the investment companies in which the fund
invests. You incur these fees and expenses indirectly through the valuation
of the fund's investment companies. As a result, the Net Annual Fund
Operating Expenses listed above may exceed the limit on Total Annual Fund
Operating Expenses, if any. The impact of the acquired fund fees and
expenses are included in the total returns of the fund.
(3) The fund's advisor has voluntarily agreed to waive a portion of the advisory
fees payable by the fund equal to 25% of the advisory fee the advisor
receives from certain affiliated money market funds as a result of the
fund's investment of its cash balances in such affiliated money market
funds. This voluntary waiver resulted in an aggregate reduction in advisory
fees of 0.02% of the fund for the year ended December 31, 2006.
(4) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 0.98% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Government Securities Fund $ $ $ $ ------------------------------------------------------------------------------------------ |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 -------------------------------------------------------------------------------------------- Annual Expense Ratio(1) Cumulative Return Before Expenses Cumulative Return After Expenses End of Year Balance Estimated Annual Expenses -------------------------------------------------------------------------------------------- SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 Annual Expense Ratio(1) Cumulative Return Before Expenses Cumulative Return After Expenses End of Year Balance Estimated Annual Expenses -------------------------------------------------------------------------------------------- |
(1) Your actual expenses may be higher or lower than those shown above.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's fiscal year ended December 31, 2007, the advisor received compensation of % of the average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Jan H. Friedli (lead manager), Portfolio Manager, who has been responsible for the fund since 2007 and has been associated with Invesco Aim and/or its affiliates since 1999. As the lead manager, Mr. Friedli generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Mr. Friedli may perform these functions, and the nature of these functions, may change from time to time.
- Brendan D. Gau, Portfolio Manager, who has been responsible for the fund since 2007 and has been associated with Invesco Aim and/or its affiliates since 1996.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board. Each of these tools is described in more detail below. In addition, restrictions designed to discourage or curtail excessive short-term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in
the U.S. market. Where market quotations are not readily available, including
where the advisor determines that the closing price of the security is
unreliable, the advisor will value the security at fair value in good faith
using procedures approved by the Board. Fair value pricing may reduce the
ability of frequent traders to take advantage of arbitrage opportunities
resulting from potentially "stale" prices of portfolio holdings. However, it
cannot eliminate the possibility of frequent trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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
fund. Variable product owners should refer to the prospectus for their variable
products for information regarding the tax consequences of owning such variable
products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of ordinary income.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II shares. The plan allows the fund 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 fund). Because the fund pays these fees out of its 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 charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they makes these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the funds's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES II
--------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
2006 2005 2004 2003 2002
------- ------- ------- ------- -------
Net asset value, beginning of period $ $ $ $ $
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
======================================================================================================================
Total from investment operations
======================================================================================================================
Less distributions:
Dividends from net investment income
----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
======================================================================================================================
Total distributions
======================================================================================================================
Net asset value, end of period $ $ $ $ $
______________________________________________________________________________________________________________________
======================================================================================================================
Total return % % % % %
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % % %
----------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % % % %
======================================================================================================================
Ratio of net investment income to average net assets % % % % %
======================================================================================================================
Ratio of interest expense to average net assets % % % % %
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate % % % % %
______________________________________________________________________________________________________________________
======================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
|
Because you cannot purchase shares of the fund directly, these documents have not been made available on our website.
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VIGOV-PRO-2
AIM V.I. HIGH YIELD FUND
PROSPECTUS
May 1, 2008
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SERIES I SHARES
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. High Yield Fund's investment objective is a high level of current income.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 6 Portfolio Managers 6 OTHER INFORMATION 6 ------------------------------------------------------ Purchase and Redemption of Shares 6 Excessive Short-Term Trading Activity Disclosures 7 Trade Activity Monitoring 7 Fair Value Pricing 8 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 9 Payments to Insurance Companies 9 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is a high level of current income.
The fund's investment objective may be changed by the Board of Trustees (the
Board) of Trustees without shareholder approval.
The fund seeks to meet its objective by investing, normally, at least 80% of
its assets in debt securities that are determined to be below investment grade
quality because they are rated BB/Ba or lower by Standard & Poor's Ratings
Services, Moody's Investors Service, Inc., or any other nationally recognized
statistical rating organization (NRSRO), or are determined by the portfolio
managers to be of comparable quality to such rated securities. These types of
securities are commonly known as "junk bonds."
The fund will principally invest in junk bonds rated B or above by an NRSRO
or deemed to be of comparable quality by the portfolio managers.
The fund may invest up to 25% of its total assets in foreign securities. The fund may also invest in securities, whether or not considered foreign securities, which carry foreign credit exposure. The fund may invest up to 15% of its total assets in securities of companies located in developing countries.
The fund's investments in the types of securities described in this
prospectus varies from time to time, and at any time, the fund may not be
invested in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
In selecting securities for the fund's portfolio, the portfolio managers
focus on junk bonds that they believe have favorable prospects for high current
income and the possibility of growth of capital. The portfolio managers conduct
a bottom-up fundamental analysis of a company before its securities are
purchased by the fund. The fundamental analysis involves an evaluation by a team
of credit analysts of a company's financial statements in order to assess a
company's financial condition. The credit analysts also assess the ability of a
company to reduce its leverage (i.e. the amount of borrowed debt).
The bottom-up fundamental analysis is supplemented by (i) an ongoing review
of the securities' relative value compared with other junk bonds, and (ii) a
top-down analysis of sector and macro-economic trends, such as changes in
interest rates.
The portfolio managers attempt to control the fund's risk by (i) limiting the portfolio's assets that are invested in any one security, and (ii) diversifying the portfolio's holdings over a number of different industries. Although the fund is actively managed, it is reviewed regularly against its benchmark index (the Lehman Brothers U.S. Aggregate Bond Index) and its peer group index (the Lipper VUF High Current Yield Bond Funds Category Average) to assess the portfolio's relative risk and its positioning.
The portfolio managers will consider selling a security if (1) there appears to be deterioration in a security's risk profile, or (2) they determine that other securities offer better value.
The fund typically maintains a portion of its assets in cash, cash equivalents, high quality debt instruments, and/or money market funds advised by the fund's advisor. Depending upon the then-current investment environment, holding a relatively larger percentage of portfolio assets in such instruments may either assist or hinder the fund's relative performance and its ability to achieve its investment objective. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. In order to respond to adverse market, economic or other conditions, the fund may assume a temporary defensive position and invest a relatively larger percentage of the fund's portfolio assets in cash, cash equivalents or high quality debt instruments.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective.
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 historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
The principal risks of investing in the fund are:
Market Risk--The prices of and the income generated by securities held by
the fund may decline in response to certain events, including those directly
involving the companies whose securities are owned by the fund; general economic
and market conditions; regional or global economic instability; and currency and
interest rate fluctuations.
Interest Rate Risk--Interest rate risk refers to the risk that bond prices
generally fall as interest rates rise; conversely, bond prices generally rise as
interest rates fall. Specific bonds differ in their sensitivity to changes in
interest rates depending on specific characteristics of each bond. A measure
investors commonly use to determine this sensitivity is called duration. The
longer the duration of a particular bond, the greater is its price sensitivity
to interest rate changes. Similarly, a longer duration portfolio of securities
has greater price sensitivity. Duration is determined by a number of factors
including coupon rate, whether the coupon is fixed or floating, time to
maturity, call or put features, and various repayment features.
Credit Risk--Credit risk is the risk of loss on an investment due to the
deterioration of an issuer's financial health. Such a deterioration of financial
health may result in a reduction of the credit rating of the issuer's securities
and may lead to the issuer's inability to honor its contractual obligations
including making timely payment of interest and principal. Credit ratings are a
measure of credit quality. Although a downgrade or
upgrade of a bond's credit ratings may or may not affect its price, a decline in
credit quality may make bonds less attractive, thereby driving up the yield on
the bond and driving down the price. Declines in credit quality may result in
bankruptcy for the issuer and permanent loss of investment.
High Yield Bond Risk--High yield risk is a form of credit risk. High yield
bonds or "junk bonds" are bonds rated below investment grade or deemed to be of
comparable quality. They are considered to be speculative investments with
greater risk of failure to make timely payment of interest and principal (to
default on their contractual obligations) than their investment grade
counterparts. High yield bonds may exhibit increased price sensitivity and
reduced liquidity generally and particularly during times of economic downturn
or volatility in the capital markets.
Reinvestment Risk--Reinvestment risk is the risk that a bond's cash flows
(coupon income and principal repayment) will be reinvested at an interest rate
below that on the original bond. If interest rates decline, the underlying bond
may rise in value, but the cash flows received from that bond may have to be
invested at a lower interest rate.
Foreign Securities Risk--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. Developing Markets Securities Risk--The risk associated with investments in foreign securities may affect the value of securities issued by foreign companies located in developing countries more than those in countries with more mature economies. For example, many developing countries, in the past, have experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, causing the value of investments in companies located in the countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures. Active Trading Risk--The fund may engage in active and frequent trading of portfolio securities to achieve its investment objectives. If a fund does trade in this way, it may incur increased costs, which can lower the actual return of the fund. Active trading may also increase short term gains and losses, which may affect taxes that must be paid. Management Risk--There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio managers will produce the desired results. An investment in the fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
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
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1999................................................................... 10.52%
2000................................................................... -19.01%
2001................................................................... -5.00%
2002................................................................... -5.84%
2003................................................................... 28.04%
2004................................................................... 11.25%
2005................................................................... 2.72%
2006................................................................... 10.74%
2007...................................................................
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During the period shown in the bar chart, the highest quarterly return was
[9.64% (quarter ended June 30, 2003)] and the lowest quarterly return was
[-14.05% (quarter ended December 31, 2000)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS ----------------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2007) 1 YEAR 5 YEARS INCEPTION DATE ----------------------------------------------------------------------------------------- AIM V.I. High Yield Fund % % % 05/01/98 Lehman Brothers U.S. Aggregate Bond Index(1,2) 04/30/98(3) Lehman Brothers U.S. Corporate High Yield Index(1,2,4) 04/30/98(3) Lipper VUF High Current Yield Bond Funds Category Average(1,2,5) 04/30/98(3) ----------------------------------------------------------------------------------------- |
(1) The Lehman Brothers U.S. Aggregate Bond Index covers U.S. investment-grade fixed-rate bonds with components for government and corporate securities, mortgage pass-throughs and asset-backed securities. The fund has also included the Lehman Brothers U.S. Corporate High Yield Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) High Current Yield Bond Funds Category Average (which may or may not include the fund) is included for comparison to a peer group.
(2) The indices may not reflect payment of fees, expenses or taxes.
(3) The average annual total return given is since the month-end closest to the
inception date of the fund's Series I shares.
(4) The Lehman Brothers U.S. Corporate High Yield Index covers the universe of fixed rate, non-investment grade debt. Pay-in-kind bonds, Eurobonds and debt issues from countries designated as emerging markets are excluded, but Canadian and global bonds (SEC registered) of issuers in non-emerging countries are included.
(5) The Lipper VUF High Current Yield Bond Funds Category Average represents an average of all the variable insurance underlying funds in the Lipper High Current Yield Bond Funds category. The funds have no credit rating restriction, but tend to invest in fixed-income securities with lower credit ratings.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees % Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(3) Net Annual Fund Operating Expenses() -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 0.95% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees, and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series I shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. High Yield Fund $ $ $ $ ------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
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Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
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SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
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(1) Your actual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, inc. (IFG)(the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors)(the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's fiscal year ended December 31, 2007 the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Peter Ehret (co-lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2001 and has been associated with Invesco Aim and/or its affiliates since 2001.
- Carolyn L. Gibbs (co-lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with Invesco Aim and/or its affiliates since 1992.
- Darren S. Hughes, Portfolio Manager, who has been responsible for the fund since 2005 and has been associated with Invesco Aim and/or its affiliates since 1992.
The lead manages generally have final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which the lead manages may perform these functions, and the nature of these functions, many change from time to time.
More information on the portfolio managers, may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may
postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board. Each of these tools is described in more detail below. In addition, restrictions designed to discourage or curtail excessive short-term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their contract owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by contract owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of ordinary income.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates makes these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the
level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES I
------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------
2006 2005 2004 2003 2002
------- ------- ------- ------- -------
Net asset value, beginning of period $ $ $ $ $
--------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
--------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
====================================================================================================================
Increase from payments by affiliates
====================================================================================================================
Total from investment operations
====================================================================================================================
Less dividends from net investment income
====================================================================================================================
Net asset value, end of period $ $ $ $ $
____________________________________________________________________________________________________________________
====================================================================================================================
Total return % % % % %
____________________________________________________________________________________________________________________
====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
____________________________________________________________________________________________________________________
====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % % %
--------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % % % %
====================================================================================================================
Ratio of net investment income to average net assets % % % % %
____________________________________________________________________________________________________________________
====================================================================================================================
Portfolio turnover rate % % % % %
____________________________________________________________________________________________________________________
====================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
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You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VIHYI-PRO-1
AIM V.I. HIGH YIELD FUND
PROSPECTUS
MAY 1, 2008
|
Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. High Yield Fund's investment objective is a high level of current income.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 5 ------------------------------------------------------ Fees and Expenses of the Fund 5 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 6 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 7 Portfolio Managers 7 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 8 Trade Activity Monitoring 8 Fair Value Pricing 8 Risks 9 Pricing of Shares 9 Taxes 10 Dividends and Distributions 10 Share Classes 10 Distribution Plan 10 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 12 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is a high level of current income.
The fund's investment objective may be changed by the Board of Trustees (the
Board) without shareholder approval.
The fund seeks to meet its objective by investing, normally, at least 80% of
its assets in debt securities that are determined to be below investment grade
quality because they are rated BB/Ba or lower by Standard & Poor's Ratings
Services, Moody's Investors Service, Inc., or any other nationally recognized
statistical rating organization (NRSRO), or are determined by the portfolio
managers to be of comparable quality to such rated securities. These types of
securities are commonly known as "junk bonds."
The fund will principally invest in junk bonds rated B or above by an NRSRO
or deemed to be of comparable quality by the portfolio managers.
The fund may invest up to 25% of its total assets in foreign securities. The fund may also invest in securities, whether or not considered foreign securities, which carry foreign credit exposure. The fund may invest up to 15% of its total assets in securities of companies located developing countries.
The fund's investments in the types of securities described in this
prospectus varies from time to time, and at any time, the fund may not be
invested in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
In selecting securities for the fund's portfolio, the portfolio managers
focus on junk bonds that they believe have favorable prospects for high current
income and the possibility of growth of capital. The portfolio managers conduct
a bottom-up fundamental analysis of a company before its securities are
purchased by the fund. The fundamental analysis involves an evaluation by a team
of credit analysts of a company's financial statements in order to assess a
company's financial condition. The credit analysts also assess the ability of a
company to reduce its leverage (i.e. the amount of borrowed debt).
The bottom-up fundamental analysis is supplemented by (i) an ongoing review
of the securities' relative value compared with other junk bonds, and (ii) a
top-down analysis of sector and macro-economic trends, such as changes in
interest rates.
The portfolio managers attempt to control the fund's risk by (i) limiting the portfolio's assets that are invested in any one security, and (ii) diversifying the portfolio's holdings over a number of different industries. Although the fund is actively managed, it is reviewed regularly against its benchmark index (the Lehman Brothers U.S. Aggregate Bond Index) and its peer-group index (the Lipper VUF High Current Yield Bond Funds Category Average) to assess the portfolio's relative risk and its positioning.
The portfolio managers will consider selling a security if (1) there appears to be deterioration in a security's risk profile, or (2) they determine that other securities offer better value.
The fund typically maintains a portion of its assets in cash, cash equivalents, high quality debt instruments, and/or money market funds advised by the fund's advisor. Depending upon the then-current investment environment, holding a relatively larger percentage of portfolio assets in such instruments may either assist or hinder the fund's relative performance and its ability to achieve its investment objective. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. In order to respond to adverse market, economic or other conditions, the fund may assume a temporary defensive position and invest a relatively larger percentage of the fund's portfolio assets in cash, cash equivalents or high quality debt instruments.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective.
upgrade of a bond's credit ratings may or may not affect its price, a decline in
credit quality may make bonds less attractive, thereby driving up the yield on
the bond and driving down the price. Declines in credit quality may result in
bankruptcy for the issuer and permanent loss of investment.
High Yield Bond Risk--High yield risk is a form of credit risk. High yield
bonds or "junk bonds" are bonds rated below investment grade or deemed to be of
comparable quality. They are considered to be speculative investments with
greater risk of failure to make timely payment of interest and principal (to
default on their contractual obligations) than their investment grade
counterparts. High yield bonds may exhibit increased price sensitivity and
reduced liquidity generally and particularly during times of economic downturn
or volatility in the capital markets.
Reinvestment Risk--Reinvestment risk is the risk that a bond's cash flows
(coupon income and principal repayment) will be reinvested at an interest rate
below that on the original bond. If interest rates decline, the underlying bond
may rise in value, but the cash flows received from that bond may have to be
invested at a lower interest rate.
Foreign Securities Risk--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. Developing Markets Securities Risk--The risk associated with investments in foreign securities may affect the value of securities issued by foreign companies located in developing countries more than those in countries with more mature economies. For example, many developing countries, in the past, have experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, causing the value of investments in companies located in those countries to decline. Transaction costs are higher in developing countries and there may be delays in settlement procedures. Active Trading Risk--The fund may engage in active and frequent trading of portfolio securities to achieve its investment objectives. If a fund does trade in this way, it may incur increased costs, which can lower the actual return of the fund. Active trading may also increase short term gains and losses, which may affect taxes that must be paid. Management Risk--There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio managers will produce the desired results. An investment in the fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The 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 chart shown does not
reflect charges assessed in connection with your variable product; if it did,
the performance shown would be lower.
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 the fund).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- ---------
1999*................................................................ 10.25%
2000*................................................................ -19.21%
2001*................................................................ -5.23%
2002**............................................................... -6.08%
2003................................................................. 27.89%
2004................................................................. 11.14%
2005................................................................. 2.43%
2006................................................................. 10.41%
2007.................................................................
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* The returns shown for these periods are 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 return shown for this period is the blended return 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 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 period shown in the bar chart, the highest quarterly return was
[9.66% (quarter ended June 30, 2003)] and the lowest quarterly return was
[-14.11% (quarter ended December 31, 2000)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS
------------------------------------------------------------------------------------------
SERIES I
(for the periods ended SINCE INCEPTION
December 31, 2007) 1 YEAR 5 YEARS INCEPTION DATE
------------------------------------------------------------------------------------------
AIM V.I. High Yield Fund(1) % % % 05/01/98
Lehman Brothers U.S. Aggregate Bond
Index(2,3) 04/30/98(4)
Lehman Brothers U.S. Corporate High
Yield Index(2,3,5) 04/30/98(4)
Lipper VUF High Current Yield Bond Funds
Category Average(2,3,6) 04/30/98(4)
------------------------------------------------------------------------------------------
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(1) The return shown for the one year period is the historical performance of the fund's Series II shares. The returns shown for other 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 covers U.S. investment-grade fixed-rate bonds with components for government and corporate securities, mortgage pass-throughs, and asset-backed securities. The fund has also included the Lehman Brothers U.S. Corporate High Yield Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) High Current Yield Bond Funds Category Average (which may or may not include the fund) is included for comparison to a peer group.
(3) The indices may not reflect payment of fees, expenses or taxes.
(4) The average annual total return given is since the month-end closest to the
inception date of the fund's Series I shares.
(5) The Lehman Brothers U.S. Corporate High Yield Index covers the universe of fixed rate, non-investment grade debt. Pay-in-kind bonds, Eurobonds and debt issues from countries designated as emerging markets are excluded, but Canadian and global bonds (SEC registered) of issuers in non-emerging countries are included.
(6) The Lipper VUF High Current Yield Bond Funds Category Average represents an average of all the variable insurance underlying funds in the Lipper High Current Yield Bond Funds category. These funds have no credit rating restriction, but tend to invest in fixed-income securities with lower credit ratings.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable contract product buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES ------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES ------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A ------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1)
-------------------------------------------------------------------------------
SERIES II
(expenses that are deducted from Series II share assets) SHARES
-------------------------------------------------------------------------------
Management Fees %
Distribution and/or Service (12b-1) Fees
Other Expenses
Acquired Fund Fees and Expenses(2)
Total Annual Fund Operating Expenses
Fee Waiver and/or Expense Reimbursements(3)
Net Annual Fund Operating Expenses
-------------------------------------------------------------------------------
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[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.20% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees, and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. High Yield Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 ----------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- |
(1) Your actual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's fiscal year ended December 31, 2007 the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolios:
- Peter Ehret (co-lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2001 and has been associated with Invesco Aim and/or its affiliates since 2001.
- Carolyn L. Gibbs (co-lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with Invesco Aim and/or its affiliates since 1992.
- Darren S. Hughes, Portfolio Manager, who has been responsible for the fund since 2005 and has been associated with Invesco Aim and/or its affiliates since 1992.
The lead managers generally have final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which the lead managers may perform these functions, and the nature of these functions, may change from time to time.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board. Each of these tools is described in more detail below. In addition, restrictions designed to discourage or curtail excessive short-term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market quotations are readily available. All other securities and assets of a fund for which market quotations are not readily available are to be valued at fair value determined in good faith using procedures approved by the Board
of Trustees of the fund. Fair value pricing may reduce the ability of frequent
traders to take advantage of arbitrage opportunities resulting from potentially
"stale" prices of portfolio holdings. However, it cannot eliminate the
possibility of frequent trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of ordinary income.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II shares. The plan allows the fund 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 fund). Because the fund pays these fees out of its 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 charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the
fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/ or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during the fiscal years (or period) indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES II
---------------------------------------------------------
Net asset value, beginning of period $ $ $ $ $
-----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
-----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
=======================================================================================================================
Increase from payments by affiliates
=======================================================================================================================
Total from investment operations
=======================================================================================================================
Less dividends from net investment income
=======================================================================================================================
Net asset value, end of period $ $ $ $ $
_______________________________________________________________________________________________________________________
=======================================================================================================================
Total return % % % % %
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % % %
-----------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % % % %
=======================================================================================================================
Ratio of net investment income to average net assets % % % % %
_______________________________________________________________________________________________________________________
=======================================================================================================================
Portfolio turnover rate % % % % %
_______________________________________________________________________________________________________________________
=======================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VIHYI-PRO-2
AIM V.I. INTERNATIONAL GROWTH FUND
PROSPECTUS
May 1, 2008
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SERIES I SHARES
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. International Growth Fund's investment objective is long- term growth of capital.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 ------------------------------------------------------ Fees and Expenses of the Fund 3 Expense Example 3 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 4 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 4 ------------------------------------------------------ FUND MANAGEMENT 4 ------------------------------------------------------ The Advisors 4 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 6 ------------------------------------------------------ Purchase and Redemption of Shares 6 Excessive Short-Term Trading Activity Disclosures 6 Trade Activity Monitoring 6 Fair Value Pricing 7 Risks 7 Pricing of Shares 7 Taxes 8 Dividends and Distributions 8 Share Classes 8 Payments to Insurance Companies 8 FINANCIAL HIGHLIGHTS 10 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees (the Board) without shareholder approval.
The fund seeks to meet its objective by investing in a diversified portfolio of international equity securities. 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 the securities of 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.
At the present time, the fund's portfolio managers intend to invest no more
than 20% of the fund's total assets in companies located in developing
countries, i.e., those that are in the initial stages of their industrial
cycles.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and at any time, the fund may not be invested
in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
The portfolio managers employ a disciplined investment strategy that emphasizes fundamental research, supported by quantitative analysis and portfolio construction techniques. The strategy primarily focuses on identifying quality companies that have experienced, or exhibit the potential for, accelerating or above average earnings growth but whose prices do not fully reflect these attributes. Investments for the portfolio are selected "bottom-up" on a stock-by-stock basis. The focus is on the strengths of individual companies, rather than sector or country trends. The fund's portfolio managers may consider selling a security for several reasons, including when (1) its fundamentals deteriorate or it posts disappointing earnings, (2) its stock price appears to be overvalued, or (3) a more attractive opportunity is identified.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
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.
The prices of foreign securities may be further affected by other factors,
including:
- Currency exchange rates--The dollar value of the fund's foreign investment 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 devalued 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. There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio managers will produce the desired results. An investment in the fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
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
----------- ---------
1998.................................................................. 15.49%
1999.................................................................. 55.04%
2000.................................................................. -26.40%
2001.................................................................. -23.53%
2002.................................................................. -15.67%
2003.................................................................. 29.06%
2004.................................................................. 24.00%
2005.................................................................. 17.93%
2006.................................................................. 28.23%
2007.................................................................. %
|
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)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS ----------------------------------------------------------------------------- (for the periods ended INCEPTION December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE ----------------------------------------------------------------------------- AIM V.I. International Growth Fund % % % 05/05/93 MSCI EAFE--Registered Trademark-- Index(1,2) -- MSCI EAFE--Registered Trademark-- Growth Index(1,2,3) -- Lipper VUF International Growth Funds Index(1,2,4) -- ----------------------------------------------------------------------------- |
(1) The Morgan Stanley Capital International Europe, Australasia and Far East Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the US & Canada. The fund has also included the MSCI EAFE--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 Variable Underlying Funds (VUF) International Growth Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(2) The indices may not reflect payment of fees, expenses or taxes.
(3) The MSCI EAFE--Registered Trademark-- Growth Index is an unmanaged index considered representative of growth stocks of Europe, Australasia, and the Far East.
(4) The Lipper VUF International Growth Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper International Growth Funds category. These funds invest at least 75% of their equity assets in companies strictly outside of the U.S. and typically have an above-average price-to-cash flow ratio, price-to-book ratio, and three-year sales-per-share growth value compared to the S&P/Citigroup World ex-U.S. BMI. The S&P/Citigroup World ex-U.S. Broad Market Index measures all of each country's available capital in stocks with capitalizations greater than $100 million (US) and represents the broad stock universe of all countries, excluding the United States.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees % Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses(3) -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 1.30% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series I shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. International Growth Fund $ $ $ $ ------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
|
(1) Your actual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG)(the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors)(the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's fiscal year ended December 31, 2007, the advisor received compensation of % of the fund's average daily net assets.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Clas G. Olsson (lead manager with respect to the fund's investments in Europe and Canada), Senior Portfolio Manager, who has been responsible for the fund since 1997 and has been associated with Invesco Aim and/or its affiliates since 1994.
- Barrett K. Sides (lead manager with respect to the fund's investments in Asia Pacific and Latin America), Senior Portfolio Manager, who has been responsible for the fund since 1995 and has been associated with Invesco Aim and/or its affiliates since 1990.
- Shuxin Cao, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 1997.
- Matthew W. Dennis, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 2000.
- Jason T. Holzer, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with Invesco Aim and/or its affiliates since 1996.
The lead managers generally have final authority over all aspects of their portions of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which the lead managers may perform these functions, and the nature of these functions, may change from time to time.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner
that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor
also relies on a screening process from a pricing vendor to indicate the degree
of certainty, based on historical data, that the closing price in the principal
market where a foreign security trades is not the current market value as of the
close of the NYSE. For foreign securities where the advisor believes, at the
approved degree of certainty, that the price is not reflective of current market
value, the advisor will use the indication of fair value from the pricing
service to determine the fair value of the security. The pricing vendor, pricing
methodology or degree of certainty may change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of its 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES I
-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
2006 2005 2004 2003 2002
-------- -------- -------- -------- --------
Net asset value, beginning of period $ $ $ $ $
-----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
-----------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized)
===========================================================================================================
Total from investment operations
===========================================================================================================
Less dividends from net investment income
===========================================================================================================
Net asset value, end of period $ $ $ $ $
___________________________________________________________________________________________________________
===========================================================================================================
Total return % % % % %
___________________________________________________________________________________________________________
===========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
___________________________________________________________________________________________________________
===========================================================================================================
Ratio of expenses to average net assets % % % % %
===========================================================================================================
Ratio of net investment income to average
net assets % % % % %
___________________________________________________________________________________________________________
===========================================================================================================
Portfolio turnover rate % % % % %
___________________________________________________________________________________________________________
===========================================================================================================
|
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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
|
Because you cannot purchase shares of the fund directly, these documents have not been made available on our website.
You can also review and obtain copies of the fund's SAI financial, reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VIIGR-PRO-1
AIM V.I. INTERNATIONAL GROWTH FUND
PROSPECTUS
MAY 1, 2008
|
Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. International Growth Fund's investment objective is long- term growth of capital.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 6 Portfolio Managers 6 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 7 Trade Activity Monitoring 7 Fair Value Pricing 8 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 9 Distribution Plan 9 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees (the Board) without shareholder approval.
The fund seeks to meet its objective by investing in a diversified portfolio of international equity securities. 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 the securities of 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.
At the present time, the fund's portfolio managers intend to invest no more
than 20% of the fund's total assets in companies located in developing
countries, i.e., those that are in the initial stages of their industrial
cycles.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and at any time, the fund may not be invested
in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
The portfolio managers employ a disciplined investment strategy that emphasizes fundamental research, supported by quantitative analysis and portfolio construction techniques. The strategy primarily focuses on identifying quality companies that have experienced, or exhibit the potential for, accelerating or above average earnings growth but whose prices do not fully reflect these attributes. Investments for the portfolio are selected "bottom-up" on a stock-by-stock basis. The focus is on the strengths of individual companies, rather than sector or country trends. The fund's portfolio managers may consider selling a security for several reasons, including when (1) its fundamentals deteriorate or it posts disappointing earnings, (2) its stock price appears to be overvalued, or (3) a more attractive opportunity is identified.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
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.
The prices of foreign securities may be further affected by other factors,
including:
- Currency exchange rates--The dollar value of the fund's foreign investment 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 devalued 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.
There is no guarantee that the investment techniques and risk analyses used
by the fund's portfolio managers will produce the desired results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The 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 chart shown does not
reflect charges assessed in connection with your variable product; if it did,
the performance shown would be lower.
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 the fund).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1998*.................................................................. 15.20%
1999*.................................................................. 54.67%
2000*.................................................................. -26.59%
2001**................................................................. -23.72%
2002................................................................... -15.89%
2003................................................................... 28.60%
2004................................................................... 23.70%
2005................................................................... 17.70%
2006................................................................... 27.88%
2007................................................................... %
|
* The returns shown for these periods are 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 return shown for this period is the blended return 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 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)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS
-----------------------------------------------------------------------------
SERIES I
(for the periods ended INCEPTION
December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE
-----------------------------------------------------------------------------
AIM V.I. International
Growth Fund(1) % % % 05/05/93
MSCI EAFE--Registered
Trademark-- Index(2,3) --
MSCI EAFE--Registered
Trademark-- Growth
Index(2,3,4) --
Lipper VUF International
Growth Funds Index(2,3,5) --
-----------------------------------------------------------------------------
|
(1) The returns shown for the one year and five year periods are the historical performance of the fund's Series II shares. The return shown for the ten year period is the blended return 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 Europe, Australasia and Far East Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the US and Canada. The fund has also included MSCI EAFE--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 Variable Underlying Funds (VUF) International Growth Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(3) The indices may not reflect payment of fees, expenses or taxes.
(4) The MSCI EAFE--Registered Trademark-- Growth Index is an unmanaged index considered representative of growth stocks of Europe, Australasia, and the Far East.
(5) The Lipper VUF International Growth Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper International Growth Funds category. These funds invest at least 75% of their equity assets invested in companies strictly outside the U.S. and typically have an above-average price-to-cash flow ratio, price-to-book ratio, and three-year sales-per-share growth value compared to the S&P/Citigroup World ex-U.S. BMI. The S&P/Citigroup World ex-U.S. Broad Market Index measures all of each country's available capital in stocks with capitalizations greater than $100 million (US) and represents the broad stock universe of all countries, excluding the United States.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES ------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES ------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A ------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) ------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES ------------------------------------------------------------------------------- Management Fees % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses(3) ------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.45% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each
year; and
(iii) incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. International Growth Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed. There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1)
Cumulative Return Before
Expenses
Cumulative Return After
Expenses
End of Year Balance
Estimated Annual Expenses
-----------------------------------------------------------------------------------------------
SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1)
Cumulative Return Before
Expenses
Cumulative Return After
Expenses
End of Year Balance
Estimated Annual Expenses
-----------------------------------------------------------------------------------------------
|
(1) Your actual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its
semi-annual and annual reports to shareholders, and on Form N-Q, which is filed
with the Securities and Exchange Commission (SEC) within 60 days of the fund's
first and third quarter-ends. Due to the fact that you cannot purchase shares of
the fund directly, these documents have not been made available on our website.
However, these documents are available on the SEC's website at
http://www.sec.gov. In addition, the fund's portfolio holdings as of each
calendar quarter-end are made available to insurance companies issuing variable
products that invest in the fund.
A description of the fund's policies and procedures with respect to the
disclosure of the fund's portfolio holdings is available in the fund's Statement
of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds and; (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's fiscal year ended December 31, 2007, the advisor received compensation of average daily net assets.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Clas G. Olsson (lead manager with respect to the fund's investments in Europe and Canada), Senior Portfolio Manager, who has been responsible for the fund since 1997 and has been associated with Invesco Aim and/or its affiliates since 1994.
- Barrett K. Sides (lead manager with respect to the fund's investments in Asia Pacific and Latin America), Senior Portfolio Manager, who has been responsible for the fund since 1995 and has been associated with Invesco Aim and/or its affiliates since 1990.
- Shuxin Cao, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 1997.
- Matthew W. Dennis, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 2000.
- Jason T. Holzer, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with Invesco Aim and/or its affiliates since 1996.
The lead managers generally have final authority over all aspects of their portions of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which the lead managers may perform these functions, and the nature of these functions, may change from time to time.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board. Each of these tools is described in more detail below. In addition, restrictions designed to discourage or curtail excessive short-term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's
account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor
believes, at the approved degree of certainty, that the price is not reflective
of current market value, the advisor will use the indication of fair value from
the pricing service to determine the fair value of the security. The pricing
vendor, pricing methodology or degree of certainty may change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II shares. The plan allows the fund 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 fund). Because the fund pays these fees out of its 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 charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES II
-------------------------------------------------------
Net asset value, beginning of period
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
---------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
=====================================================================================================================
Total from investment operations
=====================================================================================================================
Less dividends from net investment income
=====================================================================================================================
Net asset value, end of period
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted)
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets
=====================================================================================================================
Ratio of net investment income to average net assets
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate
_____________________________________________________________________________________________________________________
=====================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VIIGR-PRO-2
AIM V.I. LARGE CAP GROWTH FUND
PROSPECTUS
May 1, 2008
|
Series I shares
Shares of the fund are currently offered only to insurance company separate accounts, funding variable annuity contracts and variable life insurance policies. AIM V.I. Large Cap Growth Fund's investment objective is long-term growth of capital.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 ------------------------------------------------------ Fees and Expenses of the Fund 3 Expense Example 3 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 4 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 4 ------------------------------------------------------ FUND MANAGEMENT 4 ------------------------------------------------------ The Advisors 4 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 5 ------------------------------------------------------ Purchase and Redemption of Shares 5 Excessive Short-Term Trading Activity Disclosures 6 Trade Activity Monitoring 6 Fair Value Pricing 6 Risks 6 Pricing of Shares 7 Taxes 8 Dividends and Distributions 8 Share Classes 8 Payments to Insurance Companies 8 FINANCIAL HIGHLIGHTS 10 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees (the Board) without shareholder approval.
The fund seeks to meet its objective by investing, normally, at least 80% of its assets in securities of large-capitalization companies. 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, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. The fund considers a company to be a large-capitalization company if it has a market capitalization, at the time of purchase, no smaller than the smallest capitalized company included in the Russell 1000--Registered 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 1000--Registered Trademark-- Index is a widely recognized, unmanaged index of common stocks that measures the performance of the 1,000 largest companies in the Russell 3000--Registered Trademark-- Index, which measures the performance of the 3,000 largest U.S. companies based on total market capitalization. The fund may invest up to 25% of its total assets in foreign securities.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and at any time, the fund may not be invested
in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
The fund's portfolio managers may focus on securities of companies with
market capitalizations that are within the top 50% of stocks in the Russell
1000--Registered Trademark-- Index at the time of purchase. The portfolio
managers purchase securities of a limited number of large-cap companies that
they believe have the potential for above-average 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 typically maintains a portion if its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
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.
Foreign Securities Risk--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.
The principal risk of investments in synthetic instruments is that the fluctuations in their values may not correlate perfectly with the overall securities markets. Some synthetic instruments are more sensitive to interest rate changes and market price fluctuations than others. Also, synthetic instruments are subject to counter party risk which is the risk that the other party in the transaction will not fulfill its contractual obligation to complete the transaction with the fund.
There is no guarantee that the investment techniques and risk analyses used
by the fund's portfolio managers will produce the desired results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
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
----------- -------
2004................................................................... 9.08%
2005................................................................... 7.30%
2006................................................................... 8.05%
2007...................................................................
|
During the periods shown in the bar chart, the highest quarterly return was
[8.38% (quarter ended December 31, 2004)] and the lowest quarterly return was
[-5.32% (quarter ended June 30, 2006)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2007) 1 YEAR INCEPTION DATE ------------------------------------------------------------------------------- AIM V.I. Large Cap Growth Fund % % 08/29/03 S&P 500--Registered Trademark-- Index(1,2) 08/31/03(3) Russell 1000--Registered Trademark-- Growth Index(1,2,4) 08/31/03(3) Lipper VUF Large-Cap Growth Funds Index(1,2,5) 08/31/03(3) ------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. The fund has also included the Russell 1000--Registered Trademark-- Growth Index as its style specific index because the fund believes the Russell 1000--Registered Trademark-- Growth Index more closely reflects the performance of the types of securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) Large-Cap Growth Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(2) The indices may not reflect payment of fees, expenses or taxes.
(3) The average annual total return given is since the month-end closest to the
inception of the fund's Series I shares.
(4) The Russell 1000--Registered Trademark-- Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000--Registered Trademark--Growth Index is a trademark/service mark of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company.
(5) The Lipper VUF Large-Cap Growth Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Large-Cap Growth Funds category. These funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P 500--Registered Trademark-- index.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly
or indirectly, when a variable product owner buys, holds, or redeems interest in
an insurance company separate account that invests in the Series I shares of the
fund but does not represent the effect of any fees or other expenses assessed in
connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above tables means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees(2) % Other Expenses Acquired Fund Fees and Expenses(3) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(2,4) Net Annual Fund Operating Expenses -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Through December 31, 2009, the fund's advisor has contractually agreed to
waive a portion of its advisory fees to the extent necessary so that the
advisory fees payable by the fund does not exceed a specified maximum annual
advisory fee rate, wherein the fee rate includes breakpoints and is based
upon net asset levels. The fund's maximum annual advisory fee rate ranges
from 0.695% (for average net assets up to $250 million) to 0.52% (for
average net assets over $10 billion).
(3) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but are expenses of the investment companies in which the fund
invests. You incur these fees and expenses indirectly through the valuation
of the fund's investment in those investment companies. As a result, the Net
Annual Fund Operating Expenses listed above may exceed the limit on Total
Annual Fund Operating Expenses, if any. The impact of the acquired fund fees
and expenses are included in the total returns of the fund.
(4) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 1.01% of average daily nets assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series I shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Large Cap Growth Fund $ $ $ $ --------------------------------------------------------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
(1) Your actual expenses may be higher or lower than those shown.
SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
(1) Your actual expenses may
|
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Geoffrey V. Keeling, Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 1995.
- Robert L. Shoss, Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 1995.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its
shares to fund of funds following receipt of the requested regulatory relief.
Due to differences in tax treatment and other considerations, the interests of
fund shareholders, including variable product owners and plan participants
investing in the fund (whether directly or indirectly through fund of funds),
may conflict.
Mixed and shared funding may present certain conflicts of interest. For
example, violation of the federal tax laws by one insurance company separate
account investing directly or indirectly in a fund could cause variable products
funded through another insurance company separate account to lose their
tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the fund through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the fund. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by the fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of the fund
for which market quotations are not readily available are to be valued at fair
value determined in good faith using procedures approved by the Board of the
fund. Fair value pricing may reduce the ability of frequent traders to take
advantage of arbitrage opportunities resulting from potentially "stale" prices
of portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective
in whole or in part to detect or prevent excessive short-term trading. Although
these policies and procedures, including the tools described above, are designed
to discourage excessive short-term trading, they do not
eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the fund may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times and with different
lag times to insurance companies issuing variable products that invest in the
fund, and in annual and semi-annual shareholder reports. Refer to such reports
to determine the types of securities in which a fund has invested. You may also
refer to the Statement of Additional Information to determine what types of
securities in which the fund may invest. You may obtain copies of these reports
or of the Statement of Additional Information from the insurance company that
issued your variable product, or from the advisor as described on the back cover
of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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
fund. Variable product owners should refer to the prospectus for their variable
products for information regarding the tax consequences of owning such variable
products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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". This prospectus relates to the Series I shares.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf "). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during the fiscal years (or period) indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES I
--------------------------------------------------
Net asset value, beginning of period $ $ $ $
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
----------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized)
================================================================================================================
Total from investment operations
================================================================================================================
Less distributions:
Dividends from net investment income
----------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
================================================================================================================
Total distributions
================================================================================================================
Net asset value, end of period $ $ $ $
________________________________________________________________________________________________________________
================================================================================================================
Total return % % % %
________________________________________________________________________________________________________________
================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $
________________________________________________________________________________________________________________
================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % %
----------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % % %
________________________________________________________________________________________________________________
================================================================================================================
Ratio of net investment income (loss) to average net assets % % % %
________________________________________________________________________________________________________________
================================================================================================================
Portfolio turnover rate % % % %
________________________________________________________________________________________________________________
================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VILCG-PRO-1
[AIM INVESTMENTS LOGO APPEARS HERE]
--Registered Trademark--
|
AIM V.I. LARGE CAP GROWTH FUND
PROSPECTUS
MAY 1, 2008
|
Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Large Cap Growth Fund's investment objective is long-term growth of capital.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE LIMITATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 6 Portfolio Managers 6 OTHER INFORMATION 6 ------------------------------------------------------ Purchase and Redemption of Shares 6 Excessive Short-Term Trading Activity Disclosures 7 Trade Activity Monitoring 7 Fair Value Pricing 7 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 9 Distribution Plan 9 Payments to Insurance Companies 9 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees (the Board) without shareholder approval.
The fund seeks to meet its objective by investing, normally, at least 80% of its assets in securities of large-capitalization companies. 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, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. The fund considers a company to be a large-capitalization company if it has a market capitalization, at the time of purchase, no smaller than the smallest capitalized company included in the Russell 1000--Registered 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 1000--Registered Trademark-- Index is a widely recognized, unmanaged index of common stocks that measures the performance of the 1,000 largest companies in the Russell 3000--Registered Trademark-- Index, which measures the performance of the 3,000 largest U.S. companies based on total market capitalization. The fund may invest up to 25% of its total assets in foreign securities.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and at any time, the fund may not be invested
in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
The fund's portfolio managers may focus on securities of companies with
market capitalizations that are within the top 50% of stocks in the Russell
1000--Registered Trademark-- Index at the time of purchase. The portfolio
managers purchase securities of a limited number of large-cap companies that
they believe have the potential for above-average 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 typically maintains a portion if its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
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.
Foreign Securities Risk--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.
The principal risk of investments in synthetic instruments is that the
fluctuations in their values may not correlate perfectly with the overall
securities markets. Some synthetic instruments are more sensitive to interest
rate changes and market price fluctuations than others. Also, synthetic
instruments are subject to counter party risk which is the risk that the other
party in the transaction will not fulfill its contractual obligation to complete
the transaction with the fund.
There is no guarantee that the investment techniques and risk analyses used
by the fund's portfolio managers will produce the desired results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
The following bar chart shows changes in the performance of the fund's Series II shares form year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- --------
2004................................................................... 8.89%
2005................................................................... 7.15%
2006................................................................... 7.81%
2007...................................................................
|
During the periods shown in the bar chart, the highest quarterly return was
[8.30% (quarter ended December 31, 2004)] and the lowest quarterly return was
[-5.34% (quarter ended June 30, 2006)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS ---------------------------------------------------------------------------------- (for the periods ended SINCE December 31, 2007) 1 YEAR INCEPTION INCEPTION DATE ---------------------------------------------------------------------------------- AIM V.I. Large Cap Growth Fund % % 08/29/03 S&P 500--Registered Trademark-- Index(1,2) 08/31/03(3) Russell 1000--Registered Trademark-- Growth Index(1,2,4) 08/31/03(3) Lipper VUF Large-Cap Growth Funds Index(1,2,5) 08/31/03(3) ---------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. 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 Variable Underlying Funds (VUF) Large-Cap Growth Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(2) The indices may not reflect payment of fees, expenses or taxes.
(3) The average annual total return given is since the month-end closest to the
inception date of the fund's Series II shares.
(4) The Russell 1000--Registered Trademark-- Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000--Registered Trademark--Growth Index is a trademark/service mark of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company.
(5) The Lipper VUF Large-Cap Growth Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Large-Cap Growth Funds category. These funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P 500--Registered Trademark-- index.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES -------------------------------------------------------------------------------- Management Fees(2) % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(3) Total Annual Fund Operating Expenses Fee Waivers and/or Expense Reimbursements(2,4) Net Annual Fund Operating Expenses -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Through December 31, 2009, the fund's advisor has contractually agreed to
waive a portion of its advisory fees to the extent necessary so that the
advisory fees payable by the fund does not exceed a specified maximum annual
advisory fee rate, wherein the fee rate includes breakpoints and is based
upon net asset levels. The fund's maximum annual advisory fee rate ranges
from 0.695% (for average net assets up to $250 million) to 0.52% (for
average net assets over $10 billion).
(3) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but are expenses of the investment companies in which the fund
invests. You incur these fees and expenses indirectly through the valuation
of the fund's investment in those investment companies. As a result, the Net
Annual Fund Operating Expenses listed above may exceed the limit on Total
Annual Fund Operating Expenses, if any. The impact of the acquired fund fees
and expenses are included in the total returns of the fund.
(4) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.26% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with the cost of investing in other mutual funds.
The example also does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Large Cap Growth Fund $ $ $ $ ---------------------------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 ----------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 ----------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- |
(1) Your actual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management, Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Geoffrey V. Keeling, Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 1995.
- Robert L. Shoss, Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 1995.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for
regulatory relief to enable the fund's shares to be sold to and held by one or
more fund of funds (open-end management investment companies or series thereof
that offer their shares exclusively to insurance companies, their separate
accounts and/or qualified plans). The fund plans to offer its shares to fund of
funds following receipt of the requested regulatory relief. Due to differences
in tax treatment and other considerations, the interests of fund shareholders,
including variable product owners and plan participants investing in the fund
(whether directly or indirectly through fund of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For
example, violation of the federal tax laws by one insurance company separate
account investing directly of indirectly in a fund could cause variable products
funded through another insurance company separate account to lose their
tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the fund through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the fund. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by the fund are to be valued at current market value if market quotations are readily available. All other securities and assets of the fund for which market quotations are not readily available are to be valued at fair value determined in good faith using procedures approved by the Board of the fund. Fair value pricing may reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially "stale" prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
See "Pricing of Shares--Determination of Net Asset Value" for more information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the fund may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices.
In addition, if the price provided by the pricing service is unreliable, the
advisor valuation committee may fair value the security using procedures
approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times and with different
lag times to insurance companies issuing variable products that invest in the
fund, and in annual and semi-annual shareholder reports. Refer to such reports
to determine the types of securities in which a fund has invested. You may also
refer to the Statement of Additional Information to determine what types of
securities in which the fund may invest. You may obtain copies of these reports
or of the Statement of Additional Information from the insurance company that
issued your variable product, or from the advisor as described on the back cover
of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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
fund. Variable product owners should refer to the prospectus for their variable
products for information regarding the tax consequences of owning such variable
products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II
shares. The plan allows the fund 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 fund). Because the fund pays
this fee out of its assets on an ongoing basis, over time this fee will increase
the cost of your investment and may cost you more than paying other types of
charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf "). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the
level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during the fiscal years (or period) indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES II
------------------------------------------------
Net asset value, beginning of period $ $ $ $
--------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
--------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized)
==============================================================================================================
Total from investment operations
==============================================================================================================
Less distributions:
Dividends from net investment income
--------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
==============================================================================================================
Total distributions
==============================================================================================================
Net asset value, end of period $ $ $ $
______________________________________________________________________________________________________________
==============================================================================================================
Total return % % % %
______________________________________________________________________________________________________________
==============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $
______________________________________________________________________________________________________________
==============================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % %
--------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % % %
==============================================================================================================
Ratio of net investment income (loss) to average net assets % % % %
______________________________________________________________________________________________________________
==============================================================================================================
Portfolio turnover rate % % % %
______________________________________________________________________________________________________________
==============================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
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You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VILCG-PRO-2
AIM V.I. LEISURE FUND
PROSPECTUS
MAY 1, 2008
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Series I shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Leisure Fund's investment objective is capital growth.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 6 Portfolio Manager 6 OTHER INFORMATION 6 ------------------------------------------------------ Purchase and Redemption of Shares 6 Excessive Short-Term Trading Activity Disclosures 7 Trade Activity Monitoring 7 Fair Value Pricing 7 Risks 7 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 9 Payments to Insurance Companies 9 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective may be changed by the Board of Trustees (the Board) without shareholder approval.
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 of issuers that are engaged in the design, production and
distribution of products and services related to leisure activities of
individuals (the leisure sector). The fund considers a company to be doing
business in the leisure sector if it meets at least one of the following tests:
(1) at least 50% of its gross income or its net sales come from products or
services related to leisure activities of individuals; (2) at least 50% of its
assets are devoted to producing revenues through products or services related to
leisure activities of individuals; or (3) based on other available information,
the portfolio manager determines that its primary business is in products or
services related to leisure activities of individuals.
The principal type of equity securities purchased by the fund is common stocks. Companies in the leisure sector include, but are not limited to, those involved in the design, production and distribution of products or services related to the leisure activities of individuals. These companies operate in the following industries: hotel, gaming, publishing, advertising, beverage, audio/video, broadcasting-radio/television, cable and satellite, motion picture, recreation services and entertainment, retail and toy.
The fund may invest up to 25% of its total assets in securities of non-U.S.
issuers doing business in the leisure-related industries. Securities of Canadian
issuers and American Depositary Receipts are not subject to this 25% limitation.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and, at any time, the fund may not be
invested in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
The portfolio manager believes that investment opportunities are driven by
long-term themes that support growth of the leisure sector such as demographic
and income trends, and technology innovation and integration and globalization.
The portfolio manager seeks to invest in companies with growth potential
regardless of the economic environment, and also seeks to diversify the fund
across the leisure sector. The portfolio manager intends to adjust portfolio
weightings depending on prevailing economic conditions and relative valuations
of securities.
In selecting securities for the fund, the portfolio manager uses a bottom-up
investment approach using a combination of quantitative, fundamental and
valuation analyses. The portfolio manager focuses on businesses related to
leisure activities of individuals with (1) strong fundamentals and promising
growth potential; (2) valuations below those of the broad market and (3)
managements that have long-term visions for their companies and the skills
needed to grow their market share and earnings at faster rates than their
competitors. The fund invests in companies of all market capitalizations, but
favors mid-to-large capitalization companies. In general, the fund emphasizes
companies that the portfolio manager believes are strongly managed and will
generate above average long-term capital appreciation.
The portfolio manager will consider selling a security if: (1) there is a
negative change in the company's or industry's fundamentals, or (2) the
investment reaches the portfolio manager's target price.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
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 historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
The principal risks of investing in the fund are:
Market Risk--The prices of and the income generated by securities held by
the fund may decline in response to certain events, including those directly
involving the companies whose securities are owned by the fund; general economic
and market conditions; regional or global economic instability; and currency and
interest rate fluctuations. Certain securities selected for the fund's portfolio
may decline in value more than the overall stock market. In general, the
securities of small companies are more volatile than those of mid-size companies
or large companies.
Equity Securities Risk--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. These factors will probably affect the equity
securities of smaller companies more than the equity securities of larger,
more-established companies. Also, because equity
securities of smaller 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 these securities at a desirable price.
Sector Fund Risk--The fund's investments are concentrated in a comparatively
narrow segment of the economy, the leisure sector. This means that the fund's
investment concentration in the leisure sector is higher than most mutual funds
and the broad securities market. Consequently, the fund tends to be more
volatile than other mutual funds, and the value of the fund's investments and
consequently the value of an investment in the fund tends to rise and fall more
rapidly.
Leisure Industry Risk--The leisure sector depends on consumer discretionary
spending, which generally falls during economic downturns. Securities of
gambling casinos are often subject to high price volatility and are considered
speculative. Video and electronic games are subject to the risk of rapid
obsolescence.
Foreign Securities Risk--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.
Derivatives Risk--The value of "derivatives"--so-called because their value
"derives" from the value of an underlying asset (including an underlying
security), reference rate or index--may rise or fall more rapidly than other
investments. For some derivatives, it is possible to lose more than the amount
invested in the derivative. If the fund uses derivatives to "hedge" the overall
risk of its portfolio, it is possible that the hedge may not succeed. This may
happen for various reasons, including unexpected changes in the value of the
rest of the fund's portfolio. Over the counter derivatives are also subject to
counterparty risk, which is the risk that the other party to the contract will
not fulfill its contractual obligation to complete the transaction with the
fund.
Leverage Risk--The use of synthetic securities and derivatives may give rise
to a form of leverage. Leverage may cause the fund's portfolio to be more
volatile than if the portfolio had not been leveraged because leverage can
exaggerate the effect of any increase or decrease in the value of securities
held by the fund.
Management Risk--There is no guarantee that the investment techniques and
risk analyses used by the fund's portfolio manager will produce the desired
results.
An investment in the fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2003................................................................... 28.64%
2004................................................................... 13.40%
2005................................................................... -1.19%
2006................................................................... 24.61%
2007...................................................................
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During the periods shown in the bar chart, the highest quarterly return was
[15.13% (quarter ended June 30, 2003)] and the lowest quarterly return was
[-3.05% (quarter ended March 31, 2003)]. For periods prior to April 30, 2004,
performance shown above relates to a predecessor fund advised by INVESCO Funds
Group, Inc. (IFG), an affiliate of Invesco Aim Advisors, Inc.
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of an unmanaged broad-based securities market index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2007) 1 YEAR INCEPTION DATE --------------------------------------------------------------------------------- AIM V.I. Leisure Fund(1) % % 04/30/02(2) S&P 500--Registered Trademark-- Index(3,4) 04/30/02(2) --------------------------------------------------------------------------------- |
(1) For periods prior to April 30, 2004, performance shown relates to a predecessor fund advised by IFG. Total return figures include reinvested dividends and capital gain distributions and the effect of the fund's expenses.
(2) The fund commenced investment operations on April 30, 2002. Index comparisons began on April 30, 2002.
(3) The Standard & Poor's 500 Index is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry.
(4) The index may not reflect payment of fees, expenses or taxes.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly
or indirectly, when a variable product owner buys, holds, or redeems interest in
an insurance company separate account that invests in the Series I shares of the
fund but does not represent the effect of any fees or other expenses assessed in
connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees % Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursement(3) Net Annual Fund Operating Expenses -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 1.01% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
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.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Leisure Fund $ $ $ $ ---------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 -------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ -------------------------------------------------------------------------------------------- SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 -------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ -------------------------------------------------------------------------------------------- |
(1) Your annual expenses may be higher or lower than these shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGER
Mark D. Greenberg, Senior Portfolio Manager, is primarily responsible for the day-to-day management of the fund's portfolio. He has been responsible for the fund since 2002 and has been associated with Invesco Aim and/or its affiliates since 1996.
More information on the portfolio manager may be found on the advisor's website http://www.invescoaim.com. The website is not a part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio manager's investments in the fund, a description of his compensation structure, and information regarding other accounts he manages.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or
all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal bonds and convertible securities, including high yield or junk bonds, are valued on the basis of prices provided by independent pricing services. Prices provided by the pricing services 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, maturity and other market data. Prices received from pricing services are fair value prices. In addition, if the price provided by the pricing service is unreliable, the advisor valuation committee may fair value the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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
fund. Variable product owners should refer to the prospectus for their variable
products for information regarding the tax consequences of owning such variable
products contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
This information has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
SERIES I
-------------------------------------------
---------------------------------------------------------------
------- ------- ------- ------- ----------------
Net asset value, beginning of period $ $ $ $ $
-----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
-----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
=============================================================================================================================
Total from investment operations
=============================================================================================================================
Less distributions:
Dividends from net investment income
-----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
=============================================================================================================================
Total distributions
=============================================================================================================================
Net asset value, end of period $ $ $ $ $
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Total return % % % % %
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % % %
-----------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % % % %
=============================================================================================================================
Ratio of net investment income (loss) to average net assets % % % % %
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Portfolio turnover rate % % % % %
_____________________________________________________________________________________________________________________________
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
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Because you cannot purchase shares of the fund directly, these documents have not been made available on our website.
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com I-VILEI-PRO-1
AIM V.I. LEISURE FUND
PROSPECTUS
MAY 1, 2008
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Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Leisure Fund's investment objective is capital growth.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 6 Portfolio Manager 6 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosure 7 Trading Activity Monitoring 7 Fair Value Pricing 8 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 9 Distribution Plan 9 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective may be changed by the Board of Trustees (the Board) without shareholder approval.
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 of issuers that are engaged in the design, production and
distribution of products and services related to leisure activities of
individuals (the leisure sector). The fund considers a company to be doing
business in the leisure sector if it meets at least one of the following tests:
(1) at least 50% of its gross income or its net sales come from products or
services related to leisure activities of individuals; (2) at least 50% of its
assets are devoted to producing revenues through products or services related to
leisure activities of individuals; or (3) based on other available information,
the portfolio manager determines that its primary business is in products or
services related to leisure activities of individuals.
The principal type of equity securities purchased by the fund is common stocks. Companies in the leisure sector include, but are not limited to, those involved in the design, production and distribution of products or services related to the leisure activities of individuals. These companies operate in the following industries: hotel, gaming, publishing, advertising, beverage, audio/video, broadcasting-radio/television, cable and satellite, motion picture, recreation services and entertainment, retail and toy.
The fund may invest up to 25% of its total assets in securities of non-U.S. issuers doing business in the leisure-related industries. Securities of Canadian issuers and American Depositary Receipts are not subject to this 25% limitation.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and, at any time, the fund may not be
invested in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
The portfolio manager believes that investment opportunities are driven by
long-term themes that support growth of the leisure sector such as demographic
and income trends, and technology innovation and integration and globalization.
The portfolio manager seeks to invest in companies with growth potential
regardless of the economic environment, and also seeks to diversify the fund
across the leisure sector. The portfolio manager intends to adjust portfolio
weightings depending on prevailing economic conditions and relative valuations
of securities.
In selecting securities for the fund, the portfolio manager uses a bottom-up
investment approach using a combination of quantitative, fundamental and
valuation analyses. The portfolio manager focuses on businesses related to
leisure activities of individuals with (1) strong fundamentals and promising
growth potential; (2) valuations below those of the broad market and (3)
managements that have long-term visions for their companies and the skills
needed to grow their market share and earnings at faster rates than their
competitors. The fund invests in companies of all market capitalizations, but
favors mid-to-large capitalization companies. In general, the fund emphasizes
companies that the portfolio manager believes are strongly managed and will
generate above average long-term capital appreciation.
The portfolio manager will consider selling a security if: (1) there is a
negative change in the company's or industry's fundamentals, or (2) the
investment reaches the portfolio manager's target price.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
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 historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
The principal risks of investing in the fund are:
Market Risk--The prices of and the income generated by securities held by
the fund may decline in response to certain events, including those directly
involving the companies whose securities are owned by the fund; general economic
and market conditions; regional or global economic instability; and currency and
interest rate fluctuations. Certain securities selected for the fund's portfolio
may decline in value more than the overall stock market. In general, the
securities of small companies are more volatile than those of mid-size companies
or large companies.
Equity Securities Risk--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. These factors will probably affect the equity
securities of smaller companies more than the equity securities of larger,
more-established companies. Also, because equity
securities of smaller 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 these securities at a desirable price.
Sector Fund Risk--The fund's investments are concentrated in a comparatively
narrow segment of the economy, the leisure sector. This means that the fund's
investment concentration in the leisure sector is higher than most mutual funds
and the broad securities market. Consequently, the fund tends to be more
volatile than other mutual funds, and the value of the fund's investments and
consequently the value of an investment in the fund tends to rise and fall more
rapidly.
Leisure Industry Risk--The leisure sector depends on consumer discretionary
spending, which generally falls during economic downturns. Securities of
gambling casinos are often subject to high price volatility and are considered
speculative. Video and electronic games are subject to the risk of rapid
obsolescence.
Foreign Securities Risk--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. Derivatives Risk--The value of "derivatives"--so called because their value "derives" from the value of an underlying asset (including an underlying security), reference rate or index--may rise or fall more rapidly than other investments. For some derivatives, it is possible to lose more than the amount invested in the derivative. If the fund uses derivatives to "hedge" the overall risk of its portfolio, it is possible that the hedge may not succeed. This may happen for various reasons, including unexpected changes in the value of the rest of the fund's portfolio. Over the counter derivatives are also subject to counterparty risk, which is the risk that the other party to the contract will not fulfill its contractual obligation to complete the transaction with the fund. Leverage Risk--The use of synthetic securities and derivatives may give rise to a form of leverage. Leverage may cause the fund's portfolio to be more volatile than if the portfolio had not been leveraged because leverage can exaggerate the effect of any increase or decrease in the value of securities held by the fund. Management Risk--There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio manager will produce the desired results.
An investment in the fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The 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 chart shown does not
reflect charges assessed in connection with your variable product; if it did,
the performance shown would be lower.
Series I shares are not offered by this prospectus. The Series I shares 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 the fund).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
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2003*.................................................................. 28.32%
2004**................................................................. 13.22%
2005................................................................... -1.37%
2006................................................................... 24.28%
2007...................................................................
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* The returns shown for these periods are 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 return shown for this period is the blended return 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 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 30, 2004.
During the periods shown in the bar chart, the highest quarterly return was
[15.06% (quarter ended June 30, 2003)] and the lowest quarterly return was
[-3.11% (quarter ended March 31, 2003)]. For periods prior to April 30, 2004,
performance shown above relates to a predecessor fund advised by INVESCO Funds
Group, Inc. (IFG), an affiliate of Invesco Aim Advisors, Inc.
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of an unmanaged broad-based securities market index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS
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SERIES I
(for the periods ended December 31, SINCE INCEPTION
2007) 1 YEAR INCEPTION DATE
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AIM V.I. Leisure Fund(1) 24.28% 9.30%(2) 04/30/02(2)
S&P 500--Registered Trademark--
Index(3,4) 15.78 8.02(2) 04/30/02(2)
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(1) The return shown for the one year period is the historical performance of the fund's Series II shares. The return shown for the since inception period is the blended return of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the predecessor 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 30, 2004. For periods prior to April 30, 2004, performance shown relates to a predecessor fund advised by IFG. Total return figures include reinvested dividends and capital gain distributions and the effect of the fund's expenses.
(2) Series I shares of the fund commenced investment operations on April 30, 2002. Index comparisons began on April 30, 2002.
(3) The Standard & Poor's 500 Index is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry.
(4) The index may not reflect payment of fees, expenses or taxes.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly
or indirectly, when a variable product owner buys, holds, or redeems interest in
an insurance company separate account that invests in the Series II shares of
the fund but does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES -------------------------------------------------------------------------------- Management Fees % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(3) Net Annual Fund Operating Expenses -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but are expenses of the investment companies in which the fund
invests. You incur these fees and expenses indirectly through the valuation
of the fund's investment in those investment companies. As a result, the Net
Annual Fund Operating Expenses listed above may exceed the limit on Total
Annual Fund Operating Expenses, if any. The impact of the acquired fund fees
and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or
reimburse expenses of Series II shares to the extent necessary to limit
Total Annual Fund Operating Expenses (excluding certain items discussed
below) of Series II shares to 1.26% of average daily net assets. In
determining the advisor's obligation to waive advisory fees and/or reimburse
expenses,
the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Leisure Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
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Annual Expenses Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
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SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
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Annual Expenses Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
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(1) Your annual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGER
Mark D. Greenberg, Senior Portfolio Manager, is primarily responsible for the day-to-day management of the fund's portfolio. He has been responsible for the fund since 2002 and has been associated with Invesco Aim and/or its affiliates since 1996.
More information on the portfolio manager including biographies of members of the team, may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio manager's investments in the fund, a description of his compensation structure, and information regarding other accounts he manages.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the funds will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that
are significant and may make the closing price unreliable, the fund may fair
value the security. If an issuer specific event has occurred that the advisor
determines, in its judgment, is likely to have affected the closing price of a
foreign security, it will price the security at fair value. The advisor also
relies on a screening process from a pricing vendor to indicate the degree of
certainty, based on historical data, that the closing price in the principal
market where a foreign security trades is not the current market value as of the
close of the NYSE. For foreign securities where the advisor believes, at the
approved degree of certainty, that the price is not reflective of current market
value, the advisor will use the indication of fair value from the pricing
service to determine the fair value of the security. The pricing vendor, pricing
methodology or degree of certainty may change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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
fund. Variable product owners should refer to the prospectus for their variable
products for information regarding the tax consequences of owning such variable
products contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II
shares. The plan allows the fund 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 fund). Because the fund pays these fees out of its 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 charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they makes these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payment for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during the fiscal years (or period) indicated.
This information has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
SERIES II
--------------------------------------------------
Net asset value, beginning of period $ $ $
------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
==================================================================================================================
Total from investment operations
==================================================================================================================
Less distributions:
Dividends from net investment income
------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
==================================================================================================================
Total distributions
==================================================================================================================
Net asset value, end of period $ $ $
__________________________________________________________________________________________________________________
==================================================================================================================
Total return(a) % % %
__________________________________________________________________________________________________________________
==================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $
__________________________________________________________________________________________________________________
==================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % %
------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % %
==================================================================================================================
Ratio of net investment income (loss) to average net assets % % %
__________________________________________________________________________________________________________________
==================================================================================================================
Portfolio turnover rate(d) % % %
__________________________________________________________________________________________________________________
==================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com I-VILEI-PRO-2
AIM V.I. MID CAP CORE EQUITY FUND
PROSPECTUS
May 1, 2008
|
SERIES I SHARES
SHARES OF THE FUND ARE CURRENTLY OFFERED ONLY TO INSURANCE COMPANY SEPARATE ACCOUNTS FUNDING VARIABLE ANNUITY CONTRACTS AND VARIABLE LIFE INSURANCE
POLICIES. AIM V.I. MID CAP CORE EQUITY FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL.
THIS PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE SERIES I CLASS SHARES (SERIES I SHARES) OF THE 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.
AN INVESTMENT IN THE FUND:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 5 ------------------------------------------------------ Fees and Expenses of the Fund 5 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 6 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 7 Portfolio Managers 7 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 8 Trade Activity Monitoring 8 Fair Value Pricing 8 Risks 9 Pricing of Shares 9 Taxes 10 Dividends and Distributions 10 Share Classes 10 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 12 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is long-term growth of capital. The fund's
investment objective may be changed by the Board of Trustees (the Board) without
shareholder approval.
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 and derivative instruments. Synthetic
and derivative instruments are investments that have economic characteristics
similar to the fund's direct investments. Synthetic and derivative instruments
that the fund may invest in may include warrants, futures, options,
exchange-traded funds and American Depositary Receipts. Synthetic and derivative
instruments may have the effect of leveraging the fund's portfolio.
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--Registered
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--Registered 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--Registered Trademark-- Index are considered
representative of medium-sized companies.
In selecting securities for the fund's portfolio, the portfolio managers
normally seek to identify those companies that are, in their view, undervalued
relative to current or projected earnings, or to the current market value of
assets owned by the company. The portfolio managers perform significant due
diligence and fundamental research on companies under consideration. The primary
emphasis of the portfolio managers' search for undervalued equity securities is
normally in five 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; (4) companies whose equity securities are selling
at prices that do not yet reflect the current market value of their assets; and
(5) companies that the portfolio managers believe will translate high or
increasing returns on invested capital into improving levels of free cash flow
and value for shareholders.
The portfolio managers consider selling a security if the price target set
by the portfolio managers is exceeded, there is deterioration in fundamentals
over an 18 to 24 month period, or more compelling investment opportunities
exist.
The fund may invest up to 25% of its total assets in foreign securities. The
fund may also invest up to 20% of its assets in equity securities of companies
that have market capitalizations, at the time of purchase, in other market
capitalization ranges. The fund may invest up to 20% of its assets in
investment-grade debt securities, U.S. government securities, and high-quality
money market instruments, including shares of affiliated money market funds.
The fund employs a risk management strategy to reduce volatility. Pursuant
to this strategy, the fund generally invests a substantial amount of its assets
in cash and cash equivalents. In anticipation of or in response to adverse
market or other conditions, or atypical circumstances such as unusually large
cash inflows or redemptions, the fund may temporarily increase the portion of
its assets held in cash, cash equivalents (including shares of affiliated money
market funds) or high quality debt instruments. As a result, the fund may not
achieve its investment objective.
The fund's investment in the types of securities described in this prospectus vary from time to time, and at any time, the fund may not be invested in all types of securities described in this prospectus. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
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 historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
The principal risks of investing in the fund are:
Market Risk--The prices of and the income generated by securities held by
the fund may decline in response to certain events, including those directly
involving the companies whose securities are owned by the fund; general economic
and market conditions; regional or global economic instability; and currency and
interest rate fluctuations. Certain securities selected for the fund's portfolio
may decline in value more than the overall stock market. In general, the
securities of mid-size companies are more volatile than those of large
companies.
Equity Securities Risk--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.
Foreign Securities Risk--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. Convertible Securities Risk--The values of 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 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 a price that is unfavorable to the fund. Interest Rate Risk--Interest rate risk refers to the risk that bond prices generally fall as interest rates rise; conversely, bond prices generally rise as interest rates fall. Specific bonds differ in their sensitivity to changes in interest rates depending on specific characteristics of each bond. A measure investors commonly use to determine this sensitivity is called duration. The longer the duration of a particular bond, the greater is its price sensitivity to interest rates. Similarly, a longer duration portfolio of securities has greater price sensitivity. Duration is determined by a number of factors including coupon rate, whether the coupon is fixed or floating, time to maturity, call or put features, and various repayment features. Credit Risk--Credit risk is the risk of loss on an investment due to the deterioration of an issuer's financial health. Such a deterioration of financial health may result in a reduction of the credit rating of the issuer's securities and may lead to the issuer's inability to honor its contractual obligations including making timely payment of interest and principal. Credit ratings are a measure of credit quality. Although a downgrade or upgrade of a bond's credit ratings may or may not affect its price, a decline in credit quality may make bonds less attractive, thereby driving up the yield on the bond and driving down the price. Declines in credit quality can result in bankruptcy for the issuer and permanent loss of investment. U.S. Government Obligations Risk--The fund may invest in obligations issued by agencies and instrumentalities of the U.S. Government. These obligations vary in the level of support they receive from the U.S. Government. They may be: (i) supported by the full faith and credit of the U.S. Treasury, such as those of the Government National Mortgage Association; (ii) supported by the right of the issuer to borrow from the U.S. Treasury, such as those of the Federal National Mortgage Association; (iii) supported by the discretionary authority of the U.S. Government to purchase the issuer's obligations, such as those of the former Student Loan Marketing Association; or (iv) supported only by the credit of the issuer, such as those of the Federal Farm Credit Bureau. 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, in which case, if the issuer defaulted, the underlying fund holding securities of such issuer might not be able to recover its investment from the U.S. Government. Market Capitalization Risk--Stocks fall into three broad market capitalization categories--large, medium and small. Investing primarily in one category carries the risk that, due to current market conditions, that category may be out of favor with investors. Small and mid-sized companies tend to be more vulnerable to adverse developments and more volatile than larger companies. Investments in small and mid-sized companies may involve special risks, including those associated with dependence on a small management group, little or no operating history, little or no track record of success, and limited product lines, markets and financial resources. Also, there may be less publicly available information about the issuers of the securities or less market interest in such securities than in the case of larger companies, each of which can cause significant price volatility. The securities of small and mid-sized may be illiquid, restricted as to resale, or may trade less frequently and in smaller volume than more widely held securities, which may make it difficult for a fund to establish or close out a position in these securities at prevailing market prices. Derivatives Risk--The value of "derivatives"--so-called because their value "derives" from the value of an underlying asset (including an underlying security), reference rate or index--may rise or fall more rapidly than other investments. For some derivatives, it is possible to lose more than the amount invested in the derivative. Derivatives may be used to create a synthetic exposure to an underlying asset or to hedge a portfolio risk. If the fund uses derivatives to "hedge" a portfolio risk, it is possible that the hedge may not succeed. This may happen for various reasons, including unexpected changes in the value of the rest of the fund's portfolio. Over the counter derivatives are also subject to counterparty risk, which is the risk that the other party to the contract will not fulfill its contractual obligation to complete the transaction with the fund.
Leveraging Risk--The use of derivatives may give rise to a form of leverage. Leverage may cause the fund to be more volatile than if the portfolio had not been leveraged because leverage can exaggerate the effect of any increase or decrease in the value of securities held by the fund.
Cash/Cash Equivalents Risk--To the extent the fund holds cash or cash equivalents rather than equity securities, the fund may not achieve its investment objective and it may under perform its peer group and benchmark index, particularly during periods of strong market performance.
Management Risk--There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio managers will produce the desired results.
An investment in the fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
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
----------- -------
2002................................................................... -11.10%
2003................................................................... 27.31%
2004................................................................... 13.82%
2005................................................................... 7.62%
2006................................................................... 11.24%
2007...................................................................
|
During the period shown in the bar chart, the highest quarterly return was
[16.45% (quarter ended June 30, 2003)] and the lowest quarterly return was
[-14.37% (quarter ended September 30, 2002)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2007) 1 YEAR 5 YEARS INCEPTION DATE ----------------------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund % % % 09/10/01 S&P 500--Registered Trademark-- Index(1,2) 08/31/01(3) Russell Midcap--Registered Trademark-- Index(1,2,4) 08/31/01(3) Lipper VUF Mid-Cap Core Funds Index(1,2,5) 08/31/01(3) ----------------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. The fund has also included 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 Variable Underlying Funds (VUF) Mid-Cap Core Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(2) The indices may not reflect payment of fees, expenses or taxes.
(3) The average annual total return given is since the month end closest to the
inception date of the fund's Series I shares.
(4) The Russell Midcap--Registered Trademark-- Index measures the performance of the 800 smallest companies in the Russell 1000--Registered Trademark-- Index, which represent approximately 30% of the total market capitalization of the Russell 1000--Registered Trademark-- Index. The Russell 1000--Registered Trademark-- Index is comprised of 1000 of the largest capitalized U.S. domiciled companies whose common stock is traded in the United States. The Russell Midcap--Registered Trademark-- Index and Russell 1000--Registered Trademark-- Index are trademarks/service marks of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company.
(5) The Lipper VUF Mid-Cap Core Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Mid-Cap Core Funds category. These funds typically have an average price-to-earnings ratio, price-to-book ratio, and three year sales-per-share growth value, compared to the S&P MidCap 400 Index. The S&P MidCap 400 Index is a market capitalization-weighted index that is widely used for mid-sized companies. The index accounts for approximately 7% of the U.S. equities market.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees % Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses(3) -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 1.30% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series I shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Mid Cap Core Equity Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 ------------------------------------------------------------------------------------------------------ Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ------------------------------------------------------------------------------------------------------ SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 ------------------------------------------------------------------------------------------------------ Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ------------------------------------------------------------------------------------------------------ |
(1) Your actual expenses may be higher or lower than those shown above.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of the fund's average daily net assets.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- 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 Invesco Aim and/or its affiliates since 1998.
- Brian Nelson, Portfolio Manager, who has been responsible for the fund since 2007 and has been associated with Invesco Aim and/or its affiliates since 2004. From 2000 to 2004, Mr. Nelson was a senior telecommunications analyst for RCM Global Investors.
- Douglas Asiello, Portfolio Manager, who has been responsible for the fund since 2007 and has been associated with Invesco Aim and/or its affiliates since 2001.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not a part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in
cash, the fund reserves the right to determine, in its sole discretion, whether
to satisfy redemption requests by making payment in securities or other property
(known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may
offer them to pension and retirement plans that qualify for special federal income tax treatment. The fund and Invesco Aim have applied for regulatory relief to enable the fund's shares to be sold to and held by one or more fund of funds (open-end management investment companies or series thereof that offer their shares exclusively to insurance companies, their separate accounts and/or qualified plans). The fund plans to offer its shares to fund of funds following receipt of the requested regulatory relief. Due to differences in tax treatment and other considerations, the interests of fund shareholders, including variable product owners and plan participants investing in the fund (whether directly or indirectly through fund of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board. Each of these tools is described in more detail below. In addition, restrictions designed to discourage or curtail excessive short-term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices.
In addition, if the price provided by the pricing service is unreliable, the
advisor valuation committee may fair value the security using procedures
approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES I
--------------------------------------------------------------------
Net asset value, beginning of period $ $ $ $ $
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
=================================================================================================================================
Total from investment operations
=================================================================================================================================
Less distributions:
Dividends from net investment income
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
=================================================================================================================================
Total distributions
=================================================================================================================================
Net asset value, end of period $ $ $ $ $
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return % % % % %
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets % % % % %
=================================================================================================================================
Ratio of net investment income (loss) to average net assets % % % % %
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate % % % % %
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
AIM V.I. MID CAP CORE EQUITY FUND
PROSPECTUS
MAY 1, 2008
Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Mid Cap Core Equity Fund's investment objective is long-term growth of capital.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 5 ------------------------------------------------------ Fees and Expenses of the Fund 5 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 6 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 7 Portfolio Managers 7 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 8 Trade Activity Monitoring 8 Fair Value Pricing 8 Risks 9 Pricing of Shares 9 Taxes 10 Dividends and Distributions 10 Share Classes 10 Distribution Plan 10 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 12 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Funds Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment in the types of securities described in this prospectus vary from time to time, and at any time, the fund may not be invested in all types of securities described in this prospectus. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
- 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. Convertible Securities Risk--The values of 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 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 a price that is unfavorable to the fund. Interest Rate Risk--Interest rate risk refers to the risk that bond prices generally fall as interest rates rise; conversely, bond prices generally rise as interest rates fall. Specific bonds differ in their sensitivity to changes in interest rates depending on specific characteristics of each bond. A measure investors commonly use to determine this sensitivity is called duration. The longer the duration of a particular bond, the greater is its price sensitivity to interest rates. Similarly, a longer duration portfolio of securities has greater price sensitivity. Duration is determined by a number of factors including coupon rate, whether the coupon is fixed or floating, time to maturity, call or put features, and various repayment features. Credit Risk--Credit risk is the risk of loss on an investment due to the deterioration of an issuer's financial health. Such a deterioration of financial health may result in a reduction of the credit rating of the issuer's securities and may lead to the issuer's inability to honor it's contractual obligations including making timely payment of interest and principal. Credit ratings are a measure of credit quality. Although a downgrade or upgrade of a bond's credit ratings may or may not affect its price, a decline in credit quality may make bonds less attractive, thereby driving up the yield on the bond and driving down the price. Declines in credit quality can result in bankruptcy for the issuer and permanent loss of investment. U.S. Government Obligations Risk--The fund may invest in obligations issued by agencies and instrumentalities of the U.S. Government. These obligations vary in the level of support they receive from the U.S. Government. They may be: (i) supported by the full faith and credit of the U.S. Treasury, such as those of the Government National Mortgage Association; (ii) supported by the right of the issuer to borrow from the U.S. Treasury, such as those of the Federal National Mortgage Association; (iii) supported by the discretionary authority of the U.S. Government to purchase the issuer's obligations, such as those of the former Student Loan Marketing Association; or (iv) supported only by the credit of the issuer, such as those of the Federal Farm Credit Bureau. 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, in which case, if the issuer defaulted, the underlying fund holding securities of such issuer might not be able to recover its investment from the U.S. Government. Market Capitalization Risk--Stocks fall into three broad market capitalization categories--large, medium and small. Investing primarily in one category carries the risk that, due to current market conditions, that category may be out of favor with investors. Small and mid-sized companies tend to be more vulnerable to adverse developments and more volatile than larger companies. Investments in small and mid-sized companies may involve special risks, including those associated with dependence on a small management group, little or no operating history, little or no track record of success, and limited product lines, markets and financial resources. Also, there may be less publicly available information about the issuers of the securities or less market interest in such securities than in the case of larger companies, each of which can cause significant price volatility. The securities of small and mid-sized may be illiquid, restricted as to resale, or may trade less frequently and in smaller volume than more widely held securities, which may make it difficult for a fund to establish or close out a position in these securities at prevailing market prices. Derivatives Risk--The value of "derivatives"--so-called because their value "derives" from the value of an underlying asset (including an underlying security), reference rate or index--may rise or fall more rapidly than other investments. For some derivatives, it is possible to lose more than the amount invested in the derivative. Derivatives may be used to create synthetic exposure to an underlying asset or to hedge a portfolio risk. If the fund uses derivatives to "hedge" a portfolio risk, it is possible that the hedge may not succeed. This may happen for various reasons, including unexpected changes in the value of the rest of the fund's portfolio. Over the counter derivatives are also subject to counterparty risk, which is the risk that the other party to the contract will not fulfill its contractual obligation to complete the transaction with the fund. Leveraging Risk--The use of derivatives may give rise to a form of leverage. Leverage may cause the fund to be more volatile than if the portfolio had not been leveraged because leverage can exaggerate the effect of any increase or decrease in the value of securities held by the fund. Cash/Cash Equivalents Risk--To the extent the fund holds cash or cash equivalents rather than equity securities, the fund may not achieve its investment objective and it may underperform its peer group and benchmark index, particularly during periods of strong market performance.
Management Risk--There is no guarantee that the investment techniques and
risk analyses used by the fund's portfolio managers will produce the desired
results.
An investment in the fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
The following bar chart shows changes in the performance of the fund's Series II shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2002................................................................... -11.20%
2003................................................................... 27.05%
2004................................................................... 13.57%
2005................................................................... 7.27%
2006................................................................... 10.98%
2007...................................................................
|
During the period shown in the bar chart, the highest quarterly return was
[16.39% (quarter ended June 30, 2003)] and the lowest quarterly return was
[-14.48% (quarter ended September 30, 2002)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS ----------------------------------------------------------------------------------------- (for the periods ended 5 SINCE INCEPTION December 31, 2007) 1 YEAR YEARS INCEPTION DATE ------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund % % % 09/10/01 S&P 500--Registered Trademark-- Index(1,2) 08/31/01(3) Russell Midcap--Registered Trademark-- Index(1,2,4) 08/31/01(3) Lipper VUF Mid-Cap Core Funds Index(1,2,5) 08/31/01(3) ----------------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. The fund has also included 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 Variable Underlying Funds (VUF) Mid-Cap Core Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(2) The indices may not reflect payment of fees, expenses or taxes.
(3) The average annual total return given is since the month end closest to the
inception date of the fund's Series II shares.
(4) The Russell Midcap--Registered Trademark-- Index measures the performance of the 800 smallest companies in the Russell 1000--Registered Trademark-- Index category, which represent approximately 30% of the total market capitalization of the Russell 1000--Registered Trademark-- Index. The Russell Midcap--Registered Trademark-- Index is a trademark/service mark of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company.
(5) The Lipper VUF Mid-Cap Core Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Mid-Cap Core Funds category. The Russell 1000--Registered Trademark-- Index is comprised of 1000 of the largest capitalized U.S. domiciled companies whose common stock is traded in the United States. The Russell Midcap--Registered Trademark-- Index and Russell 1000--Registered Trademark-- Index are trademarks/service marks of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company. These funds typically have an average price-to-earnings ratio, price-to-book ratio, and three year sales-per-share growth value, compared to the S&P MidCap 400 Index. The S&P MidCap 400 Index is a market capitalization-weighted index that is widely used for mid-sized companies. The index accounts for approximately 7% of the U.S. equities market.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES -------------------------------------------------------------------------------- Management Fees % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses(3) -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.45% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Mid Cap Core Equity Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 ------------------------------------------------------------------------------------------------------ Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ------------------------------------------------------------------------------------------------------ SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 ------------------------------------------------------------------------------------------------------ Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ------------------------------------------------------------------------------------------------------ |
(1) Your actual expenses may be higher or lower than those shown above.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG)(the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors)(the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- 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 Invesco Aim and/or its affiliates since 1998.
- Brian Nelson, Portfolio Manager, who has been responsible for the fund since 2007 and has been associated with Invesco Aim and/or its affiliates since 2004. From 2000 to 2004, Mr. Nelson was a senior telecommunications analyst for RCM Global Investors.
- Douglas Asiello, Portfolio Manager, who has been responsible for the fund since 2007 and has been associated with Invesco Aim and/or its affiliates since 2001.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not a part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio manager's investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for
regulatory relief to enable the fund's shares to be sold to and held by one or
more fund of funds (open-end management investment companies or series thereof
that offer their shares exclusively to insurance companies, their separate
accounts and/or qualified plans). The fund plans to offer its shares to fund of
funds following receipt of the requested regulatory relief. Due to differences
in tax treatment and other considerations, the interests of fund shareholders,
including variable product owners and plan participants investing in the fund
(whether directly or indirectly through fund of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For
example, violation of the federal tax laws by one insurance company separate
account investing directly or indirectly in a fund could cause variable products
funded through another insurance company separate account to lose their
tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices.
In addition, if the price provided by the pricing service is unreliable, the
advisor valuation committee may fair value the security using procedures
approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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
fund. Variable product owners should refer to the prospectus for their variable
products for information regarding the tax consequences of owning such variable
products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II shares. The plan allows the fund 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 fund). Because the fund pays this fee out of its assets on an ongoing basis, over time this fee will increase the cost of your investment and may cost you more than paying other types of charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the
level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profit on these payments for those services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES II
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
2006 2005 2004 2003 2002
------- ------- ------- ------ -------
Net asset value, beginning of period $ $ $ $ $
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
============================================================================================================================
Total from investment operations
============================================================================================================================
Less distributions:
Dividends from net investment income
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
============================================================================================================================
Total distributions
============================================================================================================================
Net asset value, end of period $ $ $ $ $
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) % % % % %
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets % % % % %
============================================================================================================================
Ratio of net investment income (loss) to average net assets % % % % %
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate % % % % %
____________________________________________________________________________________________________________________________
============================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
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You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VIMCCE-PRO-2
AIM V.I. MONEY MARKET FUND
PROSPECTUS
MAY 1, 2008
|
Series I shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Money Market Fund's investment objective is to provide as high a level of current income as is consistent with the preservation of capital and liquidity.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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 fund will be able to maintain a stable net asset value of $1.00 per share.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 6 OTHER INFORMATION 6 ------------------------------------------------------ Purchase and Redemption of Shares 6 Excessive Short-Term Trading Activity Disclosures 6 Trade Activity Monitoring 7 Fair Value Pricing 7 Risks 7 Pricing of Shares 7 Taxes 8 Dividends and Distributions 9 Share Classes 9 Payments to Insurance Companies 9 FINANCIAL HIGHLIGHTS 10 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Distributors Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The portfolio managers normally hold portfolio securities to maturity. The portfolio managers consider selling a security: (i) if the issuer's credit quality declines, (ii) as a result of interest rate changes, or (iii) to enhance yield.
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 or
are sold, and the proceeds are reinvested in other securities.
The principal risks of investing in the fund are:
Market Risk--The prices of and the income generated by securities held by
the fund may decline in response to certain events, including those directly
involving the issuers whose securities are owned by the fund; general economic
and market conditions; regional or global economic instability; and currency and
interest rate fluctuations.
Money Market Fund Risk--The fund is a money market fund and an investment in
the fund is not a deposit in a bank and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
the fund seeks to preserve the value of an 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 or are sold and
the proceeds are reinvested in other securities.
Interest Rate Risk--Interest rate risk refers to the risk that bond prices
generally fall as interest rates rise; conversely, bond prices generally rise as
interest rates fall. Specific bonds differ in their sensitivity to changes in
interest rates depending on specific characteristics of each bond. A measure
investors commonly use to determine this sensitivity is called duration. The
longer the duration of a particular bond the greater is its price sensitivity to
interest rate changes. Similarly, a longer duration portfolio of securities has
greater price sensitivity. Duration is determined by a number of factors
including coupon rate, whether the coupon is fixed or floating, time to
maturity, call or put features, and various repayment features.
Credit Risk--Credit risk is the risk of loss on an investment due to the
deterioration of an issuer's financial health. Such a deterioration of financial
health may result in a reduction of the credit rating of the issuer's securities
and may lead to the issuer's inability to honor its contractual obligations
including making timely payment of interest and principal. Credit ratings are a
measure of credit quality. Although a downgrade or upgrade of a bond's credit
ratings may or may not affect its price, a decline in credit quality may make
bonds less attractive, thereby driving up the yield on the bond and driving down
the price. Declines in credit quality may result in bankruptcy for the issuer
and permanent loss of investment. Changes in the credit quality of financial
institutions providing liquidity and credit enhancements could cause the fund to
experience a loss and may affect its share price.
U.S. Government Obligations Risk--The fund may invest in obligations issued
by agencies and instrumentalities of the U.S. Government. These obligations vary
in the level of support they receive from the U.S. Government. They may be: (i)
supported by the full faith and credit of the U.S. Treasury, such as those of
the Government National Mortgage Association; (ii) supported by the right of the
issuer to borrow from the U.S. Treasury, such as those of the Federal National
Mortgage Association; (iii) supported by the discretionary authority of the U.S.
Government to purchase the issuer's obligation, such as those of the former
Student Loan Marketing Association; or (iv) supported only by the credit of the
issuer, such as those of the Federal Farm Credit Bureau. The U.S. Government may
choose not to provide financial support to the U.S. Government sponsored
agencies or instrumentalities if it is not legally obligated to do so, in which
case, if the issuer defaulted, the fund holding securities of such issuer might
not be able to recover its investment from the U.S. Government.
Municipal Securities Risk--The value of, payment of interest and repayment
of principal with respect to, and the ability of the fund to sell, a municipal
security may be affected by constitutional amendments, legislative enactments,
executive orders, administrative regulations and voter
initiatives as well as the economics of the regions in which the issuers in
which the fund invests are located. Revenue bonds are generally not backed by
the taxing power of the issuing municipality. To the extent that a municipal
security in which the fund invests is not heavily followed by the investment
community or such security issue is relatively small, the security may be
difficult to value or sell at a fair price.
Foreign Securities Risk--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. Repurchase Agreement Risk--The fund enters into repurchase agreements. 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 a decline in the value of those securities, reduced levels of income and expenses of enforcing its rights. Risks Relating to Banking and Financial Services Industries--To the extent that the fund invests in securities issued or guaranteed by companies in the banking and financial services industries, the fund's performance will depend to a greater extent on the overall condition of those industries. Financial services companies are highly dependent on the supply of short-term financing. The value of securities of issuers in the banking and financial services industry can be sensitive to changes in government regulation and interest rates and to economic downturns in the United States and abroad. Management Risk--There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio managers will produce the desired results. An investment in the fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart shown below provides an indication of the risks of investing in the fund. The fund's past performance is not necessarily an indication of its future performance. All performance assumes the reinvestment of dividends and capital gains. The bar chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
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
----------- -------
1998................................................................... 5.06%
1999................................................................... 4.66%
2000................................................................... 5.83%
2001................................................................... 3.61%
2002................................................................... 1.19%
2003................................................................... 0.58%
2004................................................................... 0.69%
2005................................................................... 2.51%
2006................................................................... 4.27%
2007...................................................................
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During the periods shown in the bar chart, the highest quarterly return was
[1.49% (quarters ended September 30, 2000 and December 31, 2000)] and the lowest
quarterly return was [0.09% (quarter ended June 30, 2004)].
PERFORMANCE TABLE
The following performance table reflects the fund's performance over the periods indicated. The fund is not managed to track the performance of any particular index. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended INCEPTION December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE ------------------------------------------------------------------------------- AIM V.I. Money Market Fund % % % 05/05/93 ------------------------------------------------------------------------------- |
The AIM V.I. Money Market Fund's seven day yield on December 31, 2007 was %. For the current seven day yield, call (800) 959-4246.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees % Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses(3) -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 1.30% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series I shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Money Market Fund $ $ $ $ ---------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 ----------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 ----------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ ----------------------------------------------------------------------------------------------- |
(1) Your actual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its
semi-annual and annual reports to shareholders, and on Form N-Q, which is filed
with the Securities and Exchange Commission (SEC) within 60 days of the fund's
first and third quarter-ends. Due to the fact that you cannot purchase shares of
the fund directly, these documents have not been made available on our website.
However, these documents are available on the SEC's website at
http://www.sec.gov. In addition, the fund's portfolio holdings as of each
calendar quarter-end are made available to insurance companies issuing variable
products that invest in the fund.
A description of the fund's policies and procedures with respect to the
disclosure of the fund's portfolio holdings is available in the fund's Statement
of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds, Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's fiscal year ended December 31, 2007, the advisor received compensation of 0.40% of average daily net assets.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive
amount of cash or to liquidate portfolio holdings at a disadvantageous time,
thus interfering with the efficient management of the fund by causing it to
incur increased brokerage and administrative costs. Where excessive short-term
trading activity seeks to take advantage of arbitrage opportunities from stale
prices for portfolio securities, the value of fund shares held by long-term
investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activity in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund value portfolio securities for which market quotations are readily available at market value. The fund values all other securities and assets for which market quotations are not readily available at their fair value in
good faith using procedures approved by the Board of the fund. Securities and
other assets quoted in foreign currencies are valued in U.S. dollars based on
the prevailing exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund values all its securities at amortized
cost.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent a fund invests in other open-end funds, other
than open-end funds that are exchange traded, the investing fund will calculate
its net asset value using the net asset value of the underlying fund in which it
invests.
The fund determines its net asset value as of 12:00 noon Eastern Time on
each day the NYSE is open for business.
TAXES
The amount, timing and character of distributions to the separate account may be affected by special tax rules applicable to certain investments purchased by the fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares on each business day and pays any dividends, if any, monthly to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of ordinary income.
CAPITAL GAINS DISTRIBUTIONS
The fund may distribute long-term and short-term capital gains, if any, annually
to separate accounts of insurance companies issuing the variable products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES I
-------------------------------------------------------
Net asset value, beginning of period $ $ $ $ $
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
=====================================================================================================================
Less dividends from net investment income
=====================================================================================================================
Net asset value, end of period $ $ $ $ $
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return % % % % %
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets % % % % %
=====================================================================================================================
Ratio of net investment income to average net assets % % % % %
_____________________________________________________________________________________________________________________
=====================================================================================================================
|
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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VIMKT-PRO-1
AIM V.I. MONEY MARKET FUND
PROSPECTUS
MAY 1, 2008
|
Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Money Market Fund's investment objective is to provide as high a level of current income as is consistent with the preservation of capital and liquidity.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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 fund will be able to maintain a stable net asset value of $1.00 per share.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 6 OTHER INFORMATION 6 ------------------------------------------------------ Purchase and Redemption of Shares 6 Excessive Short-Term Trading Activity Disclosures 6 Trade Activity Monitoring 7 Fair Value Pricing 7 Risks 7 Pricing of Shares 7 Taxes 8 Dividends and Distributions 9 Share Classes 9 Distribution Plan 9 Payments to Insurance Companies 9 FINANCIAL HIGHLIGHTS 10 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the 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's investment objective may be changed by the Board of Trustees (the
Board) without shareholder approval.
The fund invests only in high-quality U.S. dollar-denominated short term
debt obligations, including: (i) securities issued by the U.S. Government or its
agencies; (ii) bankers' acceptances, certificates of deposit, and time deposits
from U.S. or foreign banks; (iii) repurchase agreements; (iv) commercial paper;
(v) taxable municipal securities; (vi) master notes; and (vii) cash equivalents.
The fund invests in accordance with industry-standard requirements for money
market funds for the quality, maturity and diversification of investments.
The fund may invest up to 50% of its assets in U.S. dollar-denominated
foreign securities.
The fund may invest in securities issued or guaranteed by companies in the
financial services industry.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and at any time, the fund may not be invested
in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
In selecting securities for the fund's portfolio, the portfolio managers
focus on securities that offer safety, liquidity, and a competitive yield. The
portfolio managers conduct a credit analysis of each potential issuer prior to
the purchase of its securities.
The portfolio managers normally hold portfolio securities to maturity. The portfolio managers consider selling a security: (i) if the issuer's credit quality declines, (ii) as a result of interest rate changes, or (iii) to enhance yield.
initiatives as well as the economics of the regions in which the issuers in
which the fund invests are located. Revenue bonds are generally not backed by
the taxing power of the issuing municipality. To the extent that a municipal
security in which the fund invests is not heavily followed by the investment
community or such security issue is relatively small, the security may be
difficult to value or sell at a fair price.
Foreign Securities Risk--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. Repurchase Agreement Risk--The fund enters into repurchase agreements. 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 a decline in the value of those securities, reduced levels of income and expenses of enforcing its rights. Risks Relating to Banking and Financial Services Industries--To the extent that the fund invests in securities issued or guaranteed by companies in the banking and financial services industries, the fund's performance will depend to a greater extent on the overall condition of those industries. Financial services companies are highly dependent on the supply of short-term financing. The value of securities of issuers in the banking and financial services industry can be sensitive to changes in government regulation and interest rates and to economic downturns in the United States and abroad. Management Risk--There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio managers will produce the desired results. An investment in the fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart shown below provides an indication of the risks of investing in
the fund. The fund's past performance is not necessarily an indication of its
future performance. All performance assumes the reinvestment of dividends and
capital gains. The bar chart shown does not reflect charges assessed in
connection with your variable product; if it did, the performance shown would be
lower.
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 the fund).
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
----------- -------
1998*................................................................... 4.80%
1999*................................................................... 4.40%
2000*................................................................... 5.57%
2001**.................................................................. 3.36%
2002.................................................................... 0.93%
2003.................................................................... 0.33%
2004.................................................................... 0.44%
2005.................................................................... 2.26%
2006.................................................................... 4.01%
2007....................................................................
|
* The returns shown for these periods are 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 return shown for this period is the blended return 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 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
[0.03% (quarter ended June 30, 2004)].
PERFORMANCE TABLE
The following performance table reflects the fund's performance over the periods indicated. The fund is not managed to track the performance of any particular index. A fund's past performance is not necessarily an indication of its future performance. The performance tables shown below do not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------
SERIES I
(for the periods ended INCEPTION
December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE
-------------------------------------------------------------------------------
AIM V.I. Money Market Fund % % %
-------------------------------------------------------------------------------
|
The AIM V.I. Money Market Fund's seven day yield on December 31, 2007 was %. For the current seven day yield, call (800) 959-4246.
(1) The returns shown for the one year and five year periods are the historical performance of the fund's Series II shares. The return shown for the ten year period is 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.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly
or indirectly, when a variable product owner buys, holds, or redeems interest in
an insurance company separate account that invests in the Series II shares of
the fund but does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
SHAREHOLDER FEES ------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES ------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A ------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) ------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES ------------------------------------------------------------------------------- Management Fees % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses(3) ------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.45% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees, and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii)earn a 5% return on your investment before operating expenses each year;
and
incur the same amount in operating expenses each year (after giving effect to any applicable contractual fee waivers and/or expense reimbursements). To the extent fees are waived and/or expenses are reimbursed voluntarily, 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. Money Market Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
|
(1) Your actual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its
semi-annual and annual reports to shareholders, and on Form N-Q, which is filed
with the Securities and Exchange Commission (SEC) 60 days of the fund's first
and third quarter-ends. Due to the fact that you cannot purchase shares of the
fund directly, these documents have not been made available on our website.
However, these documents are available on the SEC's website at
http://www.sec.gov. In addition, the fund's portfolio holdings as of each
calendar quarter-end are made available to insurance companies issuing variable
products that invest in the fund.
A description of the fund's policies and procedures with respect to the
disclosure of the fund's portfolio holdings is available in the fund's Statement
of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fund's fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to
incur increased brokerage and administrative costs. Where excessive short-term
trading activity seeks to take advantage of arbitrage opportunities from stale
prices for portfolio securities, the value of fund shares held by long-term
investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund values portfolio securities for which market quotations are readily available at market value. The fund values all other securities and assets for which market quotations are not readily available at their fair value in good faith using procedures approved by the Board of the fund. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund values all its securities at amortized
cost.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent a fund invests in other open-end funds, other
than open-end funds that are exchange traded, the investing fund will calculate
its net asset value using the net asset value of the underlying fund in which it
invests.
The fund determines its net asset value as of 12:00 noon Eastern Time on
each day the NYSE is open for business.
TAXES
The amount, timing and character of distributions to the separate account may be affected by special tax rules applicable to certain investments purchased by the fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares on each business day and pays any dividends, if any, monthly to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of ordinary income.
CAPITAL GAINS DISTRIBUTIONS
The fund may distribute long-term and short-term capital gains, if any, annually
to separate accounts of insurance companies issuing the variable products.
At the election of participating life insurance companies, dividends and
distributions are automatically reinvested at net asset value in shares of the
fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II shares. The plan allows the fund 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 fund). Because the fund pays these fees out of its 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 charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the fund's
financial performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
SERIES II
---------------------------------------------------
Net asset value, beginning of period $ $ $ $ $
-----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
=================================================================================================================
Less dividends from net investment income
=================================================================================================================
Net asset value, end of period $ $ $ $ $
_________________________________________________________________________________________________________________
=================================================================================================================
Total return % % % % %
_________________________________________________________________________________________________________________
=================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
_________________________________________________________________________________________________________________
=================================================================================================================
Ratio of expenses to average net assets % % % % %
=================================================================================================================
Ratio of net investment income to average net assets % % % % %
_________________________________________________________________________________________________________________
=================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
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Because you cannot purchase shares of the fund directly, these documents have not been made available on our website.
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VIMKT-PRO-2
AIM V.I. SMALL CAP EQUITY FUND
PROSPECTUS
MAY 1, 2008
|
SERIES I SHARES
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Small Cap Equity Fund's investment objective is long-term growth of capital.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 3 ------------------------------------------------------ Fees and Expenses of the Fund 3 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 6 Portfolio Managers 6 OTHER INFORMATION 6 ------------------------------------------------------ Purchase and Redemption of Shares 6 Excessive Short-Term Trading Activity Disclosures 7 Trade Activity Monitoring 7 Fair Value Pricing 7 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 9 Payments to Insurance Companies 9 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees (the Board) without shareholder approval.
The fund seeks to meet its objective by investing, normally, at least 80% of its assets in equity securities, including convertible securities, of small-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 small-capitalization company if it has a market capitalization, at the time of purchase, no larger than the largest capitalized company included in the Russell 2000--Registered 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 2000--Registered Trademark-- Index measures the performance of the 2,000 smallest companies in the Russell 3000--Registered Trademark-- Index, which measures the performance of the 3,000 largest U.S. companies. The Russell 2000--Registered Trademark-- Index is widely regarded as representative of small-cap stocks. Under normal conditions, the top 10 holdings may comprise up to 25% of the fund's total assets. The fund may also invest up to 25% of its total assets in foreign securities.
In selecting investments, the portfolio managers utilize a disciplined portfolio construction process that aligns the fund with the S&P Small Cap 600 Index which the portfolio managers believe represents the small cap core asset class. The security selection process is based on a three-step process that includes fundamental, valuation and timeliness analysis.
- Fundamental analysis involves building a series of financial models, as well as conducting in-depth interviews with company management. The goal is to find high quality, fundamentally sound companies operating in an attractive industry.
- Valuation analysis focuses on identifying attractively valued securities given their growth potential over a one- to two-year horizon.
- Timeliness analysis is used to help identify the "timeliness" of a purchase. In this step, relative price strength, trading volume characteristics, and trend analysis are reviewed for signs of deterioration. If a stock shows signs of deterioration, it will not be considered as a candidate for the portfolio.
The portfolio managers consider selling a security if a change in industry or company fundamentals indicates a problem, the price target set at purchase is exceeded or a change in technical outlook indicates poor relative strength.
The fund's investments in the types of securities described in this prospectus vary from time to time, and at any time, the fund may not be invested in all types of securities described in this prospectus. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
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-cap companies, whose
prices may go up and down more than equity securities of larger,
more-established companies. Also, since equity securities of small-cap 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 desirable price.
Foreign Securities Risk--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. 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 principal risk of investments in synthetic instruments is that the fluctuations in their values may not correlate perfectly with the overall securities markets. Some synthetic instruments are more sensitive to interest rate changes and market price fluctuations than others. Also, synthetic instruments are subject to counter party risk which is the risk that the other party in the transaction will not fulfill its contractual obligation to complete the transaction with the fund. There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio managers will produce the desired results.
An investment in the fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
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
----------- -------
2004................................................................... 9.4l%
2005................................................................... 8.11%
2006................................................................... 17.44%
2007...................................................................
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(1) The fund's return during certain periods was positively impacted by its investments in IPOs. There can be no assurance that the fund will have favorable IPO investment opportunities in the future. For additional information regarding the fund's performance, please see the "Financial Highlights" section of this prospectus.
During the periods shown in the bar chart, the highest quarterly return was
[11.66% (quarter ended December 31, 2004)] and the lowest quarterly return was
[-7.24% (quarter ended September 30, 2004)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS* ------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2007) 1 YEAR INCEPTION DATE ------------------------------------------------------------------------------- AIM V.I. Small Cap Equity Fund % % 08/29/03 S&P 500--Registered Trademark-- Index(1,2) 08/31/03(3) Russell 2000(R) Index(1,2,4) 08/31/03(3) Lipper VUF Small-Cap Core Funds Index(1,2,5) 08/31/03(3) ------------------------------------------------------------------------------- |
* The fund's return during certain periods was positively impacted by its investments in IPOs. There can be no assurance that the fund will have favorable IPO investment opportunities in the future. For additional information regarding the fund's performance, please see the "Financial Highlights" section of this prospectus.
(1) The Standard & Poor's 500 Index is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. The fund has also included the Russell 2000--Registered Trademark-- Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) Small-Cap Core Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(2) The indices may not reflect payment of fees, expenses or taxes.
(3) The average annual total return given is since the month-end closest to the
inception date of the fund's Series I shares.
(4) The Russell 2000--Registered Trademark-- Index measures the performance of the 2,000 smallest companies in the Russell 3000--Registered Trademark-- Index, which represents approximately 8% of the total market capitalization of the Russell 3000--Registered Trademark-- Index. The Russell 3000--Registered Trademark-- Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. The Russell 2000--Registered Trademark-- Index and Russell 3000--Registered Trademark-- Index are trademarks/service marks of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company.
(5) The Lipper VUF Small-Cap Core Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Small-Cap Core Funds category. These funds typically have an average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P SmallCap 600 Index. The S&P SmallCap 600 Index is a market-valued weighted index that consists of 600 small cap domestic stocks chosen for market size, liquidity, and industry group representation.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above tables means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees(2) % Other Expenses Acquired Fund Fees and Expenses(3) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(2,4) Net Annual Fund Operating Expenses -------------------------------------------------------------------------------- |
([1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Through April 30, 2008, the fund's advisor has contractually agreed to waive
a portion of its advisory fees to the extent necessary so that the advisory
fees payable by the fund does not exceed a specified maximum annual advisory
fee rate, wherein the fee rate includes breakpoints and is based upon net
asset levels. The fund's maximum annual advisory fee rate ranges from 0.745%
(for average net assets up to $250 million) to 0.64% (for average net assets
over $10 billion).
(3) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but are expenses of the investment companies in which the fund
invests. You incur these fees and expenses indirectly through the valuation
of the fund's investment in those investment companies. As a result, the Net
Annual Fund Operating Expenses listed above may exceed the limit on Total
Annual Fund Operating Expenses, if any. The impact of the acquired fund fees
and expenses are included in the total returns of the fund.
(4) As a result of a reorganization which will occur on or about May 1, 2007,
the fund's Total Annual Fund Operating Expenses have been restated to
reflect such reorganization. The advisor for AIM V.I. Small Cap Equity Fund
has contractually agreed to waive advisory fees and/or reimburse expenses of
Series I shares to the extent necessary to limit Total Annual Fund Operating
Expenses (excluding certain items discussed below) of Series I shares to
1.15% of average daily net assets. In determining the advisor's obligation
to waive advisory fees and/or reimburse expenses, the following expenses are
not taken into account, and could cause the Total Annual Fund Operating
Expenses to exceed the number reflected above: (i) interest; (ii) taxes;
(iii) dividend expense on short sales; (iv) extraordinary items; (v)
expenses related to a merger or reorganization, as approved by the fund's
Board of Trustees; and (vi) expenses that the fund has incurred but did not
actually pay because of an expense offset arrangement. Currently, the
expense offset arrangements from which the fund may benefit are in the form
of credits that the fund receives from banks where the fund or its transfer
agent has deposit accounts in which it holds uninvested cash. In addition,
the fund may also benefit from a one time credit to be used to offset future
custodian expenses. These credits are used to pay certain expenses incurred
by the fund. This expense limitation agreement is in effect through at least
April 30, 2008].
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series I shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
your expenses will be lower. Although your actual returns and costs may be
higher or lower, based on these assumptions your costs would be:
1 3 5 10
SERIES I SHARES YEAR YEARS YEARS YEARS
---------------------------------------------------------------------------------------------------
AIM V.I. Small Cap Equity Fund $ $ $ $
---------------------------------------------------------------------------------------------------
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The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 -------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ -------------------------------------------------------------------------------------------- SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 -------------------------------------------------------------------------------------------- Annual Expense Ratio(1) % % % % % Cumulative Return Before Expenses % % % % % Cumulative Return After Expenses % % % % % End of Year Balance $ $ $ $ $ Estimated Annual Expenses $ $ $ $ $ -------------------------------------------------------------------------------------------- |
(1) Your actual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Juliet S. Ellis (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2004 and has been associated with Invesco Aim and/or its affiliates since 2004. From 2000 to 2004, she was Managing Director and from 1993 to 2004, she was a senior portfolio manager with JPMorgan Fleming Asset Management. As the lead manager, Ms. Ellis generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Ms. Ellis may perform these functions, and the nature of these functions, may change from time to time.
- Juan R. Hartsfield, Portfolio Manager, who has been responsible for the fund since 2006 and has been associated with Invesco Aim and/or its affiliates since 2004. From 2000 to 2004, he was co-portfolio manager with JPMorgan Fleming Asset Management.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of the variable
product owners. Variable product owners should refer to the applicable contract
and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the fund through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the fund. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by the fund are to be valued at current market value if market quotations are readily available. All other securities and assets of the fund for which market quotations are not readily available are to be valued at fair value determined in good faith using procedures approved by the Board of the fund. Fair value pricing may reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially "stale" prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
See "Pricing of Shares--Determination of Net Asset Value" for more information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the fund may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data.
Prices received from pricing services are fair value prices. In addition, if the
price provided by the pricing service is unreliable, the advisor valuation
committee may fair value the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times and with different
lag times to insurance companies issuing variable products that invest in the
fund, and in annual and semi-annual shareholder reports. Refer to such reports
to determine the types of securities in which a fund has invested. You may also
refer to the Statement of Additional Information to determine what types of
securities in which the fund may invest. You may obtain copies of these reports
or of the Statement of Additional Information from the insurance company that
issued your variable product, or from the advisor as described on the back cover
of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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". This prospectus relates to the Series I shares.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not
exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during the fiscal years (or period) indicated.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
For a discussion of how investments in IPOs affected the fund's performance, see the "Performance Information" section of this prospectus.
SERIES I
---------------------------------------------------------------
AUGUST 29, 2003
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED) TO
------------------------------------------- DECEMBER 31,
2007 2006 2005 2004 2003
------- ------- ------- ------- ----------------
Net asset value, beginning of period $ $ $ $
-----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
-----------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized)
=============================================================================================================================
Total from investment operations
=============================================================================================================================
Less distributions:
Dividends from net investment income
-----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
=============================================================================================================================
Total distributions
=============================================================================================================================
Net asset value, end of period $ $ $ $
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Total return % % % %
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % %
-----------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % % %
=============================================================================================================================
Ratio of net investment income (loss) to average net assets % % % %
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Portfolio turnover rate % % % %
_____________________________________________________________________________________________________________________________
=============================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
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You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VISCE-PRO-1
AIM V.I. SMALL CAP EQUITY FUND
PROSPECTUS
MAY 1, 2008
|
Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Small Cap Equity Fund's investment objective is long-term growth of capital.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 6 Portfolio Managers 6 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 7 Trade Activity Monitoring 7 Fair Value Pricing 8 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 9 Distribution Plan 9 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund seeks to meet its objective by investing, normally, at least 80% of its assets in equity securities, including convertible securities, of small-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 small-capitalization company if it has a market capitalization, at the time of purchase, no larger than the largest capitalized company included in the Russell 2000--Registered 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 2000--Registered Trademark-- Index measures the performance of the 2,000 smallest companies in the Russell 3000--Registered Trademark-- Index, which measures the performance of the 3,000 largest U.S. companies. The Russell 2000--Registered Trademark-- Index is widely regarded as representative of small-cap stocks. Under normal conditions, the top 10 holdings may comprise up to 25% of the fund's total assets. The fund may also invest up to 25% of its total assets in foreign securities.
In selecting investments, the portfolio managers utilize a disciplined portfolio construction process that aligns the fund with the S&P Small Cap 600 Index which the portfolio managers believe represents the small cap core asset class. The security selection process is based on a three-step process that includes fundamental, valuation and timeliness analysis.
- Fundamental analysis involves building a series of financial models, as well as conducting in-depth interviews with company management. The goal is to find high quality, fundamentally sound companies operating in an attractive industry.
- Valuation analysis focuses on identifying attractively valued securities given their growth potential over a one- to two-year horizon.
- Timeliness analysis is used to help identify the "timeliness" of a purchase. In this step, relative price strength, trading volume characteristics, and trend analysis are reviewed for signs of deterioration. If a stock shows signs of deterioration, it will not be considered as a candidate for the portfolio.
The portfolio managers consider selling a security if a change in industry or company fundamentals indicates a problem, the price target set at purchase is exceeded or a change in technical outlook indicates poor relative strength.
The fund's investments in the types of securities described in this prospectus vary from time to time, and at any time, the fund may not be invested in all types of securities described in this prospectus. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
- 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. 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 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 principal risk of investments in synthetic instruments is that the fluctuations in their values may not correlate perfectly with the overall securities markets. Some synthetic instruments are more sensitive to interest rate changes and market price fluctuations than others. Also, synthetic instruments are subject to counter party risk which is the risk that the other party in the transaction will not fulfill its contractual obligation to complete the transaction with the fund. There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio managers will produce the desired results.
An investment in the fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
The following bar chart shows changes in the performance of the fund's Series II shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2004................................................................... 9.23%
2005................................................................... 7.97%
2006................................................................... 17.12%
2007...................................................................
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(1) The fund's return during certain periods was positively impacted by its investments in IPOs. There can be no assurance that the fund will have favorable IPO investment opportunities in the future. For additional information regarding the fund's performance, please see the "Financial Highlights" section of this prospectus.
During the periods shown in the bar chart, the highest quarterly return was
[11.68% (quarter ended December 31, 2004)] and the lowest quarterly return was
[-7.33% (quarter ended September 30, 2004)].
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS(*) ----------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2007) 1 YEAR INCEPTION DATE ----------------------------------------------------------------------- AIM V.I. Small Cap Equity Fund % % 08/29/03 S&P 500--Registered Trademark-- Index(1,2) (3) 08/31/03(3) Russell 2000--Registered Trademark-- Index(1,2,4) (3) 08/31/03(3) Lipper VUF Small-Cap Core Funds Index(1,2,5) (3) 08/31/03(3) ----------------------------------------------------------------------- |
* The fund's return during certain periods was positively impacted by its investments in IPOs. There can be no assurance that the fund will have favorable IPO investment opportunities in the future. For additional information regarding the fund's performance, please see the "Financial Highlights" section of this prospectus.
(1) The Standard & Poor's 500 Index is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. The fund has also included the Russell 2000--Registered Trademark-- Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) Small-Cap Core Funds Index (which may or may not include the fund) is included for comparison to a peer group.
(2) The indices may not reflect payment of fees, expenses or taxes.
(3) The average annual total return given is since the month-end closest to the
inception date of the fund's Series II shares.
(4) The Russell 2000--Registered Trademark-- Index measures the performance of the 2,000 smallest companies in the Russell 3000--Registered Trademark-- Index, which represents approximately 8% of the total market capitalization of the Russell 3000--Registered Trademark-- Index. The Russell 3000--Registered Trademark-- Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. The Russell 2000--Registered Trademark-- Index and Russell 3000--Registered Trademark-- Index are trademarks/service marks of the Frank Russell Company. Russell--Registered Trademark-- is a trademark of the Frank Russell Company.
(5) The Lipper VUF Small-Cap Core Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Small-Cap Core Funds category. These funds typically have an average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P SmallCap. The S&P SmallCap 600 Index is a market-valued weighted index that consists of 600 small cap domestic stocks chosen for market size, liquidity, and industry group representation.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES ------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES ------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A ------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) ------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES ------------------------------------------------------------------------------- Management Fees(2) % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(3) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(2,4) Net Annual Fund Operating Expenses ------------------------------------------------------------------------------- |
([1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Through April 30, 2008, the fund's advisor has contractually agreed to waive
a portion of its advisory fees to the extent necessary so that the advisory
fees payable by the fund does not exceed a specified maximum annual advisory
fee rate, wherein the fee rate includes breakpoints and is based upon net
asset levels. The fund's maximum annual advisory fee rate ranges from 0.745%
(for average net assets up to $250 million) to 0.64% (for average net assets
over $10 billion).
(3) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but are expenses of the investment companies in which the fund
invests. You incur these fees and expenses indirectly through the valuation
of the fund's investment in those investment companies. As a result, the Net
Annual Fund Operating Expenses listed above may exceed the limit on Total
Annual Fund Operating Expenses, if any. The impact of the acquired fund fees
and expenses are included in the total returns of the fund.
(4) As a result of a reorganization which will occur on or about May 1, 2007, the fund's Total Annual Fund Operating Expenses have been restated to reflect such reorganization. The advisor for AIM V.I. Small Cap Equity Fund has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.40% of average daily nets assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. The Fee Waiver has been restated to reflect this agreement. This expense limitation agreement is in effect through at least April 30, 2008].
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily, 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. Small Cap Equity Fund $ $ $ $ ---------------------------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
|
(1) Your actual expenses may be higher or lower than those shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
- Juliet S. Ellis (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2004 and has been associated with Invesco Aim and/or its affiliates since 2004. From 2000 to 2004, she was Managing Director and from 1993 to 2004, she was a senior portfolio manager with JPMorgan Fleming Asset Management. As the lead manager, Ms. Ellis generally has final authority over all aspects of the fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which Ms. Ellis may perform these functions, and the nature of these functions, may change from time to time.
- Juan R. Hartsfield, Portfolio Manager, who has been responsible for the fund since 2006 and has been associated with Invesco Aim and/or its affiliates since 2004. From 2000 to 2004, he was co-portfolio manager with JPMorgan Fleming Asset Management.
More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of the variable
product owners. Variable product owners should refer to the applicable contract
and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the fund through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the fund. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by the fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of the fund
for which market quotations are not readily available are to be valued at fair
value determined in good faith using procedures approved by the Board of the
fund. Fair value pricing may reduce the ability of frequent traders to take
advantage of arbitrage opportunities resulting from potentially "stale" prices
of portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the fund may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that
are significant and may make the closing price unreliable, the fund may fair
value the security. If an issuer specific event has occurred that the advisor
determines, in its judgment, is likely to have affected the closing price of a
foreign security, it will price the security at fair value. The advisor also
relies on a screening process from a pricing vendor to indicate the degree of
certainty, based on historical data, that the closing price in the principal
market where a foreign security trades is not the current market value as of the
close of the NYSE. For foreign securities where the advisor believes, at the
approved degree of certainty, that the price is not reflective of current market
value, the advisor will use the indication of fair value from the pricing
service to determine the fair value of the security. The pricing vendor, pricing
methodology or degree of certainty may change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times and with different
lag times to insurance companies issuing variable products that invest in the
fund, and in annual and semi-annual shareholder reports. Refer to such reports
to determine the types of securities in which a fund has invested. You may also
refer to the Statement of Additional Information to determine what types of
securities in which the fund may invest. You may obtain copies of these reports
or of the Statement of Additional Information from the insurance company that
issued your variable product, or from the advisor as described on the back cover
of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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
fund. Variable product owners should refer to the prospectus for their variable
products for information regarding the tax consequences of owning such variable
products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions will consist primarily of capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II
shares. The plan allows the fund to pay distribution fees to 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 fund). Because the fund pays this fee out of its assets on an ongoing basis, over time this fee will increase the cost of your investment and may cost you more than paying other types of charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The information for the fiscal years ended 2007, 2006 and 2005 has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2005 was audited by other public accountants.
For a discussion of how investments in IPOs affected the fund's performance, see the "Performance Information" section of this prospectus.
SERIES II
-----------------------------------------------------------
AUGUST 29, 2003
(DATE OPERATIONS
COMMENCED) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
--------------------------------------- ----------------
2007 2006 2005 2004 2003
------ ------ ------ ------ ----------------
Net asset value, beginning of period $ $ $ $ $
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
-------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized)
=========================================================================================================================
Total from investment operations
=========================================================================================================================
Less distributions:
Dividends from net investment income
-------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
=========================================================================================================================
Total distributions
=========================================================================================================================
Net asset value, end of period $ $ $ $ $
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return % % % % %
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % % %
-------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % % % %
=========================================================================================================================
Ratio of net investment income (loss) to average net assets % % % % %
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate % % % % %
_________________________________________________________________________________________________________________________
=========================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable products, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com VISCE-PRO-2
AIM V.I. TECHNOLOGY FUND
PROSPECTUS
MAY 1, 2008
|
Series I shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Technology Fund's investment objective is capital growth.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 2 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 5 ------------------------------------------------------ Fees and Expenses of the Fund 5 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 6 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 7 Portfolio Manager 7 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 8 Trade Activity Monitoring 8 Fair Value Pricing 8 Risks 8 Pricing of Shares 9 Taxes 10 Dividends and Distributions 10 Share Classes 10 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 12 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's Investment objective is capital growth.
The fund's investment objective may be changed by the Board of Trustees (the Board) without shareholder approval.
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 of issuers engaged primarily in technology-related industries. The fund considers a company to be doing business in technology-related industries if it meets at least one of the following tests: (1) at least 50% of its gross income or its net sales come from activities in technology-related industries; (2) at least 50% of its assets are devoted to producing revenues in technology-related industries; or (3) based on other available information, the portfolio manager determines that its primary business is within technology-related industries.
The principal type of equity securities purchased by the fund is common stocks. Companies in technology-related industries include, but are not limited to, those involved in the design, manufacture, distribution, licensing, or provision of various applied technologies, hardware, software, semiconductors, telecommunications equipment, as well as services and service-related companies in information technology.
The fund may invest up to 25% of its total assets in securities of non-U.S.
issuers doing business in technology-related industries. Securities of Canadian
issuers and American Depositary Receipts are not subject to this 25% limitation.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and, at any time, the fund may not be
invested in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
A majority of the fund's assets are invested in the securities of
market-leading technology companies doing business in various subsectors in the
technology universe (the "core holdings"). The portfolio manager believes that
the securities that comprise the fund's core holdings will maintain or improve
their market share regardless of overall economic conditions. These companies
are believed to have a strategic advantage over many of their competitors. The
portfolio manager believes that these core holdings will provide attractive
long-term investment returns.
The remainder of the fund's assets are invested in the securities of
faster-growing, more volatile technology companies that the portfolio manager
believes to be emerging leaders in their fields (the "tactical holdings"). The
fund will typically hold tactical holdings for a shorter period of time than the
fund's core holdings. The portfolio manager believes that these tactical
holdings will provide attractive near-term investment returns.
The portfolio manager constructs the fund's portfolio with the goal of holding 65-85 individual stocks to take advantage of both long and short-term opportunities.
The fund is driven by two investment themes: (1) increasing usage of
information technology in business and consumer products will continue over the
long-term, yielding the potential for above-average growth rates for the sector;
and (2) technology will continue to create new market opportunities through
continual innovation that create periodic exceptional growth opportunities for
investors in technology.
In selecting securities for the fund, the portfolio manager uses a research
oriented investment approach using a combination of quantitative, fundamental
and valuation analysis. The portfolio manager focuses on attractively valued,
well-managed companies in the information-technology sector with the potential
to deliver attractive returns. While the portfolio manager may invest in stocks
of any market capitalization, the portfolio manager tends to favor mid- and
large-cap stocks to avoid liquidity problems that can be associated with some
small-cap stocks.
The portfolio manager will consider selling the security of a company if,
among other things, (1) its fundamentals change; (2) its earnings are disrupted
or disappoint; (3) its management or strategic direction changes; (4) its
valuation becomes excessive compared to similar investment opportunities; (5)
its technical analysis turns negative; or (6) a more attractive investment
opportunity is identified.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective.
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 historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
The principal risks of investing in the fund are:
Market Risk--The prices of and the income generated by securities held by
the fund may decline in response to certain events, including those directly
involving the companies whose securities are owned by the fund; general economic
and market conditions; regional or global economic instability; and currency and
interest rate fluctuations. Certain securities selected for the fund's portfolio
may decline in value more than the overall stock market. In general, the
securities of small companies are more volatile than those of mid-size companies
or large companies.
Equity Securities Risk--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. These factors will probably affect the equity
securities of smaller companies more than the equity securities of larger,
more-established companies. Also, because equity securities of smaller 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 these
securities at a desirable price.
Sector Fund Risk--The fund's investments are concentrated in a comparatively
narrow segment of the economy, the technology sector. This means that the fund's
investment concentration in the technology sector is higher than most mutual
funds and the broad securities market. Consequently, the fund may tend to be
more volatile than other mutual funds, and the value of the fund's investments
and consequently the value of an investment in the fund may tend to rise and
fall more rapidly.
Technology Industry Risk--Many of the products and services offered in
technology-related industries are subject to rapid obsolescence, which may lower
the value of the securities of the companies in this sector.
Foreign Securities Risk--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. Active Trading Risk--The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If a fund does trade in this way, it may incur increased costs, which can lower the actual return of the fund. Active trading may also increase short term gains and losses, which may affect the taxes that must be paid. Management Risk--There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio manager will produce the desired results.
An investment in the fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
BAR CHART
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1998................................................................... 25.69%
1999................................................................... 158.93%
2000................................................................... -23.42%
2001................................................................... -45.82%
2002................................................................... -46.84%
2003................................................................... 45.29%
2004................................................................... 4.63%
2005................................................................... 2.17%
2006................................................................... 10.48%
2007...................................................................
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During the periods shown in the bar chart, the highest quarterly return was
[66.65% (quarter ended December 31, 1999)] and the lowest quarterly return was
[-42.18% (quarter ended September 30, 2001)]. For periods prior to April 30,
2004, performance shown above relates to a predecessor fund advised by INVESCO
Funds Group, Inc. (IFG), an affiliate of Invesco Aim Advisors, Inc.
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2007) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------- AIM V.I. Technology Fund(1) % % %(2) 05/20/97(2) S&P 500--Registered Trademark-- Index(3,4) (2) 05/31/97(2) S&P Goldman Sachs Technology Index(3,4,5) (2) 05/31/97(2) Lipper VUF Science & Technology Funds Category Average(3,4,6) (2) 05/31/97(2) ------------------------------------------------------------------------------------------- |
(1) For the periods prior to April 30, 2004, performance shown relates to a predecessor fund advised by IFG. Total return figures include re-invested dividends and capital gain distributions and the effect of the fund's expenses.
(2) The fund commenced investment operations on May 20, 1997. Index comparisons began on May 31, 1997.
(3) The Standard & Poor's 500 Index is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. The fund has also included the S&P Goldman Sachs Technology Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) Science & Technology Funds Category Average (which may or may not include the fund) is included for comparison to a peer group.
(4) The indices may not reflect payment of fees, expenses or taxes.
(5) The S&P Goldman Sachs Technology Index is a modified capitalization-weighted index composed of companies involved in the technology industry.
(6) The Lipper VUF Science & Technology Funds Category Average represents the average of all the variable insurance underlying funds in the Lipper Science & Technology Funds category. These funds invest at least 65% of their portfolios in science and technology stocks.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees % Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses(3) -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 1.30% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
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.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii)earn a 5% return on your investment before operating expenses each year;
and
incur the same amount in operating expenses each year (after giving effect to any applicable contractual fee waivers and/or expense reimbursements). To the extent fees are waived and/or expenses are reimbursed voluntarily, 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. Technology Fund $ $ $ $ ---------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
(1) Your actual expenses may be higher or lower than these shown.
SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
(1) Your actual expenses may
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The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory or sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGERS
Warren W. Tennant, Portfolio Manager, is primarily responsible for the day-to-day management of the fund's portfolio. He has been responsible for the fund since 2008 and has associated with Invesco Aim and/or its affiliated since 2000.
More information on the portfolio manager may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio manager's investments in the fund, a description of his compensation structure, and information regarding other accounts he manages.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board of Trustees.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual
limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payment may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
This information has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
SERIES I
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- -------- --------
Net asset value, beginning of period $ $ $ $ $
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
-------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
=========================================================================================================================
Total from investment operations
=========================================================================================================================
Net asset value, end of period $ $ $ $ $
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return % % % % %
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets % % % % %
=========================================================================================================================
Ratio of net investment income (loss) to average net assets % % % % %
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate % % % % %
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
AIM V.I. TECHNOLOGY FUND
PROSPECTUS
MAY 1, 2008
Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Technology Fund's investment objective is capital growth.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 2 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 6 Portfolio Manager 7 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 7 Trading Activity Monitoring 8 Fair Value Pricing 8 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 10 Distribution Plan 10 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective is capital growth.
The fund's investment objective may be changed by the Board of Trustees (the Board) without shareholder approval.
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 of issuers engaged primarily in technology-related industries. The fund considers a company to be doing business in technology- related industries if it meets at least one of the following tests: (1) at least 50% of its gross income or its net sales come from activities in technology-related industries; (2) at least 50% of its assets are devoted to producing revenues in technology-related industries; or (3) based on other available information, the portfolio manager determines that its primary business is within technology-related industries.
The principal type of equity securities purchased by the fund is common stocks. Companies in technology-related industries include, but are not limited to, those involved in the design, manufacture, distribution, licensing, or provision of various applied technologies, hardware, software, semiconductors, telecommunications equipment, as well as services and service-related companies in information technology.
The fund may invest up to 25% of its total assets in securities of non-U.S. issuers doing business in technology-related industries. Securities of Canadian issuers and American Depositary Receipts are not subject to this 25% limitation.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and, at any time, the fund may not be
invested in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
A majority of the fund's assets are invested in the securities of
market-leading technology companies doing business in various subsectors in the
technology universe (the "core holdings"). The portfolio manager believes that
the securities that comprise the fund's core holdings will maintain or improve
their market share regardless of overall economic conditions. These companies
are believed to have a strategic advantage over many of their competitors. The
portfolio manager believes that these core holdings will provide attractive
long-term investment returns.
The remainder of the fund's assets are invested in the securities of
faster-growing, more volatile technology companies that the portfolio manager
believes to be emerging leaders in their fields (the "tactical holdings"). The
fund will typically hold tactical holdings for a shorter period of time than the
fund's core holdings. The portfolio manager believes that these tactical
holdings will provide attractive near-term investment returns.
The portfolio manager constructs the fund's portfolio with the goal of holding 65-85 individual stocks to take advantage of both long and short-term opportunities.
The fund is driven by two investment themes: (1) increasing usage of
information technology in business and consumer products will continue over the
long-term, yielding the potential for above-average growth rates for the sector;
and (2) technology will continue to create new market opportunities through
continual innovation that create periodic exceptional growth opportunities for
investors in technology.
In selecting securities for the fund, the portfolio manager uses a research
oriented investment approach using a combination of quantitative, fundamental
and valuation analysis. The portfolio manager focuses on attractively valued,
well-managed companies in the information-technology sector with the potential
to deliver attractive returns. While the portfolio manager may invest in stocks
of any market capitalization, the portfolio manager tends to favor mid- and
large-cap stocks to avoid liquidity problems that can be associated with some
small-cap stocks.
The portfolio manager will consider selling the security of a company if,
among other things, (1) its fundamentals change; (2) its earnings are disrupted
or disappoint; (3) its management or strategic direction changes; (4) its
valuation becomes excessive compared to similar investment opportunities; (5)
its technical analysis turns negative; or (6) a more attractive investment
opportunity is identified.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective.
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 historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
The principal risks of investing in the fund are:
Market Risk--The prices of and the income generated by securities held by
the fund may decline in response to certain events, including those directly
involving the companies whose securities are owned by the fund; general economic
and market conditions; regional or global economic instability; and currency and
interest rate fluctuations. Certain securities selected for the fund's portfolio
may decline in value more than the overall stock market. In general, the
securities of small companies are more volatile than those of mid-size companies
or large companies.
Equity Securities Risk--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. These factors will probably affect the equity
securities of smaller companies more than the equity securities of larger,
more-established companies. Also, because equity securities of smaller 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 these
securities at a desirable price.
Sector Fund Risk--The fund's investments are concentrated in a comparatively
narrow segment of the economy, the technology sector. This means that the fund's
investment concentration in the technology sector is higher than most mutual
funds and the broad securities market. Consequently, the fund may tend to be
more volatile than other mutual funds, and the value of the fund's investments
and consequently the value of an investment in the fund may tend to rise and
fall more rapidly.
Technology Industry Risk--Many of the products and services offered in
technology-related industries are subject to rapid obsolescence, which may lower
the value of the securities of the companies in this sector.
Foreign Securities Risk--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. Active Trading Risk--The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If a fund does trade in this way, it may incur increased costs, which can lower the actual return of the fund. Active trading may also increase short term gains and losses, which may affect the taxes that must be paid. Management Risk--There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio manager will produce the desired results.
An investment in the fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The 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 chart shown does not
reflect charges assessed in connection with your variable product; if it did,
the performance shown would be lower.
Series I shares are not offered by this prospectus. The Series I shares 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 the fund).
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
----------- -------
1998*.................................................................. 25.37%
1999*.................................................................. 158.29%
2000*.................................................................. -23.61%
2001*.................................................................. -45.96%
2002*.................................................................. -46.98%
2003*.................................................................. 44.93%
2004**................................................................. 4.21%
2005................................................................... 1.94%
2006................................................................... 10.22%
2007................................................................... %
|
* The returns shown for these periods are 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 return shown for this period is the blended return 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 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 30, 2004.
During the periods shown in the bar chart, the highest quarterly return was
[66.55% (quarter ended December 31, 1999)] and the lowest quarterly return was
[-42.22% (quarter ended September 30, 2001)]. For periods prior to April 30,
2004, performance shown above relates to a predecessor fund advised by INVESCO
Funds Group, Inc. (IFG), an affiliate of Invesco Aim Advisors, Inc.
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index, style specific index and peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------
SERIES I
(for the periods ended SINCE INCEPTION
December 31, 2007) 1 YEAR 5 YEARS INCEPTION DATE
---------------------------------------------------------------------------------------------
AIM V.I. Technology Fund(1) % % % 05/20/97(2)
S&P 500--Registered
Trademark-- Index(3,4) 05/31/97(2)
S&P Goldman Sachs Technology
Index(3,4,5) 05/31/97(2)
Lipper VUF Science &
Technology Funds Category
Average(3,4,6) 05/31/97(2)
--------------------------------------------------------------------------
|
(1) The return shown for the one year period is the historical performance of the fund's Series II shares. The returns shown for other 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 predecessor 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 30, 2004. For periods prior to April 30, 2004, performance shown relates to a predecessor fund advised by IFG. Total return figures include reinvested dividends and capital gain distributions and the effect of the fund's expenses.
(2) Series I shares of the fund commenced investment operations on May 20, 1997. Index comparisons began on May 31, 1997.
(3) The Standard & Poor's 500 Index is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. The fund has also included the S&P Goldman Sachs Technology Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Variable Underlying Funds (VUF) Science & Technology Funds Category Average (which may or may not include the fund) is included for comparison to a peer group.
(4) The indices may not reflect payment of fees, expenses or taxes.
(5) The S&P Goldman Sachs Technology Index is a modified capitalization-weighted index composed of companies involved in the technology industry.
(6) The Lipper VUF Science & Technology Funds Category Average represents an average of all the variable insurance underlying funds in the Lipper Science & Technology Funds category. These funds invest at least 65% of their portfolios in science and technology stocks.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES -------------------------------------------------------------------------------- Management Fees % Distribution and/or Service 12b-1 Fees Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses(3) -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.45% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Technology Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliate makes any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
--------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
--------------------------------------------------------------------------------------------
(1) Your annual expenses may be higher or lower than those shown.
SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
--------------------------------------------------------------------------------------------
(1) Your annual expenses may
|
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGER
Warren W. Tennant, Portfolio Manager, is primarily responsible for the day-to-day management of the fund's portfolio. He has been responsible for the fund since 2008 and has been associated with Invesco Aim and/or its affiliates since 2000.
More information on the portfolio manager may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio manager's investments in the fund, a description of his compensation structure, and information regarding other accounts he manages.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board. Each of these tools is described in more detail below. In addition, restrictions designed to discourage or curtail excessive short-term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the funds will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely
compares closing market prices, the next day's opening prices for the security
in its primary market if available, and indications of fair value from other
sources. Fair value pricing methods and pricing services can change from time to
time as approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of the day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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
fund. Variable product owners should refer to the prospectus for their variable
products for information regarding the tax consequences of owning such variable
products contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually to separate accounts of insurance companies issuing the variable products.
At the election of insurance companies issuing the variable products, dividends and distributions are automatically reinvested at net asset value in shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II
shares. The plan allows the fund 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 fund). Because the fund pays
these fees out of its 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 charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse
insurance companies for certain administrative services provided to variable
product owners. Under a Master Administrative Services Agreement, between the
fund and the advisor, the advisor is entitled to receive from the fund
reimbursement of its costs or such reasonable compensation as may be approved by
the Board. Under this arrangement, the advisor provides, or assures that
insurance companies issuing variable products will provide, certain variable
product owner-related services. These services, include, but are not limited to,
facilitation of variable product owners' purchase and redemption requests;
distribution to existing variable product owners of copies of fund prospectuses,
proxy materials, periodic fund reports, and other materials; maintenance of
variable product owners' records; and fund services and communications.
Currently, these administrative service payments made by the fund to the advisor
are subject to an annual limit of 0.25% of the average net assets invested in
the fund by each insurance company. Any amounts paid by the advisor to an
insurance company in excess of 0.25% of the average net assets invested in the
fund are paid by the advisor out of its own financial resources, and not out of
the fund's assets.
Insurance companies may earn profits on these payments for these services,
since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during the fiscal years (or period) indicated.
This information has been audited by whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
SERIES II
-----------------------------------------------------
APRIL 30, 2004
YEAR ENDED (DATE SALES
DECEMBER 31, COMMENCED) TO
-------------------------------- DECEMBER 31,
2007 2006 2005 2004
------ ------ ------ --------------
Net asset value, beginning of period $ $ $ $
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
-------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized)
===================================================================================================================
Total from investment operations
===================================================================================================================
Net asset value, end of period $ $ $ $
___________________________________________________________________________________________________________________
===================================================================================================================
Total return % % % %
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets % % % %
===================================================================================================================
Ratio of net investment income (loss) to average net assets % % % %
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate % % % %
___________________________________________________________________________________________________________________
===================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
|
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com I-VITEC-PRO-2
AIM V.I. UTILITIES FUND
PROSPECTUS
May 1, 2008
|
Series I shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Utilities Fund's investment objectives are capital growth and income.
This prospectus contains important information about the Series I class shares (Series I shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVES AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 4 FEE TABLE AND EXPENSE EXAMPLE 5 ------------------------------------------------------ Fees and Expenses of the Fund 5 Expense Example 5 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 6 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 6 ------------------------------------------------------ FUND MANAGEMENT 6 ------------------------------------------------------ The Advisors 6 Advisor Compensation 7 Portfolio Manager 7 OTHER INFORMATION 7 ------------------------------------------------------ Purchase and Redemption of Shares 7 Excessive Short-Term Trading Activity Disclosures 8 Trade Activity Monitoring 8 Fair Value Pricing 8 Risks 8 Pricing of Shares 9 Taxes 10 Dividends and Distributions 10 Share Classes 10 Payments to Insurance Companies 10 FINANCIAL HIGHLIGHTS 12 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objectives are capital growth and income.
The fund's investment objective may be changed by the Board of Trustees (the Board) without shareholder approval.
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 of issuers engaged primarily in utilities-related industries. The fund considers a company to be doing business in utilities-related industries if it meets at least one of the following tests: (1) at least 50% of its gross income or its net sales come from activities in utilities-related industries; (2) at least 50% of its assets are devoted to producing revenues in the utilities-related industries; or (3) based on other available information, the portfolio manager determines that its primary business is within the utilities-related industries.
The principal type of equity securities purchased by the fund is common stocks. Companies in utilities-related industries may include, but are not limited to, those that provide, generate, transmit, store or distribute natural gas, oil, water or electricity as well as companies that provide telecommunications services, including local, long distance and wireless services.
The fund may invest up to 25% of its total assets in securities of non-U.S. issuers doing business in the utilities-related industries. Securities of Canadian issuers and American Depositary Receipts are not subject to this 25% limitation.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and, at any time, the fund may not be
invested in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
Normally, the portfolio manager seeks to keep the portfolio divided among
the electric utility, natural gas, water and telecommunications industries.
Weightings within the various segments are continually monitored, and the
portfolio manager adjusts the portfolio weightings depending on current economic
conditions. The portfolio manager constructs a portfolio of generally less than
70 stocks. Under normal market conditions, the fund's top ten holdings may
comprise over 40% of the fund's total assets.
In selecting securities for the fund, the portfolio manger uses a
"bottom-up" investment approach using a combination of quantitative, fundamental
and valuation analysis. The portfolio manager focuses on natural gas,
electricity, oil, water and telecommunications services companies with some or
all of the following attributes: positive cash flows, predictable earnings,
solid balance sheets, current and sustainable dividends, strong management,
competitive position, and/or current and potential financial position. The
investment strategy focuses on companies that (1) could potentially benefit from
industry trends, such as increased demand for certain products and deregulation
of state markets, and (2) are attractively valued relative to the rest of the
market. The portfolio manager also monitors and may adjust industry and security
position weights according to prevailing economic trends such as gross domestic
product (GDP) growth and interest rate changes.
The portfolio manager will consider selling a security of a company if,
among other things, its (1) earnings growth are threatened by deterioration in
its fundamentals or change in the operating environment, (2) valuation becomes
too high, (3) corporate strategy changes.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
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 historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
The principal risks of investing in the fund are:
Market Risk--The prices of and the income generated by securities held by
the fund may decline in response to certain events, including those directly
involving the companies whose securities are owned by the fund; general economic
and market conditions; regional or global economic instability, and currency and
interest rate fluctuations. Certain securities selected for the fund's portfolio
may decline in value more than the overall stock market. In general, the
securities of small companies are more volatile than those of mid-size companies
or large companies.
Equity Securities Risk--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. These factors will probably affect the equity
securities of smaller companies more than the equity securities of larger,
more-established companies. Also, because equity securities of smaller 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 desirable price.
Sector Fund Risk--The fund's investments are concentrated in a comparatively
narrow segment of the economy, the utilities sector. This means that the fund's
investment concentration in the utilities sector is higher than most mutual
funds and the broad securities market. Consequently, the fund may tend to be
more volatile than other mutual funds, and consequently the value of an
investment in the fund may tend to rise and fall more rapidly.
Utilities Industry Risk--Governmental regulation, difficulties in obtaining
adequate financing and investment return, environmental issues, prices of fuel
for generation of electricity, availability of natural gas, risk associated with
power marketing and trading, and risks associated with nuclear power facilities
may adversely affect the market value of the fund's holdings. The recent trend
towards deregulation in the utility industries presents special risks. Some
companies may be faced with increased competition and may become less
profitable.
Foreign Securities Risk--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. Concentration Risk--Since a large percentage of the fund's assets may be invested in the securities of a limited number of companies, each investment has a greater effect on the fund's overall performance and any change in the value of those securities could significantly affect the value of your investment in the fund. Management Risk--There is no guarantee that the investment techniques and risk analyses used by the fund's portfolio managers will produce the desired results. An investment in the fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The 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 chart shown does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1998................................................................... 25.48%
1999................................................................... 19.13%
2000................................................................... 5.28%
2001................................................................... -32.41%
2002................................................................... -20.32%
2003................................................................... 17.47%
2004................................................................... 23.56%
2005................................................................... 16.83%
2006................................................................... 25.46%
2007................................................................... %
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During the periods shown in the bar chart, the highest quarterly return was
[17.18% (quarter ended December 31, 1998)] and the lowest quarterly return was
[-21.60% (quarter ended September 30, 2001)]. For periods prior to April 30,
2004, performance shown above relates to a predecessor fund advised by INVESCO
Funds Group, Inc. (IFG), an affiliate of Invesco Aim Advisors, Inc.
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index and a peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended INCEPTION December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE ------------------------------------------------------------------------------------------ AIM V.I. Utilities Fund(1) % % % 12/30/94 S&P 500--Registered Trademark-- Index(2,3) -- Lipper VUF Utility Funds Category Average(2,3,4) -- ------------------------------------------------------------------------------------------ |
(1) For periods prior to April 30, 2004, performance shown relates to a predecessor fund advised by IFG. Total return figures include re-invested dividends and capital gain distributions and the effect of the fund's expenses.
(2) The Standard & Poor's 500 Index is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. In addition, the Lipper Variable Underlying Funds (VUF) Utility Funds Category Average (which may or may not include the fund) is included for comparison to a peer group.
(3) The indices may not reflect payment of fees, expenses or taxes.
(4) The Lipper VUF Utility Funds Category Average represents an average of all the variable insurance underlying funds in the Lipper Utility Funds category. These funds invest primarily in the equity securities of domestic and foreign companies providing utilities.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly
or indirectly, when a variable product owner buys, holds, or redeems interest in
an insurance company separate account that invests in the Series I shares of the
fund but does not represent the effect of any fees or other expenses assessed in
connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES I SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series I share assets) SERIES I SHARES -------------------------------------------------------------------------------- Management Fees % Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(3) Net Annual Fund Operating Expenses -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 0.93% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
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.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Utilities Fund $ $ $ $ ---------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
SERIES I YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
|
(1) Your annual expenses may be higher or lower than these shown.
The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGER
John S. Segner, Senior Portfolio Manager, is primarily responsible for the day-to-day management of the fund's portfolio. He has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 1997.
More information on the portfolio manager may be found on the advisor's website http://www.invescoaim.com. The website is not a part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio manager's investments in the fund, a description of his compensation structure, and information regarding other accounts he manages.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board. Each of these tools is described in more detail below. In addition, restrictions designed to discourage or curtail excessive short-term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or
all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board of Trustees.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profit on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated.
This information has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
SERIES I
---------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- ------- -------
Net asset value, beginning of period $ $ $ $ $
-----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
-----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
=======================================================================================================================
Total from investment operations
=======================================================================================================================
Less distributions:
Dividends from net investment income
-----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
=======================================================================================================================
Total distributions
=======================================================================================================================
Net asset value, end of period $ $ $ $ $
_______________________________________________________________________________________________________________________
=======================================================================================================================
Total return % % % % %
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $ $ $
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % % % %
-----------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % % % %
=======================================================================================================================
Ratio of net investment income to average net assets % % % % %
_______________________________________________________________________________________________________________________
=======================================================================================================================
Portfolio turnover rate % % % % %
_______________________________________________________________________________________________________________________
=======================================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
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You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com I-VIUTI-PRO-1
AIM V.I. UTILITIES FUND
PROSPECTUS
May 1, 2008
|
SERIES II SHARES
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Utilities Fund's investment objectives are capital growth and income.
This prospectus contains important information about the Series II class shares (Series II shares) of the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVESTMENT OBJECTIVES AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fees and Expenses of the Fund 4 Expense Example 4 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 5 ------------------------------------------------------ DISCLOSURE OF PORTFOLIO HOLDINGS 5 ------------------------------------------------------ FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 6 Portfolio Manager 6 OTHER INFORMATION 6 ------------------------------------------------------ Purchase and Redemption of Shares 6 Excessive Short-Term Trading Activity Disclosure 7 Trading Activity Monitoring 7 Fair Value Pricing 8 Risks 8 Pricing of Shares 8 Taxes 9 Dividends and Distributions 9 Share Classes 9 Distribution Plan 9 Payments to Insurance Companies 9 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, 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, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and Invesco Trimark Investment Management 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.
Shares of the fund are used as investment vehicles for variable annuity
contracts and variable life insurance policies (variable products) issued by
certain insurance companies. You cannot purchase shares of the fund directly. As
an owner of a variable product (variable product owner) that offers the fund as
an investment option, however, you may allocate your variable product values to
a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains
information about your variable product, including how to purchase the variable
product and how to allocate variable product values to the fund.
The fund's investment objective may be changed by the Board of Trustees (the Board) without shareholder approval.
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 of issuers engaged primarily in utilities-related industries. The fund considers a company to be doing business in utilities-related industries if it meets at least one of the following tests: (1) at least 50% of its gross income or its net sales come from activities in utilities-related industries; (2) at least 50% of its assets are devoted to producing revenues in utilities-related industries; or (3) based on other available information, the portfolio managers determine that its primary business is within utilities-related industries.
The principal type of equity securities purchased by the fund is common stocks. Companies in utilities-related industries may include, but are not limited to, those that produce, generate, transmit, store or distribute natural gas, oil, water or electricity as well as companies that provide telecommunications services, including local, long distance and wireless services.
The fund may invest up to 25% of its total assets in securities of non-U.S. issuers doing business in utilities-related industries. Securities of Canadian issuers and American Depositary Receipts are not subject to this 25% limitation.
The fund's investments in the types of securities described in this
prospectus vary from time to time, and, at any time, the fund may not be
invested in all types of securities described in this prospectus. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
Normally, the portfolio manager seeks to keep the portfolio divided among
the electric utility, natural gas, water and telecommunications industries.
Weightings within the various segments are continually monitored, and the
portfolio manager adjusts the portfolio weightings depending on current economic
conditions. The portfolio manager constructs a portfolio of generally less than
70 stocks. Under normal market conditions, the fund's top ten holdings may
comprise over 40% of the fund's total assets.
In selecting securities for the fund, the portfolio manager uses a
"bottom-up" investment approach using a combination of quantitative, fundamental
and valuation analysis. The portfolio manager focuses on natural gas,
electricity, oil, water and telecommunication services companies with some or
all of the following attributes: positive cash flows, predictable earnings,
solid balance sheets, current and sustainable dividends, strong management,
competitive position, and/or current and potential financial position. The
investment strategy focuses on companies that (1) could potentially benefit from
industry trends, such as increased demand for certain products and deregulation
of state markets, and (2) are attractively valued relative to the rest of the
market. The portfolio manager also monitors and may adjust industry and security
position weights according to prevailing economic trends such as gross domestic
product (GDP) growth and interest rate changes.
The portfolio manager will consider selling a security of a company if,
among other things, its (1) earnings growth are threatened by deterioration in
its fundamentals or change in the operating environment, (2) valuation becomes
too high, (3) corporate strategy changes.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of a fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
Sector Fund Risk--The fund's investments are concentrated in a comparatively
narrow segment of the economy, the utilities sector. This means that the fund's
investment concentration in the utilities sector is higher than most mutual
funds and the broad securities market. Consequently, the fund may tend to be
more volatile than other mutual funds, and consequently the value of an
investment in the fund may tend to rise and fall more rapidly.
Utilities Industry Risk--Governmental regulation, difficulties in obtaining
adequate financing and investment return, environmental issues, prices of fuel
for generations of electricity, availability of natural gas, risks associated
with power marketing and trading, and risks associated with nuclear power may
adversely affect the market value of the fund's holdings. The recent trend
towards deregulation in the utility industries presents special risks. Some
companies may be faced with increased competition and may become less
profitable.
Foreign Securities Risk--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. Concentration Risk--Since a large percentage of the fund's assets may be invested in the securities of a limited number of companies, each investment has a greater effect on the fund's overall performance and any change in the value of those securities could significantly affect the value of your investment in the fund. Management Risk--There is no guarantee that the investment techniques and risks analyses used by the fund's portfolio managers will produce the desired results. An investment in the fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The 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 chart shown does not
reflect charges assessed in connection with your variable product; if it did,
the performance shown would be lower.
Series I shares are not offered by this prospectus. The Series I shares 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 the fund).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1998*.................................................................. 25.17%
1999*.................................................................. 18.84%
2000*.................................................................. 5.01%
2001*.................................................................. -32.58%
2002*.................................................................. -20.52%
2003*.................................................................. 17.18%
2004**................................................................. 23.24%
2005................................................................... 16.55%
2006................................................................... 25.25%
2007...................................................................
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* The returns shown for these periods are 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 return shown for this period is the blended return 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 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 30, 2004.
During the periods shown in the bar chart, the highest quarterly return was
[17.11% (quarter ended December 31, 1998)] and the lowest quarterly return was
[-21.65% (quarter ended September 30, 2001)]. For periods prior to April 30,
2004, performance shown above relates to a predecessor fund advised by INVESCO
Funds Group, Inc. (IFG), an affiliate of Invesco Aim Advisors, Inc.
PERFORMANCE TABLE
The following performance table compares the fund's performance to those of an unmanaged broad-based securities market index and a peer group index. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. A fund's past performance is not necessarily an indication of its future performance. The performance table shown below does not reflect charges assessed in connection with your variable product; if it did, the performance shown would be lower.
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------------
SERIES I
(for the periods ended INCEPTION
December 31, 2007) 1 YEAR 5 YEARS 10 YEARS DATE
-------------------------------------------------------------------------------------
AIM V.I. Utilities Fund(1) % % % 12/30/94
S&P 500--Registered Trademark--
Index(2,3) --
Lipper VUF Utility Funds Category
Average(2,3,4) --
-------------------------------------------------------------------------------------
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(1) The return shown for the one year period is the historical performance of the fund's Series II shares. The returns shown for other 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 predecessor 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 30, 2004. For periods prior to April 30, 2004, performance shown relates to a predecessor fund advised by IFG. Total return figures include reinvested dividends and capital gain distributions and the effect of the fund's expenses.
(2) The Standard & Poor's 500 Index is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. In addition, the Lipper Variable Underlying Funds (VUF) Utility Funds Category Average (which may or may not include the fund) is included for comparison to a peer group.
(3) The indices may not reflect payment of fees, expenses or taxes.
(4) The Lipper VUF Utility Funds Category Average represents an average of all the variable insurance underlying funds in the Lipper Utilities Funds category. These funds invest primarily in the equity securities of domestic and foreign companies providing utilities.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redeems interest in an insurance company separate account that invests in the Series II shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) SERIES II SHARES -------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A -------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1) -------------------------------------------------------------------------------- (expenses that are deducted from Series II share assets) SERIES II SHARES -------------------------------------------------------------------------------- Management Fees % Distribution and/or Service (12b-1) Fees Other Expenses Acquired Fund Fees and Expenses(2) Total Annual Fund Operating Expenses Fee Waiver and/or Expense Reimbursements(3) Net Annual Fund Operating Expenses -------------------------------------------------------------------------------- |
[(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the limit on Total Annual Fund Operating Expenses, if any. The impact of the acquired fund fees and expenses are included in the total returns of the fund.
(3) The fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.18% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the number reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the fund's Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the fund may benefit are in the form of credits that the fund receives from banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund may also benefit from a one time credit to be used to offset future custodian expenses. These credits are used to pay certain expenses incurred by the fund. This expense limitation agreement is in effect through at least April 30, 2008.]
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses
assessed in connection with your variable product, and if it did, expenses would
be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii)incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily,
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. Utilities Fund $ $ $ $ -------------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its affiliates (collectively, AIM Affiliates) and the New York Attorney General requires Invesco Aim Advisors, Inc. and certain of its affiliates to provide certain hypothetical information regarding investment and expense information. The chart below is intended to reflect the annual and cumulative impact of the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10 year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
(1) Your annual expenses may be higher or lower than those shown.
SERIES II YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
-----------------------------------------------------------------------------------------------
Annual Expense Ratio(1) % % % % %
Cumulative Return Before
Expenses % % % % %
Cumulative Return After
Expenses % % % % %
End of Year Balance $ $ $ $ $
Estimated Annual Expenses $ $ $ $ $
-----------------------------------------------------------------------------------------------
(1) Your annual expenses may
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The fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's investment advisor and manages the investment operations of the fund and has agreed to perform or arrange for the performance of the fund's day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 225 investment portfolios, including the fund, encompassing a broad range of investment objectives.
The following affiliates of the advisor serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at One Midtown Plaza, 1360 Peachtree Street, N.E., Suite 100, Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
Invesco Trimark Investment Management Inc. (Invesco Trimark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994.
(collectively, the affiliated sub-advisors).
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2007, the advisor received compensation of % of average daily net assets, after fee waivers and/or expense reimbursements.
Invesco Aim, not the fund, pays the sub-advisory fees.
A discussion regarding the basis for the Board's approval of the investment advisory and sub-advisory agreements of the fund is available in the fund's most recent report to shareholders for the six-month period ended June 30th.
PORTFOLIO MANAGER
John S. Segner, Senior Portfolio Manager, is primarily responsible for the day-to-day management of the fund's portfolio. He has been responsible for the fund since 2003 and has been associated with Invesco Aim and/or its affiliates since 1997.
More information on the portfolio manager may be found on the advisor's website http://www.invescoaim.com. The website is not a part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio manager's investments in the fund, a description of his compensation structure, and information regarding other accounts he manages.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may
postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. The fund
and Invesco Aim have applied for regulatory relief to enable the fund's shares
to be sold to and held by one or more fund of funds (open-end management
investment companies or series thereof that offer their shares exclusively to
insurance companies, their separate accounts and/or qualified plans). The fund
plans to offer its shares to fund of funds following receipt of the requested
regulatory relief. Due to differences in tax treatment and other considerations,
the interests of fund shareholders, including variable product owners and plan
participants investing in the fund (whether directly or indirectly through fund
of funds), may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in a fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board 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.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage
excessive short-term trading of fund shares. The fund may alter its policies and
procedures at any time without giving prior notice to fund shareholders, if the
advisor believes the change would be in the best interests of long-term
investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the
Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive
short-term trading activity may be imposed by the insurance companies and/or
their separate accounts that invest in the fund on behalf of variable product
owners. Variable product owners should refer to the applicable contract and
related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of a fund for
which market quotations are not readily available are to be valued at fair value
determined in good faith using procedures approved by the Board of the fund.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more
information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the funds will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund
values portfolio securities for which market quotations are readily available at
market value. The fund values all other securities and assets for which market
quotations are not readily available at their fair value in good faith using
procedures approved by the Board of the fund. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Even when market quotations are available, they may be stale or they may be
unreliable because the security is not traded frequently, trading on the
security ceased before the close of the trading market or issuer specific events
occurred after the security ceased trading or because of the passage of time
between the close of the market on which the security trades and the close of
the NYSE and when the fund calculates its net asset value. Issuer specific
events may cause the last market quotation to be unreliable. Such events may
include a merger or insolvency, events which affect a geographical area or an
industry segment, such as political events or natural disasters, or market
events, such as a significant movement in the U.S. market. Where market
quotations are not readily available, including where the advisor determines
that the closing price of the security is unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Fair value pricing may reduce the ability of frequent traders to take advantage
of arbitrage opportunities resulting from potentially "stale" prices of
portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
Fair value is that amount that the owner might reasonably expect to receive
for the security upon its current sale. Fair value requires consideration of all
appropriate factors, including indications of fair value available from pricing
services. A fair value price is an estimated price and may vary from the prices
used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved
by the Board. In other circumstances, the advisor valuation committee may fair
value securities in good faith using procedures approved by the Board. As a
means of evaluating its fair value process, the advisor routinely compares
closing market prices, the next day's opening prices for the security in its
primary market if available, and indications of fair value from other sources.
Fair value pricing methods and pricing services can change from time to time as
approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally
available and reliable for domestic exchange traded equity securities. If market
quotations are not available or are unreliable, the advisor will value the
security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at the
market quotations. Because trading hours for certain foreign securities end
before the close of the NYSE, closing market quotations may become unreliable.
If between the time trading ends on a particular security and the close of the
customary trading session on the NYSE events occur that are significant and may
make the closing price unreliable, the fund may fair value the security. If an
issuer specific event has occurred that the advisor determines, in its judgment,
is likely to have affected the closing price of a foreign security, it will
price the security at fair value. The advisor also relies on a screening process
from a pricing vendor to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign security
trades is not the current market value as of the close of the NYSE. For foreign
securities where the advisor believes, at the approved degree of certainty, that
the price is not reflective of current market value, the advisor will use the
indication of fair value from the pricing service to determine the fair value of
the security. The pricing vendor, pricing methodology or degree of certainty may
change from time to time.
Fund securities primarily traded on foreign markets may trade on days that
are not business days of the fund. Because the net asset value of fund shares is
determined only on business days of the fund, the value of the portfolio
securities of a fund that invests in foreign securities may change on days when
you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal
bonds and convertible securities, including high yield or junk bonds, are valued
on the basis of prices provided by independent pricing services. Prices provided
by the pricing services 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, maturity and other market data. Prices received from pricing
services are fair value prices. In addition, if the price provided by the
pricing service is unreliable, the advisor valuation committee may fair value
the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at
amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market
quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote
provided by an independent pricing service. Evaluated quotes provided by the
pricing service are based on a model that may include end of day net present
values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds,
other than open-end funds that are exchange traded, the investing fund will
calculate its net asset value using the net asset value of the underlying fund
in which it invests.
The fund discloses portfolio holdings at different times to insurance
companies issuing variable products that invest in the fund, and in annual and
semi-annual shareholder reports. Refer to such reports to determine the types of
securities in which a fund has invested. You may also refer to the Statement of
Additional Information to determine what types of securities in which the fund
may invest. You may obtain copies of these reports or of the Statement of
Additional Information from the insurance company that issued your variable
product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE
is open for business, as of the close of the customary trading session, or
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 fund. Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products. The fund expects that its distributions, if any, will consist of both ordinary income and capital gains.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually to separate accounts of insurance companies issuing the variable
products.
At the election of insurance companies issuing the variable products,
dividends and distributions are automatically reinvested at net asset value in
shares of the fund.
SHARE CLASSES
The 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 fund has adopted a distribution or "Rule 12b-1" plan for its Series II shares. The plan allows the fund 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 fund). Because the fund pays these fees out of its 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 charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors
Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of consideration provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
The financial highlights table is intended to help you understand the financial
performance of the 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 the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during the fiscal years (or period) indicated.
This information has been audited by , whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
SERIES II
-------------------------------------------------
APRIL 30, 2004
YEAR ENDED (DATE SALES
DECEMBER 31, COMMENCED) TO
------------------------------- DECEMBER 31,
2007 2006 2005 2004
------ ------ ------ --------------
Net asset value, beginning of period $ $ $
---------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a)
---------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized)
===============================================================================================================
Total from investment operations
===============================================================================================================
Less distributions:
Dividends from net investment income
---------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
===============================================================================================================
Total distributions
===============================================================================================================
Net asset value, end of period $ $ $
_______________________________________________________________________________________________________________
===============================================================================================================
Total return % % %
_______________________________________________________________________________________________________________
===============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ $ $
_______________________________________________________________________________________________________________
===============================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements % % %
---------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements % % %
===============================================================================================================
Ratio of net investment income to average net assets % % %
_______________________________________________________________________________________________________________
===============================================================================================================
Portfolio turnover rate % % %
_______________________________________________________________________________________________________________
===============================================================================================================
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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 the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
Because you cannot purchase shares of the fund directly, these documents have
not been made available on our website.
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You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 duplicating 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.
invescoaim.com I-VIUTI-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 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. EACH FUND'S FINANCIAL STATEMENTS ARE INCORPORATED INTO THIS STATEMENT OF ADDITIONAL INFORMATION BY REFERENCE TO SUCH FUND'S MOST RECENT ANNUAL REPORT TO SHAREHOLDERS. YOU MAY OBTAIN, WITHOUT CHARGE, A COPY OF ANY PROSPECTUS AND/OR ANNUAL REPORT FOR ANY FUND LISTED BELOW FROM AN AUTHORIZED DEALER OR BY WRITING TO:
INVESCO AIM DISTRIBUTORS, INC.
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TEXAS 77046-1173
OR BY CALLING (800) 410-4246
THIS STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 2008, RELATES TO THE FOLLOWING PROSPECTUSES FOR THE SERIES I AND SERIES II SHARES OF EACH OF THE FOLLOWING FUNDS:
FUND DATED
------------------------------------------------ --------
AIM V.I. BASIC BALANCED FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. BASIC VALUE FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. CAPITAL APPRECIATION FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. CAPITAL DEVELOPMENT FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. CORE EQUITY FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. DIVERSIFIED INCOME FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. DYNAMICS FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. FINANCIAL SERVICES FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. GLOBAL HEALTH CARE FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. GLOBAL REAL ESTATE FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. GOVERNMENT SECURITIES FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. HIGH YIELD FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. INTERNATIONAL GROWTH FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. LARGE CAP GROWTH FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. LEISURE FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. MID CAP CORE EQUITY FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. MONEY MARKET FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. SMALL CAP EQUITY FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. TECHNOLOGY FUND - SERIES I 05/01/08
SERIES II 05/01/08
AIM V.I. UTILITIES FUND - SERIES I 05/01/08
SERIES II 05/01/08
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AIM VARIABLE INSURANCE FUNDS
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
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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........................................................................... 3
Foreign Investments.......................................................................... 4
Debt Investments............................................................................. 7
Other Investments............................................................................ 15
Investment Techniques........................................................................ 18
Derivatives.................................................................................. 25
Additional Securities or Investment Techniques............................................... 31
Diversification Requirements - AIM V.I. Money Market Fund....................................... 32
Fund Policies for the V.I. Funds................................................................ 32
Temporary Defensive Positions (for V.I. Funds)............................................... 38
Fund Policies for the VIF Funds................................................................. 38
Temporary Defensive Positions (for VIF Funds)................................................ 38
Portfolio Turnover.............................................................................. 38
Policies and Procedures for Disclosure of Fund Holdings......................................... 38
General Disclosures.......................................................................... 38
Selective Disclosures........................................................................ 39
MANAGEMENT OF THE TRUST............................................................................ 41
Board of Trustees............................................................................... 41
Management Information.......................................................................... 41
Trustee Ownership of Fund Shares............................................................. 44
Compensation.................................................................................... 44
Retirement Plan For Trustees................................................................. 45
Deferred Compensation Agreements............................................................. 45
Code of Ethics.................................................................................. 46
Proxy Voting Policies........................................................................... 46
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES................................................ 46
INVESTMENT ADVISORY AND OTHER SERVICES............................................................. 46
Investment Advisor.............................................................................. 46
Investment Sub-Advisor.......................................................................... 51
Portfolio Managers........................................................................... 52
Securities Lending Arrangements.............................................................. 52
Services Agreements............................................................................. 53
Other Service Providers......................................................................... 53
BROKERAGE ALLOCATION AND OTHER PRACTICES........................................................... 54
Brokerage Transactions.......................................................................... 54
Commissions..................................................................................... 55
Broker Selection................................................................................ 55
Directed Brokerage (Research Services).......................................................... 58
Regular Brokers................................................................................. 58
Allocation of Portfolio Transactions............................................................ 58
Allocation of Equity Initial Public Offering ("IPO") Transactions............................... 59
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PAGE
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PURCHASE AND REDEMPTION OF SHARES.................................................................. 59
Calculation of Net Asset Value.................................................................. 60
Redemptions In Kind............................................................................. 62
Payments to Participating Insurance Companies and/or their Affiliates........................... 62
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS........................................................... 63
Dividends and Distributions..................................................................... 63
Tax Matters..................................................................................... 64
DISTRIBUTION OF SECURITIES......................................................................... 66
Distribution Plan............................................................................... 66
Distributor..................................................................................... 68
FINANCIAL STATEMENTS............................................................................... 68
PENDING LITIGATION................................................................................. 68
APPENDICES:
RATINGS OF DEBT SECURITIES......................................................................... A-1
PERSONS TO WHOM INVESCO AIM PROVIDES NON-PUBLIC PORTFOLIO HOLDINGS ON AN ONGOING BASIS............. B-1
TRUSTEES AND OFFICERS.............................................................................. C-1
TRUSTEE AND OFFICER COMPENSATION TABLE............................................................. D-1
PROXY POLICIES AND PROCEDURES...................................................................... E-1
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES................................................ F-1
MANAGEMENT FEES.................................................................................... G-1
PORTFOLIO MANAGERS................................................................................. H-1
ADMINISTRATIVE SERVICES FEES....................................................................... I-1
BROKERAGE COMMISSIONS.............................................................................. J-1
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF SECURITIES OF REGULAR BROKERS OR DEALERS... K-1
CERTAIN FINANCIAL INSTITUTIONS THAT RECEIVE ONE OR MORE TYPES OF PAYMENTS.......................... L-1
AMOUNTS PAID TO INVESCO AIM DISTRIBUTORS, INC. PURSUANT TO DISTRIBUTIONS PLAN...................... M-1
ALLOCATION OF ACTUAL FEES PAID PURSUANT TO DISTRIBUTION PLANS...................................... N-1
PENDING LITIGATION................................................................................. O-1
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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 twenty separate portfolios: AIM V.I. Basic Balanced Fund (formerly known as AIM V.I. Balanced Fund), AIM V.I. Basic Value Fund, AIM V.I. Capital Appreciation Fund, AIM V.I. Capital Development Fund, AIM V.I. Core Equity Fund, AIM V.I. Diversified Income Fund, AIM V.I. Global Real Estate Fund (formerly known as AIM V.I. Real Estate Fund and INVESCO VIF - Real Estate Opportunity Fund), AIM V.I. Government Securities Fund, AIM V.I. High Yield Fund, AIM V.I. International Growth Fund, AIM V.I. Large Cap Growth Fund, AIM V.I. Mid Cap Core Equity Fund, AIM V.I. Money Market Fund, and AIM V.I. Small Cap Equity Fund (collectively, the " V.I. Funds"), and AIM V.I. Dynamics Fund (formerly known as INVESCO VIF - Dynamics Fund), AIM V.I. Financial Services Fund (formerly known as INVESCO VIF - Financial Services Fund), AIM V.I. Global Health Care Fund (formerly known as AIM V.I. Health Sciences Fund and INVESCO VIF - Health Sciences Fund), AIM V.I. Leisure Fund (formerly known as INVESCO VIF - Leisure Fund), , AIM V.I. Technology Fund (formerly known as INVESCO VIF - Technology Fund), and AIM V.I. Utilities Fund (formerly known as INVESCO VIF - Utilities Fund) (collectively, the " VIF Funds"). This Statement of Additional Information relates to the V.I. Funds and the VIF Funds (each a "Fund," and collectively, the "Funds"). Under the Amended and Restated Agreement and Declaration of Trust, dated September 14, 2005, as amended (the "Trust Agreement"), the Board of Trustees of the Trust (the "Board") 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, AIM V.I. Capital Appreciation Fund, AIM V.I. International Equity 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 V.I. Funds, except AIM V.I. Basic Value Fund, AIM V.I. Global Real Estate Fund and AIM V.I. Large Cap Growth Fund, AIM V.I. Mid Cap Core Equity Fund, and AIM V.I. Small Cap 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 on September 10, 2001. AIM V.I. Large Cap Growth Fund and AIM V.I. Small Cap Equity Fund commenced operations as series of the Trust on September 1, 2003. AIM V.I. Core Equity Fund was known 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. Prior to April 30, 2004, AIM V.I. Global Real Estate Fund and the VIF Funds were portfolios of INVESCO Variable Investment Funds, Inc., a Maryland corporation. Pursuant to an agreement and plan of reorganization, AIM V.I. Global Real Estate Fund and the VIF Funds became portfolios of the Trust. All historical financial and other information contained in this Statement of Additional Information for the periods prior to April 30, 2004, relating to AIM V.I. Global Real Estate Fund and the VIF Funds (or a class thereof) is that of its predecessor fund (or its corresponding class thereof).
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, 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 variable annuity contracts and variable life insurance policies ("Contract Owners"), annuitants and beneficiaries. Fund shares held by a 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 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 Invesco Aim Advisors, Inc. ("Invesco 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's Bylaws generally provide 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. Indemnification does not extend to judgments or amounts paid in settlement in any actions by or in the right of the Trust. The Trust's Bylaws provide for the advancement of payments to current and former trustees, officers and employees or agents of the Trust, or anyone serving at their request, in connection with the preparation and presentation of a defense to any claim, action, suit or proceeding, expenses for which such person would be entitled to indemnification; provided that any advancement of payments would be reimbursed unless it is ultimately determined that such person is entitled to indemnification for such expenses.
SHARE CERTIFICATES. Shareholders of the Funds do not have the right to demand or require the Trust to issue share certificates and share certificates are not issued.
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS
CLASSIFICATION
The Trust is an open-end management investment company. Each of the Funds are "diversified" for purposes of the 1940 Act.
INVESTMENT STRATEGIES AND RISKS
The tables on the following pages identify various securities and investment techniques used by Invesco Aim in managing the Funds. The tables have been marked to indicate those securities and investment techniques that Invesco Aim and/or the Sub-advisors (as defined herein) may use to manage a Fund. A Fund may not use all of these techniques at any one time. Invesco Aim may also invest in types of securities and may use investment techniques in managing the Funds, other than those described below, subject to the limitations imposed by a Fund's investment objectives, 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.
Equity Investments
COMMON STOCK. Each Fund (except AIM V.I. Government Securities Fund, AIM V.I. High Yield Fund and AIM V.I. Money Market Fund) may invest in 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. Each Fund (except AIM V.I. Government Securities Fund and AIM V.I. Money Market Fund) may invest in 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, which is 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. Each Fund (except AIM V.I. Government Securities Fund and AIM V.I. Money Market Fund) may invest in 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. International Growth Fund may invest up to 20% of its total assets in securities exchangeable for or convertible into marketable equity securities of foreign issues.
ALTERNATIVE ENTITY SECURITIES. Each Fund (except AIM V.I. Government Securities Fund and AIM V.I. Money Market Fund) may invest in 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. 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. For a discussion of ADRs and EDRs, please refer to subsection "Foreign Exchange Transaction - ADRs and EDRs below.
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; in addition to those accompanying an investment in U.S. issued securities. Investments by a Fund in ADRs, EDRs or similar securities also may entail some or all of the risks described below, as well as the risks set forth under "Description of the Funds and Their Investments - Investment Strategies and Risks - Foreign Investments - ADR and EDRs."
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, and developments, 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. Therefore, financial information about foreign companies may be incomplete, or may not be comparable to the information available on U.S. 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 often 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.
Risks of Developing Countries. Each Fund (excluding AIM V.I. Money Market Fund) may invest up to 5%, except that AIM V.I. Technology Fund may invest up to 10%, AIM V.I. High Yield Fund and AIM V.I. Diversified Income Fund may invest up to 15% and AIM V.I. International Growth Fund, and AIM V.I. Global Health Care Fund and AIM V.I. Global Real Estate Fund may invest up to 20% of their respective total assets in securities of companies located in developing countries. Developing countries are those countries which are not included in the MSCI World Index. The Funds consider various factors when determining whether a company is in a developing country, including whether (1) it is organized under the laws of a developing country; (2) it has a principal office in a developing country; (3) it derives 50% or more of its total revenues from business in developing markets countries; or (4) its securities are traded principally on a stock exchange, or in an over-the-counter market, in a developing country. 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 or 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. Each Fund (other than AIM V.I. Basic Value Fund, AIM V.I. Capital Appreciation Fund, AIM V.I. Capital Development Fund, AIM V.I. Core Equity Fund, AIM V.I. International Growth Fund, AIM V.I. Large Cap Growth Fund and AIM V.I. Mid Cap Core Equity Fund) may invest in debt securities of foreign governments. 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," though, there are other types of foreign government obligations meeting this definition that are not Brady Bonds.
FOREIGN EXCHANGE TRANSACTIONS. Each Fund (except AIM V.I. Money Market Fund) has authority to deal in foreign exchange transactions 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. AIM V.I. Diversified Income Fund may also invest in foreign exchange transactions using futures or forward contracts for other than hedging purposes to enhance returns. A Fund may commit the same percentage of its assets to foreign exchange transactions as it can invest in foreign securities.
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. Foreign exchange transactions also include transactions conducted on a cash or "spot" basis at the spot rate for purchasing or selling currency in the relevant foreign currency exchange markets.
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. There can be no guarantee that these investments will be successful. Additionally, foreign exchange transactions may involve some of the risks of investments in foreign securities.
ADRs AND EDRs. Each Fund may invest in ADRs and EDRs. ADRs are receipts typically issued by U.S. banks. ADRs are receipts for the shares of foreign corporations that are held by the bank issuing the receipt. An ADR entitles its holder to all dividends and capital gains on the underlying foreign securities, less any fees paid to the bank. Purchasing ADRs gives a Fund the ability to purchase the functional equivalent of foreign securities without going to the foreign securities markets to do so. ADRs are bought and sold in U.S. dollars, not foreign currencies. An ADR that is "sponsored" means that the foreign corporation whose shares are represented by the ADR is actively involved in the issuance of the ADR, and generally provides material information about the corporation to the U.S. market. An "unsponsored" ADR program means that the foreign corporation whose shares are held by the bank is not obligated to disclose material information in the United States, and, therefore, the market value of the ADR may not reflect important facts known only to the foreign company. Since they mirror their underlying foreign securities, ADRs generally have the same risks as investing directly in the underlying foreign securities. EDRs are similar to ADRs, except they are typically issued by European banks or trust companies.
Debt Investments
INVESTMENT GRADE CORPORATE DEBT OBLIGATIONS. Each Fund (except AIM V.I. Government Securities 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 portfolio managers 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. Each Fund may investment in liquid assets. 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 and municipal obligations).
JUNK BONDS. AIM V.I. Diversified Income Fund, AIM V.I. Global Real Estate fund and AIM V.I. High Yield Fund may invest in junk bonds. AIM V.I. Global Real Estate Fund may invest up to 10% of its total assets in lower-rated or non-rated debt securities commonly known as junk bonds.
Junk bonds are considered speculative with respect to their capacity to pay interest and repay principal. While they may provide greater income and opportunity for gain, junk bonds are subject to greater risks than higher-rated debt securities. The prices of and yields on junk bonds may fluctuate to a greater extent than those of higher-rated debt securities.
Issuers of junk bonds are often highly leveraged, and may lack more traditional methods of financing. The risk of issuer default on junk bonds is generally higher because such issues are often unsecured or otherwise subordinated to claims of the issuer's other creditors. If a junk bond issuer defaults, a Fund may incur additional expenses to seek recovery.
Junk bonds have been found to be less sensitive to fluctuations in interest rates, and more sensitive to real or perceived adverse economic conditions and individual corporate developments (including industry competition and adverse publicity), than those of higher-rated debt securities, which can decrease the liquidity and values of junk bonds. During such periods of recession and economic downturns, highly leveraged junk bond issuers may experience financial stress and may lack sufficient revenues to meet interest payment obligations, increasing the risk of default. In addition, new laws and proposed new laws may adversely impact the market for junk bonds.
A Fund may have difficulty selling certain junk bonds at the desired time and price. The secondary markets in which junk bonds are traded may be thin and less liquid than the market for higher-rated debt securities. Less liquidity in secondary trading markets could adversely affect the price at which a Fund could sell a particular junk bond, and could adversely affect and cause large fluctuations in the net asset value of that Fund's shares. The lack of a liquid secondary market may also make it more difficult for a Fund to obtain accurate market quotations in valuing junk bond assets.
Descriptions of debt securities ratings are found in Appendix A.
U.S. GOVERNMENT OBLIGATIONS. Each Fund (except AIM V.I. Basic Value Fund, AIM V.I. Capital Appreciation Fund, AIM V.I. Capital Development Fund, AIM V.I. Core Equity Fund, AIM V.I. International
Growth Fund and AIM V.I. Mid Cap Core Equity Fund) may invest in 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 former 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, in which case, if the issuer were to default and a Fund held securities of such issuer, it might not be able to recover their investments from the U.S. Government.
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 Invesco Aim (under the supervision of and pursuant to guidelines established by the Board) 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). Since AIM V.I. Money Market Fund may invest in securities backed by banks and other financial institutions, changes in the credit quality of these institutions could cause losses to the Fund and affect their share price. 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 limit investments in money market obligations to those which are denominated in U.S. dollars and which at the date of purchase are "First Tier" securities as defined in Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time. Briefly, "First Tier" securities are securities that are rated in the highest rating category for short-term debt obligations by two NRSROs, or, if only rated by one NRSRO, are rated in the highest rating category by the NRSRO, or if unrated, are determined by Invesco Aim, the Fund's investment advisor (under the supervision of and pursuant to guidelines established by the Board) to be of comparable quality to a rated security that meets the foregoing quality standards, as well as securities issued by a registered investment company that is a money market fund and U.S. Government securities.
FOREIGN BANK OBLIGATIONS. AIM V.I. Basic Balanced Fund, AIM V.I. Diversified Income Fund, AIM V.I. High Yield and AIM V.I. Money Market Fund may invest in 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. AIM V.I. Basic Balanced Fund,
AIM V.I. Diversified Income Fund, AIM V.I. Dynamics Fund, AIM V.I. Financial
Services Fund, AIM V.I. Global Health Care Fund, AIM V.I. Global Real Estate
Fund, AIM V.I. Government Securities Fund, AIM V.I. High Yield Fund, AIM V.I.
Leisure Fund, AIM V.I. Technology Fund and AIM V.I. Utilities Fund may invest in
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. Basic Balanced Fund, AIM V.I. Diversified Income Fund and AIM V.I. Global Real Estate Fund may invest in CMOs. The Funds 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., Series A, B, C, and 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 following order: Series A, B, C, and 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. AIM V.I. Basic Balanced Fund, AIM V.I. Diversified Income Fund, AIM V.I. Global Health Care Fund, AIM V.I. Global Real Estate Fund and AIM V.I. Money Market 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.
AIM V.I. Global Real Estate Fund and AIM V.I. Money Market Fund may invest in certificates of deposit ("Eurodollar CDs") and time deposits ("Eurodollar time deposits") of foreign branches of domestic banks. Accordingly, an investment in a Fund may involve risks that are different in some respects from those incurred by an investment company which invests only in debt obligations of U.S. domestic issuers. Such risks include future political and economic developments, the possible seizure or nationalization of foreign deposits and the possible imposition of foreign country withholding taxes on interest income.
LOANS, LOAN PARTICIPATIONS AND ASSIGNMENTS. AIM V.I. High Yield Fund may invest, subject to an overall 15% limit on loans, in loan participations or assignments. Loan participations are loans or other direct debt instruments that are interests in amounts owed by a corporate, governmental or other borrower to another party. They may represent amounts owed to lenders or lending syndicates, suppliers of goods or services, or to other parties. The fund will have the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the participation and only upon receipt by the lender of the payments from the borrower. In connection with purchasing participations, the fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the loan, nor any rights of set-off against the borrower, and the fund may not directly benefit from any collateral supporting the loan in which it has purchased the participation. As a result, the fund will be subject to the credit risk of both the borrower and the lender that is selling the participation. In the event of the insolvency of the lender selling a participation, a fund may be treated as a general creditor of the lender and may not benefit from any set-off between the lender and the borrower.
When the fund purchases assignments from lenders, it acquires direct rights against the borrower on the loan. However, because assignments are arranged through private negotiations between potential assignees and potential assignors, the rights and obligations acquired by a fund as the purchaser of an
assignment may differ from, and be more limited than, those held by the assigning lender. Investments in loan participations and assignments present the possibility that the fund could be held liable as a co-lender under emerging legal theories of lender liability. In addition, if the loan is foreclosed, the fund could be part owner of any collateral and could bear the costs and liabilities of owning and disposing of the collateral. The fund anticipates that loan participations could be sold only to a limited number of institutional investors. In addition, some loan participations and assignments may not be rated by major rating agencies and may not be protected by the securities laws.
COMMERCIAL INSTRUMENTS. AIM V.I. Basic Balanced Fund, AIM V.I. Diversified Income Fund, AIM V.I. Global Real Estate Fund, AIM V.I. High Yield and AIM V.I. Money Market 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. Global Real Estate and AIM V.I. Money Market Fund may purchase participations in corporate loans. Participation 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"). The Fund generally will have no right directly to enforce compliance by the Borrower with the terms of the credit agreement. Instead, the Funds will be required to rely on the Lender or the Participant that sold the participation interest both for the enforcement of the Funds' rights against the Borrower and for the receipt and processing of payments due to the Fund under the loans. Under the terms of a participation interest, the Fund may be regarded as a member of the Participant and thus the Fund is subject to the credit risk of both the Borrower and a Participant. Participation interests are generally subject to restrictions on resale. The Funds consider participation interests to be illiquid and therefore subject to the Funds' percentage limitations for investments in illiquid securities.
MUNICIPAL SECURITIES. AIM V.I. Diversified Income Fund, AIM V.I. Global Real Estate Fund, AIM V.I. High Yield Fund and AIM V.I. Money Market Fund may invest in "Municipal Securities," which include debt obligations of states, territories or possessions of the United States and the District of Columbia and their political subdivisions, agencies and instrumentalities. Municipal Securities are issued to obtain funds for various public purposes, including the construction of a wide range of public facilities such as airports, bridges, highways, housing, hospitals, mass transportation, schools, streets and water and sewer works.
Other public purposes for which Municipal Securities may be issued include the refunding of outstanding obligations, obtaining funds for general operating expenses and lending such funds to other public institutions and facilities. In addition, certain types of industrial development bonds are issued by or on behalf of public authorities to obtain funds to provide for the construction, equipment, repair or improvement of privately operated housing facilities, airport, mass transit, industrial, port or parking facilities, air or water pollution control facilities and certain local facilities for water supply, gas, electricity or sewage or solid waste disposal. The principal and interest payments for industrial development bonds or pollution control bonds are often the sole responsibility of the industrial user and therefore may not be backed by the taxing power of the issuing municipality. The interest paid on such bonds may be exempt
from federal income tax, although current federal tax laws place substantial limitations on the purposes and size of such issues. Such obligations are considered to be Municipal Securities provided that the interest paid thereon, in the opinion of bond counsel, qualifies as exempt from federal income tax. However, interest on Municipal Securities may give rise to a federal alternative minimum tax liability and may have other collateral federal income tax consequences. See "Dividends, Distributions and Tax Matters."
The two major classifications of Municipal Securities are bonds and notes. Bonds may be further classified as "general obligation" or "revenue" issues. General obligation bonds are secured by the issuer's pledge of its full faith, credit and taxing power for the payment of principal and interest. Revenue bonds are payable from the revenues derived from a particular facility or class of facilities, and in some cases, from the proceeds of a special excise or other specific revenue source, but not from the general taxing power. Tax exempt industrial development bonds are in most cases revenue bonds and do not generally carry the pledge of the credit of the issuing municipality. Notes are short term instruments which usually mature in less than two years. Most notes are general obligations of the issuing municipalities or agencies and are sold in anticipation of a bond sale, collection of taxes or receipt of other revenues. There are, of course, variations in the risks associated with Municipal Securities, both within a particular classification and between classifications. The Funds' assets may consist of any combination of general obligation bonds, revenue bonds, industrial revenue bonds and notes. The percentage of such Municipal Securities held by a Fund will vary from time to time.
Municipal Securities also include the following securities:
- Bond Anticipation Notes usually are general obligations of state and local governmental issuers which are sold to obtain interim financing for projects that will eventually be funded through the sale of long term debt obligations or bonds.
- Tax Anticipation Notes are issued by state and local governments to finance the current operations of such governments. Repayment is generally to be derived from specific future tax revenues. Tax anticipation notes are usually general obligations of the issuer.
- Revenue Anticipation Notes are issued by governments or governmental bodies with the expectation that future revenues from a designated source will be used to repay the notes. In general, they also constitute general obligations of the issuer.
- Tax-Exempt Commercial Paper (Municipal Paper) is similar to taxable commercial paper, except that tax-exempt commercial paper is issued by states, municipalities and their agencies.
The Funds also may purchase participation interests or custodial receipts from financial institutions. These participation interests give the purchaser an undivided interest in one or more underlying Municipal Securities.
Subsequent to its purchase by a Fund, an issue of Municipal Securities may cease to be rated by Moody's Investors Service, Inc. ("Moody's") or Standard and Poor's Ratings Services ("S&P"), or another nationally recognized statistical rating organization ("NRSRO"), or the rating of such a security may be reduced below the minimum rating required for purchase by a Fund. Neither event would require a Fund to dispose of the security, but Invesco Aim will consider such events to be relevant in determining whether the Fund should continue to hold the security. To the extent that the ratings applied by Moody's, S&P or another NRSRO to Municipal Securities may change as a result of changes in these rating systems, a Fund will attempt to use comparable ratings as standards for its investments in Municipal Securities in accordance with the investment policies described herein.
Quality Standards. The following quality standards apply at the time a security is purchased. Information concerning the ratings criteria of Moody's, S&P, and Fitch Investors Service, Inc. ("Fitch") appears herein under "Appendix A - Ratings of Debt Securities."
At least 80% of AIM Municipal Bond Fund's total assets will be invested in municipal securities rated within the four highest ratings for municipal obligations by Moody's (Aaa, Aa, A, or Baa), S&P (AAA, AA, A, or BBB), or have received a comparable rating from another NRSRO. The Fund may invest up to 20% of its total assets in municipal securities that are rated below Baa/BBB (or a comparable rating of any other NRSRO) or that are unrated. For purposes of the foregoing percentage limitations, municipal securities (i) which have been collateralized with U.S. Government obligations held in escrow until the municipal securities' scheduled redemption date or final maturity, but (ii) which have not been rated by a NRSRO subsequent to the date of escrow collateralization, will be treated by the Fund as the equivalent of Aaa/AAA rated securities.
If a Fund invests in securities backed by insurance companies and other financial institutions, changes in the financial condition of these institutions could cause losses to the Fund and affect its share price.
The Funds may invest in securities which are insured by financial insurance companies. Because a limited number of entities provide such insurance, a Fund may invest more than 25% of its assets in securities insured by the same insurance company.
Other Considerations. The ability of a Fund to achieve its investment objective depends upon the continuing ability of the issuers or guarantors of Municipal Securities held by the Fund to meet their obligations for the payment of interest and principal when due. The securities in which a Fund invests may not yield as high a level of current income as longer term or lower grade securities, which generally have less liquidity and greater fluctuation in value.
There is a risk that some or all of the interest received by a Fund from Municipal Securities might become taxable as a result of tax law changes or determinations of the Internal Revenue Service ("IRS").
The yields on Municipal Securities are dependent on a variety of factors, including general economic and monetary conditions, money market factors, conditions of the Municipal Securities market, size of a particular offering, and maturity and rating of the obligation. Generally, the yield realized by a Fund's shareholders will be the yield realized by the Fund on its investments, reduced by the general expenses of the Fund and the Trust. The market values of the Municipal Securities held by a Fund will be affected by changes in the yields available on similar securities. If yields increase following the purchase of a Municipal Security, the market value of such Municipal Security will generally decrease. Conversely, if yields decrease, the market value of a Municipal Security will generally increase.
MUNICIPAL LEASE OBLIGATIONS. AIM V.I. Basic Balanced Fund, AIM V.I. Diversified Income Fund, AIM V.I. Global Real Estate Fund, AIM V.I. High Yield and AIM V.I. Money Market Fund may purchase 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.
PARTICIPATION NOTES. AIM V.I. Global Real Estate Fund may purchase participation notes. Participation notes are issued by banks or broker-dealers that are designed to replicate the performance of foreign companies. The performance results of participated notes will not replicate exactly the performance of the foreign companies that they seek to replicate due to transaction and other expenses. Investments in participation notes involve the same risks associated with a direct investment in the underlying foreign companies that they seek to replicate. There can be no assurance that the trading price of participation notes will equal the underlying value of the foreign companies that they seek to replicate. Participation notes are generally traded over-the-counter. Participation notes are subject to counterparty risk, which is the risk that the broker-dealer or bank that issues them will not fulfill its contractual obligation to complete the transaction with the Fund. Participation notes constitute general unsecured contractual obligations of the banks or broker-dealers that issue them, the counterparty, and a Fund is relying on the creditworthiness of such counterparty and has no rights under a participation note against the issuer of the underlying foreign shares. Participation notes involve transaction costs. Participation notes may be illiquid and therefore subject to a Fund's percentage limitation for investments in illiquid securities. Participation notes offer a return linked to a particular underlying equity, debt or currency.
A Fund will not enter into a transaction with any single counterparty if the net amount owed or to be received under existing transactions with that counterparty would exceed 5% of the Fund's net assets determined on the date the Participation not is entered into.
Other Investments
REAL ESTATE INVESTMENT TRUSTS ("REITs"). To the extent consistent with its investment objective, each Fund (except AIM V.I. Global Real Estate Fund) may invest up to 15% of its total assets in equity and/or debt securities issued by REITs. AIM V.I. Global Real Estate Fund may invest all of its total assets in equity and/or debt securities issued by 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 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.
REITs can generally be classified as equity REITs, mortgage REITs and hybrid REITs. Equity REITs generally invest a majority of their assets in income-producing real estate properties in order to generate cash flow from rental income and a gradual asset appreciation. The income-producing real estate properties in which equity REITs invest typically include properties such as office, retail, industrial, hotel and apartment buildings, self storage, specialty and diversified and healthcare facilities. Equity REITs can realize capital gains by selling properties that have appreciated in value. Mortgage REITs invest the majority of their assets in real estate mortgages and derive their income primarily from interest payments on the mortgages. Hybrid REITs combine the characteristics of both equity REITs and mortgage REITs. The Fund will invest primarily in equity REITs, but may invest up to 10% of its total assets in any combination of mortgage REITs and hybrid REITs.
REITs can be listed and traded on national securities exchanges or can be traded privately between individual owners. The Fund may invest in both publicly and privately traded REITs.
The Fund could conceivably own real estate directly as a result of a default on the securities it owns. The Fund, therefore, may be subject to certain risks associated with the direct ownership of real estate including difficulties in valuing and trading real estate, declines in the value of real estate, risks related to general and local economic conditions, adverse changes in the climate for real estate, 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. Each Fund may purchase shares of other investment companies. For each Fund, the 1940 Act imposes the following restrictions on investments in other investment companies: (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. These restrictions do not apply to investments by the Funds in investment companies that are money market funds, including money market funds that have AIM or an affiliate of AIM as an investment advisor (the "Affiliated Money Market Funds").
With respect to a Fund's purchase of shares of another investment company, including an Affiliated Money Market Fund, the Fund will indirectly bear its proportionate share of the advisory fees and other operating expenses of such investment company.
EXCHANGE-TRADED FUNDS. Each Fund may purchase shares of exchange-traded funds ("ETFs"). Most ETFs are registered under the 1940 Act as investment companies. Therefore, a Fund's purchase of shares of an ETF may be subject to the restrictions on investments in other investment companies discussed above under "Other Investment Companies."
ETFs hold portfolios of securities, commodities and/or currencies that are designed to replicate, as closely as possible before expenses, the price and/or yield of (i) a specified market or other index, (ii) a basket of securities, commodities or currencies, or (iii) a particular commodity or currency. The performance results of ETFs will not replicate exactly the performance of the pertinent index, basket, commodity or currency due to transaction and other expenses, including fees to service providers, borne by ETFs. ETF shares are sold and redeemed at net asset value only in large blocks called creation units and redemption units, respectively. ETF shares also may be purchased and sold in secondary market trading on national securities exchanges, which allows investors to purchase and sell ETF shares at their market price throughout the day.
Investments in ETFs involve the same risks associated with a direct investment in the commodity or currency, or in the types of securities, commodities and/or currencies included in the indices or baskets the ETFs are designed to replicate. In addition, shares of an ETF may trade at a market price that is higher or lower than their net asset value and an active trading market in such shares may not develop or continue. Moreover, trading of an ETF's shares may be halted if the listing exchange's officials deem such action to be appropriate, the shares are de-listed from the exchange, or the activation of market-wide "circuit breakers" (which are tied to large decreases in stock prices) halts stock trading generally.
Finally there can be no assurance that the portfolio of securities, commodities and/or currencies purchased by an ETF to replicate (i) a particular index or basket will replicate such index or basket, or (ii) a commodity or currency will replicate the prices of such commodity or currency.
DEFAULTED SECURITIES. AIM V.I. Diversified Income Fund, AIM V.I. Global Real Estate Fund and 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 Invesco Aim determines that such defaulted securities are liquid under guidelines adopted by the Board.
VARIABLE OR FLOATING RATE INSTRUMENTS. AIM V.I. Basic Balanced Fund, AIM
V.I. Diversified Income Fund, AIM V.I. Global Real Estate Fund, AIM V.I.
Government Securities Fund, AIM V.I. High Yield and AIM V.I. Money Market Fund
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.
INDEXED SECURITIES. AIM V.I. Diversified Income Fund, AIM V.I. Global Real Estate Fund and AIM V.I. High Yield Fund may invest in indexed securities the value of which is linked to interest rates, commodities, indices or other financial indicators. Most indexed securities are short to intermediate term fixed income securities whose values at maturity (principal value) or interest rates rise or fall according to changes in the value of one or more specified underlying instruments. Indexed securities may be positively or negatively indexed (i.e., their principal value or interest rates may increase or decrease if the underlying instrument appreciates), and may have return characteristics similar to direct investments in the underlying instrument or to one or more options on the underlying instrument. Indexed securities may be more volatile than the underlying instrument itself and could involve the loss of all or a portion of the principal amount of the indexed security.
ZERO-COUPON AND PAY-IN-KIND SECURITIES. To the extent consistent with its investment objective, AIM V.I. Basic Balanced Fund, AIM V.I. Diversified Income Fund, AIM V.I. Dynamics Fund, AIM V.I. Financial Services Fund, AIM V.I. Global Health Care Fund, AIM V.I. Global Real Estate Fund, AIM V.I. Government Securities Fund, AIM V.I. High Yield Fund, AIM V.I. Leisure Fund, AIM V.I. Technology Fund and AIM V.I. Utilities 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" ("RIC") 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. Each Fund may engage in delayed delivery transactions. Delayed delivery transactions, also referred to as forward commitments, 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. Each Fund may purchase 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 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. Each Fund (except AIM V.I. Money Market Fund) intends from time to time to sell securities short. A short sale is effected when it is believed that the price of a particular security will decline, and involves the sale of a security which a Fund does not own in the hope of purchasing the same security at a later date at a lower price. To make delivery to the buyer, a Fund must borrow the security from a broker-dealer through which the short sale is executed, and the broker-dealer delivers such securities, on behalf of such Fund, to the buyer. The broker-dealer is entitled to retain the proceeds from the short sale until a Fund delivers to such broker-dealer the securities sold short. In addition, a Fund is required to pay to the broker-dealer the amount of any dividends paid on shares sold short and may have to pay a premium to borrow the securities.
To secure its obligation to deliver to such broker-dealer the securities sold short, a Fund may be required to deposit cash or liquid securities with the broker in addition to the proceeds from the short sale to meet necessary margin requirements. In addition, a Fund will place in a segregated account with such Fund's custodian an amount of cash or liquid securities equal to the difference, if any, between the current market value of the securities sold short and any cash or liquid securities deposited as collateral with the broker-dealer in connection with the short sale. As a result of these requirements, a Fund will not gain any leverage merely by selling short, except to the extent that it earns interest on the retained proceeds of sale. The amounts deposited with the broker-dealer or segregated as described above do not have the effect of limiting the amount of money that the Fund may lose on a short sale.
A Fund is said to have a short position in the securities sold short until it delivers to the broker-dealer the securities sold short, at which time such Fund receives the proceeds of the sale. A Fund will normally close out a short position by purchasing on the open market and delivering to the broker-dealer an equal amount of the securities sold short.
A Fund will realize a gain if the price of a security declines between the date of the short sale and the date on which such Fund purchases a security to replace the borrowed security. On the other hand, a Fund will incur a loss if the price of the security increases between those dates. The amount of any gain will be decreased and the amount of any loss increased by any premium or interest that a Fund may be required to pay in connection with a short sale. It should be noted that possible losses from short sales differ from those that could arise from a cash investment in a security in that losses from a short sale may be limitless, while the losses from a cash investment in a security cannot exceed the total amount of a Fund's investment in the security. For example, if a Fund purchases a $10 security, potential loss is limited to $10; however, if a Fund sells a $10 security short, it may have to purchase the security for return to the broker-dealer when the market value of that security is $50, thereby incurring a loss of $40.
A Fund may also make short sales "against the box," meaning that at all times when a short position is open a Fund owns an equal amount of such securities or securities convertible into or exchangeable for, without payment of any further consideration, securities of the same issue as, and in an amount equal to, the securities sold short. To secure its obligation to deliver the securities sold short "against the box", a Fund will segregate with its custodian an equal amount of the securities sold short or securities convertible into or exchangeable for an equal amount of such securities. Open short positions (established by AIM V.I. Diversified Income Fund) using futures or forward currency contracts are not deemed to constitute selling securities short. Short sales "against the box" result in a "constructive sale" and require a Fund to recognize any taxable gain unless an exception to the constructive sale rule applies.
AIM V.I. Global Real Estate Fund is permitted and intends from time to time to effect short sales that are not "against the box." In a short sale that is not "against the box", AIM V.I. Global Real Estate Fund does not own the security borrowed. To secure its obligation to deliver to such broker-dealer the securities sold short, AIM V.I. Global Real Estate Fund must segregate an amount of cash or liquid securities equal to the difference between the current market value of the securities sold short and any cash or liquid
securities deposited as collateral with the broker in connection with the short sale (including the proceeds of the short sale). As a result of these requirements, AIM V.I. Global Real Estate Fund will not gain any leverage merely by selling short, except to the extent that it earns interest on the immobilized cash or liquid securities.
The amounts deposited with the broker or segregated, as described above, do not have the effect of limiting the amount of money that the Funds may lose on a short sale. In a short sale that is not "against the box", AIM V.I. Global Real Estate Fund will normally close out a short position by purchasing on the open market and delivering to the broker-dealer an equal amount of the securities sold short.
In a short sale that is not "against the box", AIM V.I. Global Real Estate Fund will realize a gain if the price of a security declines between the date of the short sale and the date on which the Fund replaces the borrowed security. On the other hand, the Fund will incur a loss if the price of the security increases between those dates. The amount of any gain will be decreased and the amount of any loss increased by any premium or interest that the Fund may be required to pay in connection with a short sale. It should be noted that possible losses from short sales that are not "against the box" differ from those that could arise from a cash investment in a security in that losses from short sales that are not "against the box" may be limitless, while the losses from a cash investment in a security cannot exceed the total amount of the Fund's investment in the security. For example, if the Fund purchases a $10 security, potential loss is limited to $10; however, if the Fund sells a $10 security short, it may have to purchase the security for return to the broker-dealer when the market value of that security is $50, thereby incurring a loss of $40.
In addition to enabling the Funds to hedge against market risk, short sales and short sales "against the box" may afford a Fund an opportunity to earn additional current income to the extent a Fund is able to enter into arrangements with broker-dealers through which the short sales are executed to receive income with respect to the proceeds of the short sales during the period a Fund's short positions remain open. There is no assurance that a Fund will be able to enter into such arrangements.
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 and short sales will not be considered the purchase of a security on margin.
SWAP AGREEMENTS. Each Fund (except AIM V.I. Government Securities Fund and AIM V.I. Money Market Fund) may enter into swap agreements to hedge against fluctuations in the price of portfolio securities, to enhance total return or to attempt 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 based on a notional amount. The notional amount is a predetermined amount which is used to calculate the exchanged amounts of a particular instrument. For example, an interest rate swap would multiply each interest rate to be swapped against a notional principal amount to determine the amount of each party's payment. Swaps are generally governed by a single master agreement for each counterparty. The agreements may allow for netting of the counterparties' obligations on specific transactions in which case a Fund's obligation or rights will be the net amount owed to or by the counterparty.
Commonly used swap agreements include:
- credit default swaps ("CDS") (which are described below),
- interest rate swaps (the parties exchange a floating rate payment for a fixed rate payment),
- currency swaps (the parties exchange a U.S. dollar-denominated payment for a payment denominated in a different currency),
- index swaps (the parties exchange a payment tied to the price of one index for a payment tied to the price of another index),
- total return swaps (the parties exchange a fixed payment for the total return of a reference security, investment or index), and
- swaptions (an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date).
A Fund's current obligations under a swap agreement will be accrued daily (on a net basis), and the Fund will maintain cash or liquid assets in an amount equal to amounts owed to a swap counterparty less the value of any collateral segregated to secure the swap counterparty. A Fund will not enter into a transaction with any single counterparty if the net amount owed or to be received under existing transactions under the swap agreements with that counterparty would exceed 5% of the Fund's net assets determined on the date the transaction is entered into.
The use of swap agreements by a Fund entails certain risks. Swaps may be subject to liquidity risk, which exists when a particular swap is difficult to sell or liquidate. If a swap transaction is particularly large or if the relevant market is illiquid, it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses. Swaps may be subject to pricing risk, which exists when a particular swap becomes extraordinarily expensive (or cheap) relative to historical prices or the prices of corresponding cash instruments. Swap counterparties may default on their obligations. Interest rate and currency swaps could result in losses if interest rate or currency changes are not correctly anticipated by the Fund. Total return swaps could result in losses if the reference index, security or investments do not perform as anticipated by the Fund.
Although this will not guarantee that the counterparty does not default, the Fund will not enter into a transaction with any counterparty that Invesco Aim and/or the Sub-Advisors believe does not have the financial resources to honor its obligation under the transaction. Further, Invesco Aim will monitor the financial stability of a counterparty to a transaction in an effort to protect the Fund's investments. Where the obligations of the counterparty are guaranteed, Invesco Aim monitors the financial stability of the guarantor instead of the counterparty. For a discussion of the tax considerations relating to swap agreements, see "Dividends, Distributions and Tax Matters - Swap Agreements."
Credit Default Swaps. AIM V.I. Basic Balanced Fund, AIM V.I. Diversified Income Fund, AIM V.I. Global Real Estate Fund and AIM V.I. High Yield Fund may enter into a CDS. A CDS is an agreement between two parties pursuant to which one party agrees to make one or more payments to the other, while the other party would assume the risk of a referenced debt obligation in the event of default. CDS may be direct ("unfunded swaps") or indirect in the form of a structured note ("funded swaps"). Unfunded and funded credit default swaps may be on a single security or packaged as a basket of CDS. A Fund may buy a CDS ("buy credit protection") in which it pays a fixed payment over the life of the swap in exchange for a counterparty taking on the risk of default of a referenced debt obligation ("Reference Entity"). Alternatively, the Fund may sell a CDS ("sell protection") in which it will receive a fixed payment in exchange for taking on the credit risk of the Reference Entity. An investment in a CDS may cause the portfolio performance to be more or less volatile.
CDS agreements are typically individually negotiated and structured. CDS agreements may be entered into for investment or hedging purposes. The Fund may enter into CDS to create direct or
synthetic long or short exposure to domestic or foreign corporate debt securities or sovereign debt securities.
As a buyer of a CDS, the Fund would pay a fixed spread over the life of the agreement to the seller of the CDS. If an event of default occurs, the fixed payment stream would cease, the Fund would deliver defaulted bonds to the seller and the seller would pay the full notional value, or the "par value," of the reference obligation to the Fund. The Fund may already own the reference bonds or may purchase a deliverable bond in the market. Alternatively, the two counterparties may agree to cash settlement. If no event of default occurs, the Fund pays the fixed stream of cash flows to the seller, and no other exchange occurs.
As a seller of a CDS, the Fund would receive a fixed payment stream. If an event of default occurs, the fixed payment stream stops, the Fund would pay the buyer par, and, in return, the Fund would receive deliverable bonds. Alternatively, if cash settlement is elected, the Fund would pay the buyer par less the market value of the referenced bonds. If no event of default occurs, the Fund receives the cash flow payment over the life of the agreement.
Risks of a CDS include the risk that a counterparty may default on amounts owed to the Fund, basis risk (risk that the price of a derivative used to hedge or reflect an underlying bond behaves differently than the price of that bond), liquidity risk and market risk.
Credit Derivatives may create covered or uncovered exposure to the Funds. The Fund generally will employ a strategy of setting aside liquid assets to cover any potential obligation. This strategy would be employed to avoid multiplying a Fund's economic exposure and would limit risks of leveraging. For example, the Fund may sell protection on a Reference Entity bearing the risk of delivering par to the counterparty. The Fund would set aside liquid assets, marked to the market daily, to cover this potential obligation.
CDS Options. A Fund may additionally enter into CDS option transactions which grant the holder the right, but not the obligation, to enter into a credit default swap at a specified future date and under specified terms in exchange for a purchase price ("premium"). The writer of the option bears the risk of any unfavorable move in the value of the CDS relative to the market value on the exercise date, while the purchaser may allow the option to expire unexercised. 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 funds advised by Invesco Aim (the "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. The Funds may borrow money, except as described below, to the extent permitted under the 1940 Act Laws, Interpretations and Exemptions. Such borrowings may be utilized (i) for temporary or emergency purposes; (ii) in anticipation of or in response to adverse market conditions; or, (iii) for cash management purposes. AIM V.I. High Yield Fund, AIM V.I. Diversified Income Fund and AIM V.I. Government Securities Fund may also borrow money to purchase additional securities when the Advisor deems it advantageous to do so. A Fund may not purchase additional securities when any borrowings from banks exceed 5% of the Fund's total assets or when any borrowings from an AIM Fund are outstanding.
If there are unusually heavy redemptions because of changes in interest rates or Fund performance, 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 its portfolio securities less likely. Additionally, the ability of AIM V.I. High Yield Fund, AIM V.I. Diversified Income Fund and AIM V.I. Government Securities Fund to borrow money for leverage may permit these Funds to access new issuances of securities or assume a defensive strategy in response to an increase in the spread between the bid and ask prices of portfolio securities during specific market events, or settle portfolio transactions.
The Funds may borrow from a bank, broker-dealer, or an AIM Fund. Additionally, the Funds are permitted to temporarily carry a negative or overdrawn balance in their respective accounts with their custodian bank. To compensate the custodian bank for such overdrafts, the Funds may either (i) leave funds as a compensating balance in their respective accounts so the custodian bank can be compensated by earning interest on such funds; or (ii) compensate the custodian bank by paying it an agreed upon rate.
LENDING PORTFOLIO SECURITIES. Each 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.
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. The Fund would receive income in lieu of dividends on loaned securities and would, at the same time, earn interest on the loan collateral or on the investment of any cash collateral. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the loaned securities increases and the collateral is not increased accordingly, or in the event of a default by the borrower. The Fund could also experience delays and costs in gaining access to the collateral.
Any cash received as collateral for loaned securities will be invested, in accordance with a Fund's investment guidelines, in short-term money market instruments or Affiliated Money Market Funds. For purposes of determining whether a Fund is complying with its investment policies, strategies and restrictions, the Fund will consider the loaned securities as assets of the Fund, but will not consider any collateral received as a Fund asset.
REPURCHASE AGREEMENTS. Each of the Funds may engage in repurchase agreement transactions involving the types of securities in which it is permitted to invest. 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. Each Fund may engage in 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. AIM V.I. Basic Balanced Fund, AIM V.I. Dividend Income Fund and AIM V.I. Government Securities Fund may invest in dollar roll transactions. 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 on mortgage securities 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. 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, including repurchase agreements with, in the absence of certain demand features, remaining maturities in excess of seven (7) days. 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 under the 1933 Act, and thus may or may not constitute illiquid securities.
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. Each Fund may invest in 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. Invesco Aim, under the supervision of the Board, 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 Invesco Aim will consider the trading markets for the specific
security taking into account the unregistered nature of a Rule 144A security. In
addition, Invesco 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). Invesco Aim will also monitor the
liquidity of Rule 144A securities and, if as a result of changed conditions,
Invesco Aimdetermines that a Rule 144A security is no longer liquid, Invesco
Aimwill 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. Each Fund (except AIM V.I. Money Market Fund) may invest in the securities of 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.
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. The Funds may, as applicable, invest in such instruments to attempt to hedge against the overall level of investment and currency risk normally associated with the Fund's investments, and to increase the Fund's return. AIM V.I. Diversified Income Fund may also invest in futures and forward currency contracts for non-hedging purposes with the goal of enhancing returns. The Fund may also invest in equity-linked derivative products designed to replicate the composition and performance of particular indices. AIM V.I. Diversified Income Fund and AIM V.I. High Yield Fund may also invest in fixed-rate certificates ("TRAINS") that represent fractional undivided interests in the assets of a Targeted Return Index Securities Trust. 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).
BUNDLED SECURITIES. In lieu of investing directly in securities appropriate for AIM V.I. Diversified Income Fund and AIM V.I. High Yield Fund, the Funds may from time to time invest in trust certificates (such as TRAINS) or similar instruments representing a fractional undivided interest in an underlying pool of such appropriate securities. The Funds will be permitted at any time to exchange such certificates for the underlying securities evidenced by such certificates. To that extent, such certificates are generally subject to the same risks as the underlying securities. The Funds will examine the characteristics of the underlying securities for compliance with most investment criteria but will determine liquidity with reference to the certificates themselves. To the extent that such certificates involve interest rate swaps or other derivative devices, a Fund may invest in such certificates if the Fund is permitted to engage in interest rate swaps or other such derivative devices.
PUT AND CALL OPTIONS. Each Fund (except for AIM V.I. Money Market Fund) may purchase and sell 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 (except for AIM V.I. Diversified Income 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.
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. 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, in some cases, 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 which would result in the loss of any premium paid by a Fund as well as the loss of any expected benefit from the transaction. 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 (except AIM V.I. Money Market Fund) 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. Each Fund (except AIM V.I. Government Securities Fund and AIM V.I. Money Market Fund) may participate in warrants. Warrants are, in effect, longer-term call options. They give the holder the right to purchase a given number of shares of a particular company at specified prices within certain periods of time. The purchaser of a warrant expects that the market price of the security will exceed the purchase price of the warrant plus the exercise price of the warrant, thus giving him a profit. 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. Each Fund may engage in forward currency transactions in anticipation of, or to protect itself against fluctuations in exchange rates ("hedging"). 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, other than AIM V.I. Diversified Income 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. AIM V.I. Diversified Income Fund may enter into futures contracts for both hedging and non-hedging purposes.
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.
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 in the section "Cover."
The Trust, on behalf of each Fund, has claimed an exclusion from the definition of the term "commodity pool operator" under the Commodity Exchange Act and, therefore, is not subject to registration or regulation as a pool operator under that Act with respect to each Fund.
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," from and to 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.
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, which may be any fixed number of days (term) from the date of the forward currency contract agreed upon by the parties, and price as agreed upon by the parties at the time the contract is entered. A Fund either may accept or make delivery of the currency at the maturity of the forward currency contract at the time the contract is entered. 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 (except AIM V.I. Government Securities Fund and AIM V.I. Money Market Fund) may engage in forward currency transactions in anticipation of, or to protect itself against, fluctuations in exchange rates ("hedged"). AIM V.I. Diversified Income Fund may also engage in forward currency transactions for non-hedging purposes. 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 and non-hedging transactions depends upon Invesco Aim's ability to correctly predict the direction of changes in the value of the applicable markets and securities, contracts and/or currencies. While Invesco Aim and/or the Sub-Advisor are experienced in the use of these instruments, there can be no assurance that any particular hedging strategy will succeed.
(2) In a hedging transaction, 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) Non-hedging transactions present greater profit potential but also involve increased risk relative to hedging transactions. For example, a Fund may purchase a given foreign currency through a future contract if, in the judgment of Invesco Aim, the value of such currency is expected to rise relative to another currency. Conversely, a Fund may sell the currency through a forward contract if Invesco Aim believes that its value will decline relative to another currency.
(5) 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.
(6) 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 a 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.
(7) 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
TAXABLE MUNICIPAL SECURITIES. AIM V.I. Global Real Estate fund may invest in 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.
INVESTMENTS IN ENTITIES WITH RELATIONSHIPS WITH THE FUNDS/ADVISORS. The Funds may invest in securities issued, sponsored or guaranteed by the following types of entities or their affiliates: (i) entities that sell shares of the AIM Funds; (ii) entities that rate or rank the AIM Funds; (iii) exchanges
on which the AIM Funds buy or sell securities; and (iv) entities that provide services to the AIM Funds (e.g., custodian banks). The Funds will decide whether to invest in or sell securities issued by these entities based on the merits of the specific investment opportunity.
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 FOR THE V.I. FUNDS
FUNDAMENTAL RESTRICTIONS. Each Fund is subject to the following fundamental investment restrictions, except AIM V.I. Global Real Estate Fund is not subject to restriction (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;
AIM V.I. Global Real Estate 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 real estate and real estate-related companies.
(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.
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 has adopted non-fundamental restrictions for the Funds relating to certain of these restrictions which Invesco Aim and, when applicable, the Sub-advisors must follow in managing the Funds. Any changes to these non-fundamental restrictions, which are set forth below, require the approval of the Board.
NON-FUNDAMENTAL RESTRICTIONS. The following non-fundamental investment restrictions apply to all of the Funds, except AIM V.I. Global Real Estate Fund is not subject to restriction (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 and securities issued by other investment companies), 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 purchase securities of other investment companies as permitted by the 1940 Act Laws, Interpretations and Exemptions.
(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 an AIM Fund. The Fund may not borrow for leveraging except that AIM V.I. High Yield Fund,
AIM V.I. Diversified Income Fund and AIM V.I. Government Securities Fund may borrow from banks for leveraging in an amount not exceeding 5% of the Fund's total assets (not including the amount borrowed) at the time the borrowing is made. The Fund 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 borrowings from banks exceed 5% of the Fund's total assets or when any borrowings from an AIM Fund are outstanding.
(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 an AIM 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 currently 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 Real Estate Fund's fundamental restriction regarding industry concentration, real estate and real estate-related companies shall consist of companies (i) that at least 50% of its assets, gross income or net profits are attributable to ownership, construction, management, or sale of residential, commercial or industrial real estate, including listed equity REITs and other real estate operating companies that own property, or that make short-term construction and development mortgage loans or which invest in long-term mortgages or mortgage pools, or (ii) companies whose products and services are related to the real estate industry, such as manufacturers and distributors of building supplies and financial institutions which issue or service mortgages.
The Funds do not consider currencies or other financial commodities or contracts and financial instruments to be physical commodities (which include, for example, oil, precious metals and grains). Accordingly, the Funds will interpret the restriction and the related non-fundamental restriction to permit the Funds, subject to each Fund's investment objectives and general investment policies (as stated in the Funds' prospectuses and applicable herein), to invest directly in foreign currencies and other financial commodities and to purchase, sell or enter into commodity futures contracts and options thereon, foreign currency forward contracts, foreign currency options, currency-, commodity- and financial instrument-related swap agreements, hybrid instruments, interest rate or securities-related or foreign currency-related hedging instruments or other currency-, commodity- or financial instrument-related derivatives, subject to compliance with any applicable provisions of the federal securities or commodities laws. The Funds also will interpret their fundamental restriction regarding purchasing and selling physical commodities and their related non-fundamental restriction to permit the Funds to invest in exchange-traded funds that invest in physical and/or financial commodities, subject to the limits described in the Funds' prospectuses and applicable herein.
Temporary Defensive Positions (for V.I. Funds)
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.
FUND POLICIES FOR THE VIF FUNDS
FUNDAMENTAL RESTRICTIONS. Each Fund is subject to the following fundamental investment restrictions, except AIM V.I. Financial Services Fund is not subject to restriction (1). 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) AIM V.I. Dynamics 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, or (ii) tax-exempt obligations issued by governments or political subdivisions of governments. In complying with this restriction, the Fund will not consider a bank-issued guaranty or financial guaranty insurance as a separate security. AIM V.I. Financial Services 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 issuers engaged primarily in financial services-related industries. AIM V.I. Global Health Care 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 issuers engaged primarily in health care industries. AIM V.I. Leisure 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 issuers engaged primarily in leisure-related industries. AIM V.I. Technology 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 issuers engaged primarily in technology-related industries. AIM V.I. Utilities 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 issuers engaged primarily in utilities-related industries;
(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 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 the 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 restrictions as the Fund.
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 has adopted non-fundamental restrictions for the Funds relating to certain of these restrictions which AIM must follow in managing the Funds. Any changes to these non-fundamental restrictions, which are set forth below, require the approval of the Board.
NON-FUNDAMENTAL RESTRICTIONS. The following non-fundamental restrictions apply to all of the Funds. 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, purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities and securities issued by other investment companies), if, as a result, (i) more than 5% of the Fund's total assets would be invested in the securities of that issuer, or (ii) the Fund would hold more than 10% of the outstanding voting securities of that issuer. The Fund may purchase securities of other investment companies as permitted by the 1940 Act Laws, Interpretations and Exemptions.
(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 an AIM 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 borrowings from banks exceed 5% of the Fund's total assets or when any borrowings from an AIM Fund are outstanding.
(3) In complying with the fundamental restriction regarding industry concentration, AIM V.I. Dynamics Fund may invest up to 25% of its total assets in the securities of issuers whose principal business activities are in the same industry. For purposes of AIM V.I. Financial Services Fund's fundamental investment restriction regarding industry concentration, an issuer will be considered to be engaged in a financial services-related industry if (1) at least 50% of its gross income or its net sales are derived from activities in financial services-related industries; (2) at least 50% of its assets are devoted to producing revenues in financial services-related industries; or (3) based on other available information, the Fund's portfolio manager(s) determines that its primary business is within financial services-related industries. For purposes of AIM V.I. Global Health Care Fund's fundamental investment restriction regarding industry concentration, an issuer will be considered to be engaged in health care industries if (1) at least 50% of its gross income or its net sales are derived from activities in the health care industry; (2) at least 50% of its assets are devoted to producing revenues from the health care industry; or (3) based on other available information, AIM determines that its primary business is within the health care industry. For purposes of AIM V.I. Leisure Fund's fundamental investment restriction regarding industry concentration, an issuer will be considered to be in the leisure industry if (1) at least 50% of its gross income or its net sales are derived from products or services related to the leisure activities of individuals; (2) at least 50% of its assets are devoted to producing revenues through products or services related to the leisure activities of individuals; or (3) based on other available information, the Fund's portfolio manager(s) determines that its primary business is in products or services related to leisure activities of
individuals. For purposes of AIM V.I. Technology Fund's fundamental investment
restriction regarding industry concentration an issuer will be considered to be
engaged in a technology-related industry if (1) at least 50% of its gross income
or its net sales are derived from activities in technology-related industries;
(2) at least 50% of its assets are devoted to producing revenues in
technology-related industries; or (3) based on other available information, the
Fund's portfolio manager(s) determines that its primary business is within
technology-related industries. For purposes of AIM V.I. Utilities Fund's
fundamental investment restriction regarding industry concentration an issuer
will be considered to be engaged in a utilities-related industry if (1) at least
50% of its gross income or its net sales are derived from activities in
utilities-related industries; (2) at least 50% of its assets are devoted to
producing revenues in utilities-related industries; or (3) based on other
available information, the Fund's portfolio manager(s) determines that its
primary business is within utilities-related industries.
(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 an AIM 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 objective, 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.
The Funds do not consider currencies or other financial commodities or contracts and financial instruments to be physical commodities (which include, for example, oil, precious metals and grains). Accordingly, as is the case with the other AIM Funds that currently have the proposed restriction regarding purchasing and selling physical commodities, the Funds will interpret the proposed restriction and the related non-fundamental restriction to permit the Funds, subject to each Fund's investment objectives and general investment policies (as stated in the Funds' prospectuses and applicable Statement of Additional Information), to invest directly in foreign currencies and other financial commodities and to purchase, sell or enter into commodity futures contracts and options thereon, foreign currency forward contracts, foreign currency options, currency-, commodity- and financial instrument-related swap agreements, hybrid instruments, interest rate or securities-related or foreign currency-related hedging instruments or other currency-, commodity- or financial instrument-related derivatives, subject to compliance with any applicable provisions of the federal securities or commodities laws. The Funds also will interpret their fundamental restriction regarding purchasing and selling physical commodities and their related non-fundamental restriction to permit the Funds to invest in exchange-traded funds that invest in physical and/or financial commodities, subject to the limits described in the Funds' prospectuses and applicable Statement of Additional Information.
In addition, with respect to a Fund that may invest in municipal obligations, the following non-fundamental policy applies, which may be changed without shareholder approval:
Each state (including the District of Columbia and Puerto Rico), territory and possession of the United States, each political subdivision agency, instrumentality and authority thereof, and each multi-state agency of which a state is a member is a separate "issuer." When the assets and revenues of an agency, authority, instrumentality or other political subdivision are separate from the government creating the subdivision and the security is backed only by assets and revenues of the subdivision, such subdivision would be deemed to be the sole issuer. Similarly, in the case of an Industrial Development Bond or Private Activity bond, if that bond is backed only by the assets and revenues of the non-governmental user, then that non-governmental user would be deemed to be the sole issuer. However, if the creating government or another entity guarantees a security, then to the extent that the value of all securities issued or guaranteed by that government or entity and owned by a Fund exceeds 10% of the
Fund's total assets, the guarantee would be considered a separate security and would be treated as issued by that government or entity. With respect to a Fund that is not a money market fund, securities issued or guaranteed by a bank or subject to financial guaranty insurance are not subject to the limitations set forth in the preceding sentence.
Temporary Defensive Positions (for VIF Funds)
When securities markets or economic conditions are unfavorable to unsettled, the Advisor and/or Sub-Advisor, where applicable, might try to protect the assets of the Fund by investing in securities that are highly liquid, such as high-quality money market instruments like short-term U.S. government obligations, commercial paper, or repurchase agreements, even though that is not the normal investment strategy of the Fund. We have the right to invest up to 100% of the Fund's assets in these securities, although we are unlikely to do so.
PORTFOLIO TURNOVER
For the fiscal years ended December 31, 2007 and 2006, the portfolio turnover rates for each Fund are presented in the table below. Unless otherwise indicated, variations in turnover rate may be due to a fluctuating volume of shareholder purchase and redemption orders, market conditions and/or changes in AIM's investment outlook.
FUND NAME 2007 2006
----------------------------------- ---- ----
AIM V.I. Basic Balanced Fund 44%
AIM V.I. Basic Value Fund 15%
AIM V.I. Capital Appreciation Fund 120%
AIM V.I. Capital Development Fund 119%
AIM V.I. Core Equity Fund 45%
AIM V.I. Diversified Income Fund 78%
AIM V.I. Dynamics Fund 142%
AIM V.I. Financial Services Fund 14%
AIM V.I. Global Health Care Fund 79%
AIM V.I. Global Real Estate Fund(1) 84%
AIM V.I. Government Securities Fund 89%
AIM V.I. High Yield Fund 135%
AIM V.I. International Growth Fund 34%
AIM V.I. Large Cap Growth Fund 76%
AIM V.I. Leisure Fund 14%
AIM V.I. Mid Cap Core Equity Fund 83%
AIM V.I. Small Cap Equity Fund 52%
AIM V.I. Technology Fund 116%
AIM V.I. Utilities Fund 38%
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POLICIES AND PROCEDURES FOR DISCLOSURE OF FUND HOLDINGS
The Board has adopted policies and procedures with respect to the disclosure of the Funds' portfolio holdings (the "Holdings Disclosure Policy"). Non-public holdings information may not be disclosed except in compliance with the Holdings Disclosure Policy.
General Disclosures
The Holdings Disclosure Policy permits Invesco Aim to publicly release certain portfolio holdings information of the Funds from time to time. The Funds sell their shares to life insurance companies and their separate accounts to fund interests in variable annuity and variable life insurance policies issued by such companies, but not directly to the public. Accordingly, the Policy authorizes
Invesco Aim to disclose, pursuant to the following table, the Funds' portfolio holdings information on a non-selective basis to all insurance companies whose variable annuity and variable life insurance separate accounts invest in the Funds and with which the Funds have entered into participation agreements ("Insurance Companies") and Invesco Aim has entered into a nondisclosure agreement:
DISCLOSURE DATE AVAILABLE/LAG
-------------------------------------- --------------------------------------
Month-end top ten holdings Available 10 days after month-end
(Holdings as of June 30 available July
10)
Calendar quarter-end complete holdings Available 25 days after calendar
quarter-end (Holdings as of June 30
available July 25)
Fiscal quarter-end complete holdings Available 55 days after fiscal
quarter-end (Holdings as of June 30
available August 24)
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Selective Disclosures
SELECTIVE DISCLOSURE - TO INSURANCE COMPANIES. The Policy permits Invesco Aimto disclose Fund Portfolio Holdings Information to Insurance Companies, upon request/on a selective basis, up to five days prior to the scheduled release dates of such information to allow the Insurance Companies to post the information on their websites at approximately the same time that Invesco Aim posts the same information. The Policy incorporates the Board's determination that selectively disclosing portfolio holdings information to facilitate an Insurance Company's dissemination of the information on its website is a legitimate business purpose of the Funds. Insurance Companies that wish to receive such portfolio holdings information in advance must sign a non-disclosure agreement requiring them to maintain the confidentiality of the information until the later of five business days or the scheduled release dates and to refrain from using that information to execute transactions in securities. Invesco Aimdoes not post the portfolio holdings of the Funds to its website. Not all insurance companies that receive Fund portfolio holdings information provide such information on their websites. To obtain information about Fund portfolio holdings, please contact the life insurance company that issued your variable annuity or variable life insurance policy.
SELECTIVE DISCLOSURE OF PORTFOLIO HOLDINGS PURSUANT TO NON-DISCLOSURE AGREEMENT. Employees of Invesco Aim and its affiliates may disclose non-public full portfolio holdings on a selective basis only if the Internal Compliance Controls Committee (the "ICCC") of Invesco Aim Management Group Inc. ("Invesco AimManagement") approves the parties to whom disclosure of non-public full portfolio holdings will be made. The ICCC must determine that the proposed selective disclosure will be made for legitimate business purposes of the applicable Fund and address any perceived conflicts of interest between shareholders of such Fund and Invesco Aimor its affiliates as part of granting its approval.
The Board exercises continuing oversight of the disclosure of Fund portfolio holdings by (1) overseeing the implementation and enforcement of the Holdings Disclosure Policy and the AIM Funds Code of Ethics by the Chief Compliance Officer (or his designee) of Invesco Aimand the AIM Funds and (2) considering reports and recommendations by the Chief Compliance Officer concerning any material compliance matters (as defined in Rule 38a-1 under the 1940 Act and Rule 206(4)-7 under the Investment Advisers Act of 1940, as amended) that may arise in connection with the Holdings Disclosure Policy. Pursuant to the Holdings Disclosure Policy, the Board reviews the types of situations in which Invesco Aimprovides selective disclosure and approves situations involving perceived conflicts of interest between shareholders of the applicable Fund and Invesco Aimor its affiliates brought to the Board's attention by Invesco Aim.
Invesco Aimdiscloses non-public full portfolio holdings information to the following persons in connection with the day-to-day operations and management of the AIM Funds:
- Attorneys and accountants;
- Securities lending agents;
- Lenders to the AIM Funds;
- Rating and rankings agencies;
- Persons assisting in the voting of proxies;
- AIM Funds' custodians;
- The AIM Funds' transfer agent(s) (in the event of a redemption in kind);
- Pricing services, market makers, or other persons who provide systems or software support in connection with AIM Funds' operations (to determine the price of securities held by an AIM Fund);
- Financial printers;
- Brokers identified by the AIM Funds' portfolio management team who provide execution and research services to the team; and
- Analysts hired to perform research and analysis to the AIM Funds' portfolio management team.
In many cases, Invesco Aimwill disclose current portfolio holdings on a daily basis to these persons. In these situations, Invesco Aimhas entered into non-disclosure agreements which provide that the recipient of the portfolio holdings will maintain the confidentiality of such portfolio holdings and will not trade on such information ("Non-Disclosure Agreements"). Please refer to Appendix B for a list of examples of persons to whom Invesco Aim provides non-public portfolio holdings on an ongoing basis.
Invesco Aim will also disclose non-public portfolio holdings information if such disclosure is required by applicable laws, rules or regulations, or by regulatory authorities having jurisdiction over Invesco Aim and its affiliates or the Funds.
The Holdings Disclosure Policy provides that AIM will not request, receive or accept any compensation (including compensation in the form of the maintenance of assets in any Fund or other mutual fund or account managed by Invesco Aim or one of its affiliates) for the selective disclosure of portfolio holdings information.
DISCLOSURE OF CERTAIN PORTFOLIO HOLDINGS AND RELATED INFORMATION WITHOUT NON-DISCLOSURE AGREEMENT. Invesco Aim and its affiliates that provide services to the Funds, and the Funds' subadvisors, if applicable, and each of their employees may receive or have access to portfolio holdings as part of the day-to-day operations of the Funds.
From time to time, employees of Invesco Aim and its affiliates may express their views orally or in writing on one or more of the Funds' portfolio securities or may state that a Fund has recently purchased or sold, or continues to own, one or more securities. The securities subject to these views and statements may be ones that were purchased or sold since a Fund's most recent quarter-end and therefore may not be reflected on the list of the Fund's most recent quarter-end portfolio holdings. Such views and statements may be made to various persons, including members of the press, brokers and other financial intermediaries that sell shares of the Funds. The nature and content of the views and statements provided to each of these persons may differ.
From time to time, employees of Invesco Aim and its affiliates also may provide oral or written information ("portfolio commentary") about a Fund, including, but not limited to, how the Fund's investments are divided among various sectors, industries, countries, investment styles and capitalization sizes, and among stocks, bonds, currencies and cash, security types, bond maturities, bond coupons and bond credit quality ratings. This portfolio commentary may also include information on how these various weightings and factors contributed to Fund performance. Invesco Aim may also provide oral or written information ("statistical information") about various financial characteristics of a Fund or its underlying portfolio securities including, but not limited to, alpha, beta, R-squared, coefficient of determination, duration, maturity, information ratio, sharpe ratio, earnings growth, payout ratio, price/book value, projected earnings growth, return on equity, standard deviation, tracking error, weighted average quality, market capitalization, percent debt to equity, price to cash flow, dividend yield or growth, default rate, portfolio turnover, and risk and style characteristics. This portfolio commentary and statistical information
about a Fund may be based on the Fund's portfolio as of the most recent quarter-end or the end of some other interim period, such as month-end. The portfolio commentary and statistical information may be provided to various persons, including those described in the preceding paragraph. The nature and content of the information provided to each of these persons may differ.
DISCLOSURE OF PORTFOLIO HOLDINGS BY TRADERS. Additionally, employees of Invesco Aim and its affiliates may disclose one or more of the portfolio securities of a Fund when purchasing and selling securities through broker-dealers, requesting bids on securities, obtaining price quotations on securities, or in connection with litigation involving the Funds' portfolio securities. Invesco Aim does not enter into formal Non-Disclosure Agreements in connection with these situations; however, the Funds would not continue to conduct business with a person who Invesco Aim believed was misusing the disclosed information.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The Trustees have the authority to take all actions necessary in connection with the business affairs of the Trust. The Trustees, among other things, approve the investment objectives, policies and procedures for the Funds. The Trust enters into agreements with various entities to manage the day-to-day operations of the Funds, including the Funds' investment advisers, administrator, transfer agent, distributor and custodians. The Trustees are responsible for selecting these service providers, and approving the terms of their contracts with the Funds. On an ongoing basis, the Trustees exercise general oversight of these service providers.
Certain trustees and officers of the Trust are affiliated with Invesco Aim and Invesco Aim Management, the parent corporation of Invesco 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, their principal occupations during the last five years and certain other information concerning them are set forth in Appendix C.
The standing committees of the Board are the Audit Committee, the Compliance Committee, the Governance Committee, the Investments Committee, the Valuation, Distribution and Proxy Oversight Committee and the Special Market Timing Litigation Committee (the "Committees").
The members of the Audit Committee are James T. Bunch (Vice Chair), Bruce
L. Crockett, Lewis F. Pennock, Raymond Stickel, Jr. (Chair)and Dr. Larry Soll
(Vice Chair). The Audit Committee's primary purposes are to: (i) oversee
qualifications and performance of the independent registered public accountant;
(ii) appoint independent registered public accountants for the Funds; (iii)
pre-approve all permissible audit and non-audit services that are provided to
Funds by their independent registered public accountants to the extent required
by Section 10A(h) and (i) of the Exchange Act, (iv) pre-approve, in accordance
with Rule 2-01(c)(7)(ii) of Regulation S-X, certain non-audit services provided
by the Funds' independent registered public accountants to the Funds' investment
adviser and certain other affiliated entities; (v) review the audit and tax
plans prepared by the independent registered public accountants; (vi) review the
Funds' audited financial statements; (vii) review the process that management
uses to evaluate and certify disclosure controls and procedures in Form N-CSR;
(viii) review the process for preparation and review of the Funds' shareholder
reports; (ix) review certain tax procedures maintained by the Funds; (x) review
modified or omitted officer certifications and disclosures; (xi) review any
internal audits of the Funds; (xii) establish procedures regarding questionable
accounting or auditing matters and other alleged violations; (xiii) set hiring
policies for employees and proposed employees of the Funds who are employees or
former employees of the independent registered public accountants; and (xiv)
remain informed (a) of the Funds accounting systems and controls, (b) regulatory
changes and new accounting
pronouncements that affect the Funds' net asset value calculations and financial statement reporting requirements, and (c) communications with regulators regarding accounting and financial reporting matters that pertain to the Funds. During the fiscal year ended December 31, 2007, the Audit Committee held six meetings.
The members of the Compliance Committee are Frank S. Bayley, Mr. Crockett
(Chair), Albert R. Dowden (Vice Chair) and Mr. Stickel. The Compliance Committee
is responsible for: (i) recommending to the Board and the independent trustees
the appointment, compensation and removal of the Funds' Chief Compliance
Officer; (ii) recommending to the independent trustees the appointment,
compensation and removal of the Funds' Senior Officer appointed pursuant to the
terms of the Assurances of Discontinuance entered into by the New York Attorney
General, Invesco Aim and INVESCO Funds Group, Inc. ("IFG"); (iii) recommending
to the independent trustees the appointment and removal of Invesco Aim's
independent Compliance Consultant (the "Compliance Consultant") and reviewing
the report prepared by the Compliance Consultant upon its compliance review of
Invesco Aim (the "Report") and any objections made by Invesco Aim with respect
to the Report; (iv) reviewing any report prepared by a third party who is not an
interested person of Invesco Aim, upon the conclusion by such third party of a
compliance review of Invesco Aim; (v) reviewing all reports on compliance
matters from the Funds' Chief Compliance Officer, (vi) reviewing all
recommendations made by the Senior Officer regarding Invesco Aim's compliance
procedures, (vii) reviewing all reports from the Senior Officer of any
violations of state and federal securities laws, the Colorado Consumer
Protection Act, or breaches of Invesco Aim's fiduciary duties to Fund
shareholders and of Invesco Aim's Code of Ethics; (viii) overseeing all of the
compliance policies and procedures of the Funds and their service providers
adopted pursuant to Rule 38a-1 of the 1940 Act; (ix) from time to time,
reviewing certain matters related to redemption fee waivers and recommending to
the Board whether or not to approve such matters; (x) receiving and reviewing
quarterly reports on the activities of Invesco Aim's Internal Compliance
Controls Committee; (xi) reviewing all reports made by Invesco Aim's Chief
Compliance Officer; (xii) reviewing and recommending to the independent trustees
whether to approve procedures to investigate matters brought to the attention of
Invesco Aim's ombudsman; (xiii) risk management oversight with respect to the
Funds and, in connection therewith, receiving and overseeing risk management
reports from Invesco Ltd. ("Invesco") that are applicable to the Funds or their
service providers; and (xiv) overseeing potential conflicts of interest that are
reported to the Compliance Committee by Invesco Aim, the Chief Compliance
Officer, the Senior Officer and/or the Compliance Consultant. During the fiscal
year ended December 31, 2007, the Compliance Committee held seven meetings.
The members of the Governance Committee are Messrs. Bob R. Baker, Bayley, Dowden (Chair), Jack M. Fields (Vice Chair), Carl Frischling and Dr. Prema Mathai-Davis. The Governance Committee is responsible for: (i) nominating persons who will qualify as independent trustees for (a) election as trustees in connection with meetings of shareholders of the Funds that are called to vote on the election of trustees, (b) appointment by the Board as trustees in connection with filling vacancies that arise in between meetings of shareholders; (ii) reviewing the size of the Board, and recommending to the Board whether the size of the Board shall be increased or decreased; (iii) nominating the Chair of the Board; (iv) monitoring the composition of the Board and each committee of the Board, and monitoring the qualifications of all trustees; (v) recommending persons to serve as members of each committee of the Board (other than the Compliance Committee), as well as persons who shall serve as the chair and vice chair of each such committee; (vi) reviewing and recommending the amount of compensation payable to the independent trustees; (vii) overseeing the selection of independent legal counsel to the independent trustees; (viii) reviewing and approving the compensation paid to independent legal counsel and to the independent trustees; (ix) reviewing and approving the compensation paid to counsel and other advisers, if any, to the Committees of the Board; and (x) reviewing as they deem appropriate administrative and/or logistical matters pertaining to the operations of the Board.
The Governance Committee 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 Governance Committee or the Board, as applicable, shall make the
final determination of persons to
be nominated. During the fiscal year ended December 31, 2007, the Governance Committee held eight meetings.
Notice procedures set forth in the Trust's bylaws require that any shareholder of a Fund desiring to nominate a trustee for election at a shareholder meeting must submit to the Trust's Secretary the nomination in writing not later than the close of business on the later of the 90th day prior to such shareholder meeting or the tenth day following the day on which public announcement is made of the shareholder meeting and not earlier than the close of business on the 120th day prior to the shareholder meeting.
The members of the Investments Committee are Messrs. Baker (Vice Chair), Bayley (Chair), Bunch, Crockett, Dowden, Fields, Martin L. Flanagan, Frischling, Pennock, Stickel, Philip A. Taylor and Drs. Mathai-Davis (Vice Chair) and Soll (Vice Chair). The Investments Committee's primary purposes are to: (i) assist the Board in its oversight of the investment management services provided by Invesco Aim as well as any sub-advisers; and (ii) review all proposed advisory, sub-advisory and distribution arrangements for the Funds, and to recommend what action the full Boards and the independent trustees take regarding the approval of all such proposed arrangements and the continuance of all such existing arrangements. During the fiscal year ended December 31, 2007, the Investments Committee held six meetings.
The Investments Committee has established three Sub-Committees. The
Sub-Committees are responsible for: (i) reviewing the performance, fees and
expenses of the Funds that have been assigned to a particular Sub-Committee (for
each Sub-Committee, the "Designated Funds"), unless the Investments Committee
takes such action directly; (ii) reviewing with the applicable portfolio
managers from time to time the investment objective(s), policies, strategies and
limitations of the Designated Funds; (iii) evaluating the investment advisory,
sub-advisory and distribution arrangements in effect or proposed for the
Designated Funds, unless the Investments Committee takes such action directly;
(iv) being familiar with the registration statements and periodic shareholder
reports applicable to their Designated Funds; and (v) such other
investment-related matters as the Investments Committee may delegate to the
Sub-Committee from time to time.
The members of the Valuation, Distribution and Proxy Oversight Committee are Messrs. Baker, Bunch, Fields, Frischling (Chair), Pennock (Vice Chair), Taylor and Drs. Mathai-Davis and Soll. The primary purposes of the Valuation, Distribution and Proxy Oversight Committee are: (a) to address issues requiring action or oversight by the Board of the AIM Funds (i) in the valuation of the AIM Funds' portfolio securities consistent with the Pricing Procedures, (ii) in oversight of the creation and maintenance by the principal underwriters of the AIM Funds of an effective distribution and marketing system to build and maintain an adequate asset base and to create and maintain economies of scale for the AIM Funds, (iii) in the review of existing distribution arrangements for the AIM Funds under Rule 12b-1 and Section 15 of the 1940 Act, and (iv) in the oversight of proxy voting on portfolio securities of the funds; and (b) to make regular reports to the full Boards of the AIM Funds.
The Valuation, Distribution and Proxy Oversight Committee is responsible
for: (a) with regard to valuation, (i) developing an understanding of the
valuation process and the Pricing Procedures, (ii) reviewing the Pricing
Procedures and making recommendations to the full Board with respect thereto,
(iii) reviewing the reports described in the Pricing Procedures and other
information from Invesco Aim regarding fair value determinations made pursuant
to the Pricing Procedures by Invesco Aim's internal valuation committee and
making reports and recommendations to the full Board with respect thereto, (iv)
receiving the reports of Invesco Aim's internal valuation committee requesting
approval of any changes to pricing vendors or pricing methodologies as required
by the Pricing Procedures and the annual report of Invesco Aim evaluating the
pricing vendors, approving changes to pricing vendors and pricing methodologies
as provided in the Pricing Procedures, and recommending annually the pricing
vendors for approval by the full Board, (v) upon request of Invesco Aim,
assisting Invesco Aim's internal valuation committee or the full Board in
resolving particular fair valuation issues, (vi) reviewing the reports described
in the Procedures for Determining the Liquidity of Securities (the "Liquidity
Procedures")
and other information from Invesco Aim regarding liquidity determinations made
pursuant to the Liquidity Procedures by Invesco Aim and making reports and
recommendations to the full Board with respect thereto, and (vii) overseeing
actual or potential conflicts of interest by investment personnel or others that
could affect their input or recommendations regarding pricing or liquidity
issues; (b) with regard to distribution, (i) developing and understanding of
mutual fund distribution and marketing channels and legal, regulatory and market
developments regarding distribution, (ii) reviewing periodic distribution and
marketing determinations and annual approval of distribution arrangements and
making reports and recommendations to the full Board with respect thereto, and
(iii) reviewing other information from the principal underwriters to the AIM
Funds regarding distribution and marketing of the AIM Funds and making
recommendations to the full Board with respect thereto; and (c) with regard to
proxy voting, (i) overseeing the implementation of the Proxy Voting Guidelines
(the "Guidelines") and the Proxy Policies and Procedures (the "Proxy
Procedures") by Invesco Aim and other advisers, reviewing the Quarterly Proxy
Voting Report and making recommendations to the full Board with respect thereto,
(ii) reviewing the Guidelines and the Proxy Procedures and information provided
by Invesco Aim or other advisers regarding industry developments and best
practices in connection with proxy voting and making recommendations to the full
Board with respect thereto, and (iii) in implementing its responsibilities in
this area, assisting Invesco Aim in resolving particular proxy voting issues.
During the fiscal year ended December 31, 2007, the Valuation, Distribution and
Proxy Oversight Committee held four meetings.
The members of the Special Market Timing Litigation Committee are Messrs.
Bayley, Bunch (Chair), Crockett and Dowden (Vice Chair). The Special Market
Timing Litigation Committee is responsible: (i) for receiving reports from time
to time from management, counsel for management, counsel for the AIM Funds and
special counsel for the independent trustees, as applicable, related to (a) the
civil lawsuits, including purported class action and shareholder derivative
suits, that have been filed against the AIM Funds concerning alleged excessive
short term trading in shares of the AIM Funds ("market timing") and (b) the
civil enforcement actions and investigations related to market timing activity
in the AIM Funds that were settled with certain regulators, including without
limitation the SEC, the New York Attorney General and the Colorado Attorney
General, and for recommending to the independent trustees what actions, if any,
should be taken by the AIM Funds in light of all such reports; (ii) for
overseeing the investigation(s) on behalf of the independent trustees by special
counsel for the independent trustees and the independent trustees' financial
expert of market timing activity in the AIM Funds, and for recommending to the
independent trustees what actions, if any, should be taken by the AIM Funds in
light of the results of such investigation(s); (iii) for (a) reviewing the
methodology developed by Invesco Aim's Independent Distribution Consultant (the
"Distribution Consultation") for the monies ordered to be paid under the
settlement order with the SEC, and making recommendations to the independent
trustees as to the acceptability of such methodology and (b) recommending to the
independent trustees whether to consent to any firm with which the Distribution
Consultant is affiliated entering into any employment, consultant,
attorney-client, auditing or other professional relationship with Invesco Aim,
or any of its present or former affiliates, directors, officers, employees or
agents acting in their capacity as such for the period of the Distribution
Consultant's engagement and for a period of two years after the engagement; and
(iv) for taking reasonable steps to ensure that any AIM Fund which the Special
Market Timing Litigation Committee determines was harmed by improper market
timing activity receives what the Special Market Timing Litigation Committee
deems to be full restitution. During the fiscal year ended December 31, 2007,
the Special Market Timing Litigation Committee held did not meet.
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 the AIM Funds Complex is set forth in
Appendix C.
COMPENSATION
Each trustee who is not affiliated with Invesco 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. The Chair of the Board and Chairs and Vice Chairs of certain committees receive additional compensation for their services.
Information regarding compensation paid or accrued for each trustee of the Trust who was not affiliated with Invesco Aim during the year ended December 31, 2007 is found in Appendix D. Appendix D also provides information regarding compensation paid to Russell Burk, the Funds' Senior Vice President and Senior Officer, during the year ended December 31, 2007.
Retirement Plan For Trustees
The trustees have adopted a retirement plan for the trustees of the Trust who are not affiliated with Invesco Aim.
The trustees have also adopted a retirement policy that permits each non-Invesco 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-Invesco 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. Effective January 1, 2006, for retirement after December 31, 2005, the retirement benefits will equal 75% of the trustee's annual retainer paid to or accrued by any Covered Fund with respect 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 amount of the annual retirement benefit does not include additional compensation paid for Board meeting fees or compensation paid to the Chair of the Board and the Chairs and Vice Chairs of certain Board committees, whether such amounts are paid directly to the Trustee or deferred. The annual retirement benefit is payable in quarterly installments for a number of years equal to the lesser of (i) sixteen years or (ii) the number of such trustee's credited years of service. If a trustee dies prior to receiving the full amount of retirement benefits, the remaining payments will be made to the deceased trustee's designated beneficiary for the same length of time that the trustee would have received the payments based on his or her service. A trustee must have attained the age of 65 (60 in the event of death or disability) to receive any retirement benefit. A trustee may make an irrevocable election to commence payment of retirement benefits is upon retirement from the Board before age 72; in such a case, the annual retirement benefit is subject to a reduction for early payment.
Deferred Compensation Agreements
Messrs. Crockett, Edward K. Dunn, Jr. (a former trustee), Fields, Frischling and Drs. Mathai-Davis and Soll (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 and deemed to be invested in one or more AIM Funds selected by the Deferring Trustees. 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. 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.
CODE OF ETHICS
Invesco Aim, the Trust, Invesco Aim Distributors and the Sub-Advisors have adopted Codes of Ethics which apply to all AIM Fund trustees and officers, employees of Invesco Aim, the Sub-Advisors and their subsidiaries and govern, among other things, personal trading activities of all such persons. The Codes of Ethics are intended to address conflicts of interest with the Trust that may arise from personal trading, including personal trading in most of the funds within The AIM Family of Funds(R). Personal trading, including personal trading involving securities that may be purchased or held by a fund within The AIM Family of Funds(R), is permitted under the Codes subject to certain restrictions; however employees are required to pre-clear security transactions with the applicable Compliance Officer or a designee and to report transactions on a regular basis.
[PROXY VOTING POLICIES
The Board has delegated responsibility for decisions regarding proxy voting for securities held by each Fund (except AIM V.I. Global Real Estate Fund) to the Fund's investment advisor. The Board has delegated responsibility for decisions regarding proxy voting for securities held by AIM V.I. Global Real Estate Fund to the Sub-Advisor. Invesco Aim and the Sub-Advisor will vote such proxies in accordance with its proxy policies and procedures, which have been reviewed by the Board, and which are found in Appendix E.
Any material changes to the proxy policies and procedures will be submitted to the Board for approval. The Board will be supplied with a summary quarterly report of each Fund's proxy voting record.
Information regarding how the Funds voted proxies related to its portfolio securities during the 12 months ended June 30, 2007 is available, without charge, at our Website, http://www.invescoaim.com. This information is also available at the SEC Website, http://www.sec.gov.]
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 F. 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
Invesco Aim, the Funds' investment advisor, was organized in 1976, and along with its subsidiaries, manages or advises over 225 investment portfolios encompassing a broad range of investment objectives. Invesco Aim is a direct, wholly owned subsidiary of Invesco Aim Management, a holding company that has been engaged in the financial services business since 1976. Invesco Aim Management is an indirect, wholly owned subsidiary of Invesco. Invesco and its subsidiaries are an independent global investment management group. Certain of the directors and officers of Invesco Aim are also executive officers of the Trust and their affiliations are shown under "Management Information" herein.
As investment advisor, Invesco Aim supervises all aspects of the Funds' operations and provides investment advisory services to the Funds. Invesco 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, Invesco Aim may engage the services of other investment managers with respect to one or more of the Funds. The investment
advisory services of Invesco Aim are not exclusive and Invesco Aim is free to render investment advisory services to others, including other investment companies.
Invesco Aim is also responsible for furnishing to the Funds, at Invesco Aim's expense, the services of persons believed 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 Advisory Agreement provides that the Fund will pay or cause to be paid all expenses of the Fund not assumed by Invesco 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.
Invesco Aim, at its own expense, furnishes to the Trust office space and facilities. Invesco Aim furnishes to the Trust all personnel for managing the affairs of the Trust and each of its series of shares.
Pursuant to the Advisory Agreement with the Trust, Invesco Aim receives a monthly fee from each Fund calculated at the annual rates indicated in the second column below, based on the average daily net assets of each Fund during the year. Each Fund allocates advisory fees to a class based on the relative net assets of each class.
Effective January 1, 2005, the advisor has contractually agreed to waive advisory fees to the extent necessary so that the advisory fees payable by each Fund do not exceed the maximum advisory fee rate set forth in the third column below. The maximum advisory fee rates are effective through the Committed Until Date set forth in the fourth column.
MAXIMUM ADVISORY
FEE RATES
ANNUAL RATE/NET ASSETS PER MAXIMUM ADVISORY FEE RATE COMMITTED UNTIL
FUND NAME ADVISORY AGREEMENT AFTER JANUARY 1, 2005 DATE
------------------------------ -------------------------------------- ------------------------------------ ----------------
AIM V.I. Basic Balanced Fund 0.75% of the first $150 million 0.62% of the first $150 million 12/31/2009
0.50% of the excess over $150 million 0.50% of the next $4.85 billion
0.475% of the next $5 billion
0.45% of the excess over $10 billion
AIM V.I. Basic Value Fund 0.695% of the first $250 million N/A N/A
0.67% of the next $250 million
0.645% of the next $500 million
0.62% of the next $1.5 billion
0.595% of the next $2.5 billion
0.57% of the next $2.5 billion
0.545% of the next $2.5 billion
0.52% of the excess over $10 billion
|
MAXIMUM ADVISORY
FEE RATES
ANNUAL RATE/NET ASSETS PER MAXIMUM ADVISORY FEE RATE COMMITTED UNTIL
FUND NAME ADVISORY AGREEMENT AFTER JANUARY 1, 2005 DATE
------------------------------ -------------------------------------- ------------------------------------ ----------------
AIM V.I. Capital Appreciation 0.65% of the first $250 million 0.695% of the first $250 million 12/31/2009
Fund 0.60% of the excess over $250 million 0.625% of the next $750 million
0.62% of the next $1.5 billion
0.595% of the next $2.5 billion
0.57% of the next $2.5 billion
0.545% of the next $2.5 billion
0.52% of the excess over $10 billion
AIM V.I. Capital Development 0.75% of the first $350 million 0.745% of the first $250 million 04/30/2009
Fund 0.625% of the excess over $350 million 0.73% of the next $250 million
0.715% of the next $500 million
0.70% of the next $1.5 billion
0.685% of the next $2.5 billion
0.67% of the next $2.5 billion
0.655% of the next $2.5 billion
0.64% of the excess over $10 billion
AIM V.I. Core Equity Fund 0.65% of the first $250 million 0.695% of the first $250 million 12/31/2009
0.60% of the excess over $250 million 0.67% of the next $250 million
0.645% of the next $500 million
0.62% of the next $1.5 billion
0.595% of the next $2.5 billion
0.57% of the next $2.5 billion
0.545% of the next $2.5 billion
0.52% of the excess over $10 billion
AIM V.I. Diversified Income 0.60% of the first $250 million N/A N/A
Fund 0.55% of the excess over $250 million
AIM V.I. Dynamics Fund 0.745% of the first $250 million N/A N/A
0.73% of the next $250 million
0.715% of the next $500 million
0.70% of the next $1.5 billion
0.685% of the next $2.5 billion
0.67% of the next $2.5 billion
0.655% of the next $2.5 billion
0.64% of the excess over $10 billion
AIM V.I. Financial Services 0.75% of the first $250 million N/A N/A
Fund 0.74% of the next $250 million
0.73% of the next $500 million
0.72% of the next $1.5 billion
0.71% of the next $2.5 billion
0.70% of the next $2.5 billion
0.69% of the next $2.5 billion
0.68% of the excess over $10 billion
AIM V.I. Global Health Care 0.75% of the first $250 million N/A N/A
Fund 0.74% of the next $250 million
0.73% of the next $500 million
0.72% of the next $1.5 billion
0.71% of the next $2.5 billion
0.70% of the next $2.5 billion
0.69% of the next $2.5 billion
0.68% of the excess over $10 billion
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MAXIMUM ADVISORY
FEE RATES
ANNUAL RATE/NET ASSETS PER MAXIMUM ADVISORY FEE RATE COMMITTED UNTIL
FUND NAME ADVISORY AGREEMENT AFTER JANUARY 1, 2005 DATE
------------------------------ -------------------------------------- ------------------------------------ ----------------
AIM V.I. Global Real Estate 0.75% of the first $250 million N/A N/A
Fund 0.74% of the next $250 million
0.73% of the next $500 million
0.72% of the next $1.5 billion
0.71% of the next $2.5 billion
0.70% of the next $2.5 billion
0.69% of the next $2.5 billion
0.68% of the excess over $10 billion
AIM V.I. Government Securities 0.50% of the first $250 million N/A N/A
Fund 0.45% of the excess over $250 million
AIM V.I. High Yield Fund 0.625% of the first $200 million N/A N/A
0.55% of the next $300 million
0.50% of the next $500 million
0.45% of the excess over $1 billion
04/30/2009
AIM V.I. International Growth 0.75% of the first $250 million The current advisory fee schedule
Fund 0.70% of the excess over $250 million is lower than the uniform fee
schedule at all asset levels.
AIM V.I. Large Cap Growth Fund 0.695% of the first $250 million N/A N/A
0.67% of the next $250 million
0.645% of the next $500 million
0.62% of the next $1.5 billion
0.595% of the next $2.5 billion
0.57% of the next $2.5 billion
0.545% of the next $2.5 billion
0.52% of the excess over $10 billion
AIM V.I. Leisure Fund 0.75% of the first $250 million N/A N/A
0.74% of the next $250 million
0.73% of the next $500 million
0.72% of the next $1.5 billion
0.71% of the next $2.5 billion
0.70% of the next $2.5 billion
0.69% of the next $2.5 billion
0.68% of the excess over $10 billion
AIM V.I. Mid Cap Core Equity 0.725% of the first $500 million The current advisory fee schedule 04/30/2009
Fund 0.70% of the next $500 million is lower than the uniform fee
0.675% of the next $500 million schedule at all asset levels.
0.65% of the excess over $1.5 billion
AIM V.I. Money Market Fund 0.40% of the first $250 million N/A N/A
0.35% of the excess over $250 million
AIM V.I. Small Cap Equity Fund 0.745% of the first $250 million N/A N/A
0.73% of the next $250 million
0.715% of the next $500 million
0.70% of the next $1.5 billion
0.685% of the next $2.5 billion
0.67% of the next $2.5 billion
0.655% of the next $2.5 billion
0.64% of the excess over $10 billion
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MAXIMUM ADVISORY
FEE RATES
ANNUAL RATE/NET ASSETS PER MAXIMUM ADVISORY FEE RATE COMMITTED UNTIL
FUND NAME ADVISORY AGREEMENT AFTER JANUARY 1, 2005 DATE
------------------------------ -------------------------------------- ------------------------------------ ----------------
AIM V.I. Technology Fund 0.75% of the first $250 million N/A N/A
0.74% of the next $250 million
0.73% of the next $500 million
0.72% of the next $1.5 billion
0.71% of the next $2.5 billion
0.70% of the next $2.5 billion
0.69% of the next $2.5 billion
0.68% of the excess over $10 billion
AIM V.I. Utilities Fund 0.60% of average daily net assets The current advisory fee schedule is 04/30/2009
lower than the uniform fee schedule
at all asset levels.
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Invesco 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, Invesco 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 Invesco Aim and the Fund.
Invesco Aim has contractually agreed through at least April 30, 2009 to waive advisory fees payable by each Fund in an amount equal to 100% of the advisory fee Invesco Aim receives from the Affiliated Money Market Funds as a result of each Fund's investment of uninvested cash in the Affiliated Money Market Funds. See "Description of the Funds and Their Investments and Risks - Investment Strategies and Risks - Other Investments - Other Investment Companies."
Invesco Aim has contractually agreed to waive advisory fees and/or
reimburse expenses through April 30, 2009, to the extent necessary to limit
Total Annual Fund Operating Expenses (excluding: (i) interest; (ii) taxes; (iii)
dividend expense on short sales; (iv) extraordinary items; (v) expenses related
to a merger or reorganizations as approved by each Fund's Board of Trustees; and
(vi) expenses that each Fund has incurred but did not actually pay because of an
expense offset arrangement) for the following Funds' shares as follows:
FUND EXPENSE LIMITATION
---------------------------------------------- ------------------
AIM V.I. Basic Balanced Fund - Series I 0.91%
Series II 1.16%
AIM V.I. Basic Value Fund - Series I 1.30%
Series II 1.45%
AIM V.I. Capital Appreciation Fund - Series I 1.30%
Series II 1.45%
AIM V.I. Capital Development Fund - Series I 1.30%
Series II 1.45%
AIM V.I. Core Equity Fund - Series I 1.30%
Series II 1.45%
AIM V.I. Diversified Income Fund - Series I 0.75%
Series II 1.00%
AIM V.I. Dynamics Fund - Series I 1.30%
Series II 1.45%
AIM V.I. Financial Services Fund - Series I 1.30%
Series II 1.45%
AIM V.I. Global Health Care Fund - Series I 1.30%
Series II 1.45%
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FUND EXPENSE LIMITATION
---------------------------------------------- ------------------
AIM V.I. Global Real Estate Fund - Series I 1.30%
Series II 1.45%
AIM V.I. Government Securities Fund - Series I 0.73%
Series II 0.98%
AIM V.I. High Yield Fund - Series I 0.95%
Series II 1.20%
AIM V.I. International Growth Fund - Series I 1.30%
Series II 1.45%
AIM V.I. Large Cap Growth Fund - Series I 1.01%
Series II 1.26%
AIM V.I. Leisure Fund - Series I 1.01%
Series II 1.26%
AIM V.I. Mid Cap Core Equity Fund - Series I 1.30%
Series II 1.45%
AIM V.I. Money Market Fund - Series I 1.30%
Series II 1.45%
AIM V.I. Small Cap Equity Fund - Series I 1.15%
Series II 1.40%
AIM V.I. Technology Fund - Series I 1.30%
Series II 1.45%
AIM V.I. Utilities Fund - Series I 0.93%
Series II 1.18%
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Contractual fee waivers or reductions may not be terminated or amended to a Funds detriment during the period stated in the agreement between Invesco Aim and such Fund.
INVESTMENT SUB-ADVISOR
Invesco Aim has entered into a Sub-Advisory Agreement with certain affiliates to serve as sub-advisors to the Funds, pursuant to which these affiliated sub-advisors may be appointed by Invesco Aim from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the Funds. These affiliated sub-advisors, each of which is a registered investment advisor under the Advisors Act, are:
Invesco Asset Management Deutschland GmbH ("Invesco Deutschland");
Invesco Asset Management Ltd. ("IAML");
Invesco Asset Management (Japan) Limited ("Invesco Japan");
Invesco Australia Limited ("Invesco Australia");
Invesco Global Asset Management (N.A.), Inc. ("IGAM");
Invesco Hong Kong Limited ("Invesco Hong Kong");
Invesco Institutional (N.A.), Inc. ("IINA"); and
Invesco Senior Secured Management, Inc. ("ISSM"); and
Invesco Trimark Investment Management, Inc. ("Invesco Trimark"); (each a "Sub-Advisor" and collectively, the "Sub-Advisors").
Invesco Aim and each Sub-Advisor are indirect wholly owned subsidiaries of Invesco.
The only fees payable to the Sub-Advisors under the Sub-Advisory Agreement are for providing discretionary investment management services. For such services, Invesco Aim will pay each Sub-Advisor a fee, computed daily and paid monthly, equal to (i) 40% of the monthly compensation that Invesco Aim receives from the Trust, multiplied by (ii) the fraction equal to the net assets of such Fund as to which such Sub-Advisor shall have provided discretionary investment management services for that month divided by the net assets of such Fund for that month. Pursuant to the Sub-Advisory Agreement, this fee is reduced to reflect contractual or voluntary fee waivers or expense limitations by Invesco Aim, if any, in effect from time to time. In no event shall the aggregate monthly fees paid to the Sub-Advisors under the Sub-Advisory Agreement exceed 40% of the monthly compensation that Invesco Aim receives from the Trust pursuant to its advisory agreement with the Trust, as reduced to reflect contractual or voluntary fees waivers or expense limitations by Invesco Aim, if any.
Prior to April 30, 2004, IFG served as investment advisor to the VIF Funds. During the periods indicated in Appendix G, the VIF Funds paid Invesco Aim (IFG prior to April 30, 2004) advisory fees in the dollar amounts shown. If applicable, the advisory fees were offset by credits in the amounts shown below, so that the Funds' fees were not in excess of the expense limitations shown, which have been voluntarily agreed to by the Trust and Invesco Aim (IFG prior to April 30, 2004).
The management fees payable by each Fund, the amounts waived by Invesco Aim and the net fees paid by each Fund for the last three fiscal years ended December 31 are found in Appendix G.
Prior to April 30, 2004, IFG served as investment advisor to the predecessor to the AIM V.I. Global Real Estate Fund. During periods outlined in Appendix G, AIM V.I. Global Real Estate Fund paid IFG advisory fees in the dollar amounts shown. If applicable, the advisory fees were offset by credits in the amounts shown in Appendix G, so that the AIM V.I. Global Real Estate Fund's fees were not in excess of the expense limitations shown, which have been voluntarily agreed to by the Trust and IFG.
Portfolio Managers
Appendix H contains the following information regarding the portfolio managers identified in each Fund's prospectus:
- The dollar range of the managers' investments in each Fund.
- A description of the managers' compensation structure.
- Information regarding other accounts managed by the manager and potential conflicts of interest that might arise from the management of multiple accounts.
Securities Lending Arrangements
If a Fund engages in securities lending, Invesco Aim will provide the Fund
investment advisory services and related administrative services. The Advisory
Agreement describes the administrative services to be rendered by Invesco Aim if
a Fund engages in securities lending activities, as well as the compensation
Invesco 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 Invesco
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.
Invesco 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
Invesco Aim will provide, a lending Fund will pay Invesco Aim a fee equal to 25% of the net monthly interest or fee income retained or paid to the Fund from such activities. Invesco 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.
SERVICES AGREEMENTS
ADMINISTRATIVE SERVICES AGREEMENT. Invesco Aim and the Trust have entered into a Master Administrative Services Agreement ("Administrative Services Agreement") pursuant to which Invesco 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 Invesco 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 Board, including the independent trustees, by votes cast in person at a meeting called for such purpose. Under the Administrative Services Agreement, Invesco Aim is entitled to receive from the Funds reimbursement of its costs or such reasonable compensation as may be approved by the Board. Currently, Invesco 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, Invesco Aim contracts with Participating Insurance Companies to provide certain services related to operations of the Trust. These services may include, among other things: the printing of prospectuses, financial reports and proxy statements and the delivery of the same to existing Contract owners; the maintenance of master accounts; the facilitation of purchases and redemptions requested by Contract owners; and the servicing of Contract owner accounts.
Each Participating Insurance Company negotiates the fees to be paid for the provision of these services. The cost of providing the services and the overall package of services provided may vary from one Participating Insurance Company to another. Invesco Aim does not make an independent assessment of the cost of providing such services.
Effective May 1, 1998, the Funds agreed to reimburse Invesco Aim for its costs in paying the Participating Insurance Companies that provide these services, currently subject to an annual limit of 0.25% of the average net assets invested in each Fund by each Participating Insurance Company. Any amounts paid by Invesco Aim to a Participating Insurance Company in excess of 0.25% of the average net assets invested in each Fund are paid by Invesco Aim out of its own financial resources.
Invesco Aim is entitled to reimbursement by a VIF Fund for any fees waived pursuant to expense limitation commitments between Invesco Aim and the VIF Funds if such reimbursement does not cause the Fund to exceed the current expense limitations and the reimbursement is made within three years after Invesco Aim incurred the expense.
IFG served as the VIF Funds' administrative services agent until April 30, 2004. Administrative services fees paid to Invesco Aim by each Fund for the last three fiscal years ended December 31 are found in Appendix I.
OTHER SERVICE PROVIDERS
TRANSFER AGENT. Invesco Aim Investment Services, Inc. ("Invesco Aim Investment Services"), 11 Greenway Plaza, Suite 100, Houston, Texas 77046, a wholly owned subsidiary of Invesco Aim, is the Trust's transfer agent.
The Transfer Agency and Service Agreement (the "TA Agreement") between the Trust and Invesco Aim Investment Services provides that Invesco Aim Investment Services will perform certain shareholder services for the Funds. The TA Agreement provides that Invesco Aim Investment Services will receive a per trade fee plus out-of-pocket expenses to process orders for purchases, and redemptions of shares; prepare and transmit payments for dividends and distributions declared by the Funds; and maintain shareholder accounts.
SUB-TRANSFER AGENT. Invesco Trimark Investment Management Inc. ("Invesco Trimark"), 5140 Yonge Street, Suite 900, Toronto, Ontario M2N6X7, a wholly owned, indirect subsidiary of Invesco, provides services to the Trust as a sub-transfer agent, pursuant to an agreement between Invesco Trimark and Invesco Aim Investment Services. The Trust does not pay a fee to AFMI for these services. Rather Invesco Trimark is compensated by Invesco Aim Investment Services, as a sub-contractor.
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, 2 Hanson Place, Brooklyn, New York 11217-1431, is custodian of all securities and cash of AIM V.I. Money Market Fund. JPMorgan Chase Bank, N.A., 712 Main, Houston, Texas 77002, serves as sub-custodian for purchases of shares of the Funds.
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. Invesco 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 Custodian 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.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. The Funds' independent registered public accounting firm is responsible for auditing the financial statements of the Funds. The Audit Committee of the Board has appointed [ ], as the independent registered public accounting firm to audit the financial statements of the Funds. Such appointment was ratified and approved by the Board.
COUNSEL TO THE TRUST. Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street, Philadelphia, Pennsylvania 19103-7599, has advised the Trust on certain federal securities law matters.
BROKERAGE ALLOCATION AND OTHER PRACTICES
The Sub-Advisors have adopted compliance procedures that cover, among other items, brokerage allocation and other trading practices. Unless specifically noted, the Sub-Advisors' procedures do not materially differ from Invesco Aim's procedures discussed below.
BROKERAGE TRANSACTIONS
Invesco Aim or the Sub-Advisor makes decisions to buy and sell securities for each Fund, selects broker-dealers (each, a "Broker"), effects the Funds' investment portfolio transactions, allocates brokerage fees in such transactions and, where applicable, negotiates commissions and spreads on transactions. Invesco Aim and the Sub-Advisor's primary consideration in effecting a security transaction is to obtain best execution, which is defined as prompt and efficient execution of the transaction at the best obtainable price with payment of commissions, mark-ups or mark-downs which are reasonable in relation to the value of the brokerage services provided by the Broker. While Invesco Aim and the Sub-Advisors seek reasonably competitive commission rates, the Funds may not pay the lowest commission or spread available. See "Broker Selection" below.
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 on a principal basis at net prices without
commissions, but which include compensation to the Broker 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, including electronic communication networks. Purchases of underwritten issues include a commission or concession paid by the issuer (not the Funds) to the underwriter. Purchases of money market instruments may be made directly from issuers without the payment of commissions.
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 J.
COMMISSIONS
During the last three fiscal years ended December 31, none of the Funds paid brokerage commissions to Brokers affiliated with the Funds, Invesco Aim, Invesco Aim Distributors, the Sub-Advisor 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 certain other AIM Funds or other accounts (and may invest in the Affiliated Money Market Funds) provided the Funds follow procedures adopted by the Boards 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.
BROKER SELECTION
Invesco Aim's primary consideration in selecting Brokers to execute portfolio transactions for a Fund is to obtain best execution. In selecting a Broker to execute a portfolio transaction in equity securities for a Fund, Invesco Aim considers the full range and quality of a Broker's services, including the value of research and/or brokerage services provided, execution capability, commission rate, willingness to commit capital, anonymity and responsiveness. Invesco Aim's primary consideration when selecting a Broker to execute a portfolio transaction in fixed income securities for a Fund is the Broker's ability to deliver or sell the relevant fixed income securities; however, Invesco Aim will also consider the various factors listed above. In each case, the determinative factor is not the lowest commission or spread available but whether the transaction represents the best qualitative execution for the Fund. Invesco Aim will not select Brokers based upon their promotion or sale of Fund shares.
In choosing Brokers to execute portfolio transactions for the Funds, Invesco Aim may select Brokers that provide brokerage and/or research services ("Soft Dollar Products") to the Funds and/or the other accounts over which Invesco Aim and its affiliates have investment discretion. Section 28(e) of the Securities Exchange Act of 1934, as amended, provides that Invesco Aim, under certain circumstances, lawfully may cause an account to pay a higher commission than the lowest available. Under Section 28(e)(1), Invesco 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 [Invesco Aim's] overall responsibilities with respect to the accounts as to which [it] exercises investment discretion." The services provided by the Broker also must lawfully and appropriately assist Invesco Aim in the performance of its investment decision-making responsibilities. Accordingly, a Fund may pay a Broker higher commissions than those available from another Broker in recognition of such Broker's provision of Soft Dollar Products to Invesco Aim.
Invesco Aim faces a potential conflict of interest when it uses client trades to obtain Soft Dollar Products. This conflict exists because Invesco Aim is able to use the Soft Dollar Products to manage client accounts without paying cash for the Soft Dollar Products, which reduces Invesco Aim's expenses
to the extent that Invesco Aim would have purchased such products had they not been provided by Brokers. Section 28(e) permits Invesco Aim to use Soft Dollar Products for the benefit of any account it manages. Certain Invesco Aim-managed accounts may generate soft dollars used to purchase Soft Dollar Products that ultimately benefit other Invesco Aim-managed accounts, effectively cross subsidizing the other Invesco Aim-managed accounts that benefit directly from the product. Invesco Aim may not use all of the Soft Dollar Products provided by Brokers through which a Fund effects securities transactions in connection with managing such Fund.
Invesco Aim and certain of its affiliates presently engage in the following instances of cross-subsidization:
1. Fixed income funds normally do not generate soft dollar commissions to pay for Soft Dollar Products. Therefore, soft dollar commissions used to pay for Soft Dollar Products which are used to manage certain fixed income AIM Funds are generated entirely by equity AIM Funds and other equity client accounts managed by Invesco Aim or Invesco Aim Capital Management, Inc. ("Invesco Aim Capital"), a subsidiary of Invesco Aim. In other words, certain fixed income AIM Funds are cross-subsidized by the equity AIM Funds, in that the fixed income AIM Funds receive the benefit of Soft Dollar Products services for which they do not pay.
2. The investment models used to manage many of the AIM Funds are also used to manage other accounts of Invesco Aim and/or Invesco Aim Capital. The Soft Dollar Products obtained through the use of soft dollar commissions generated by the transactions of the AIM Funds and/or other accounts managed by Invesco Aim and/or Invesco Aim Capital are used to maintain the investment models relied upon by both of these advisory affiliates.
This type of cross-subsidization occurs in both directions. For example, soft dollar commissions generated by transactions of the AIM Funds and/or other accounts managed by Invesco Aim are used for Soft Dollar Products which may benefit those AIM Funds and/or accounts as well as accounts managed by Invesco Aim Capital. Additionally, soft dollar commissions generated by transactions of accounts managed by Invesco Aim Capital are used for Soft Dollar Products which may benefit those accounts as well as accounts managed by Invesco Aim. In certain circumstances, Invesco Aim Capital accounts may indicate that their transactions should not be used to generate soft dollar commissions but may still receive the benefits of Soft Dollar Products received by Invesco Aim or Invesco Aim Capital.
3. Some of the common investment models used to manage various Funds and other accounts of Invesco Aim and/or Invesco Aim Capital are also used to manage accounts of Invesco Aim Private Asset Management, Inc. ("IPAM"), another Invesco Aim subsidiary. The Soft Dollar Products obtained through the use of soft dollar commissions generated by the transactions of the Funds and/or other accounts managed by Invesco Aim and/or Invesco Aim Capital are used to maintain the investment models relied upon by Invesco Aim, Invesco Aim Capital and IPAM. This cross-subsidization occurs in only one direction. Most of IPAM's accounts do not generate soft dollar commissions which can be used to purchase Soft Dollar Products. The soft dollar commissions generated by transactions of the Funds and/or other accounts managed by Invesco Aim and/or Invesco Aim Capital are used for Soft Dollar Products which may benefit the accounts managed by Invesco Aim, Invesco Aim Capital and IPAM; however, IPAM does not provide any soft dollar research benefit to the Funds and/or other accounts managed by Invesco Aim or Invesco Aim Capital.
Invesco Aim and Invesco Aim Capital attempt to reduce or eliminate the potential conflicts of interest concerning the use of Soft Dollar Products by directing client trades for Soft Dollar Products only if Invesco Aim and Invesco Aim Capital conclude that the Broker supplying the product is capable of providing best execution.
Certain Soft Dollar Products may be available directly from a vendor on a hard dollar basis; other Soft Dollar Products are available only through Brokers in exchange for soft dollars. Invesco Aim uses soft dollars to purchase two types of Soft Dollar Products:
- proprietary research created by the Broker executing the trade, and
- other products created by third parties that are supplied to Invesco Aim through the Broker executing the trade.
Proprietary research consists primarily of traditional research reports, recommendations and similar materials produced by the in house research staffs of broker-dealer firms. This research includes evaluations and recommendations of specific companies or industry groups, as well as analyses of general economic and market conditions and trends, market data, contacts and other related information and assistance. Invesco Aim periodically rates the quality of proprietary research produced by various Brokers. Based on the evaluation of the quality of information that Invesco Aim receives from each Broker, Invesco Aim develops an estimate of each Broker's share of Invesco Aim clients' commission dollars. Invesco Aim attempts to direct trades to the firms to meet these estimates.
Invesco Aim also uses soft dollars to acquire products from third parties that are supplied to Invesco Aim through Brokers executing the trades or other Brokers who "step in" to a transaction and receive a portion of the brokerage commission for the trade. Invesco Aim may from time to time instruct the executing Broker to allocate or "step out" a portion of a transaction to another Broker. The Broker to which Invesco Aim has "stepped out" would then settle and complete the designated portion of the transaction, and the executing Broker would settle and complete the remaining portion of the transaction that has not been "stepped out." Each Broker may receive a commission or brokerage fee with respect to that portion of the transaction that it settles and completes.
Soft Dollar Products received from Brokers supplement Invesco Aim's own research (and the research of certain of its affiliates), and may include the following types of products and services:
- Database Services - comprehensive databases containing current and/or historical information on companies and industries and indices. Examples include historical securities prices, earnings estimates and financial data. These services may include software tools that allow the user to search the database or to prepare value-added analyses related to the investment process (such as forecasts and models used in the portfolio management process).
- Quotation/Trading/News Systems - products that provide real time market data information, such as pricing of individual securities and information on current trading, as well as a variety of news services.
- Economic Data/Forecasting Tools - various macro economic forecasting tools, such as economic data or currency and political forecasts for various countries or regions.
- Quantitative/Technical Analysis - software tools that assist in quantitative and technical analysis of investment data.
- Fundamental/Industry Analysis - industry specific fundamental investment research.
- Fixed Income Security Analysis - data and analytical tools that pertain specifically to fixed income securities. These tools assist in creating financial models, such as cash flow projections and interest rate sensitivity analyses, which are relevant to fixed income securities.
- Other Specialized Tools - other specialized products, such as consulting analyses, access to industry experts, and distinct investment expertise such as forensic accounting or custom built investment-analysis software.
If Invesco Aim determines that any service or product has a mixed use (i.e., it also serves functions that do not assist the investment decision-making or trading process), Invesco Aim will allocate the costs of such service or product accordingly in its reasonable discretion. Invesco Aim will allocate brokerage commissions to Brokers only for the portion of the service or product that Invesco Aim determines assists it in the investment decision-making or trading process and will pay for the remaining value of the product or service in cash.
Outside research assistance is useful to Invesco Aim since the Brokers used by Invesco Aim tend to provide more in-depth analysis of a broader universe of securities and other matters than Invesco Aim's staff follows. In addition, such services provide Invesco Aim with a diverse perspective on financial markets. Some Brokers may indicate that the provision of research services is dependent upon the generation of certain specified levels of commissions and underwriting concessions by Invesco Aim's clients, including the Funds. However, the Funds are not under any obligation to deal with any Broker in the execution of transactions in portfolio securities. In some cases, Soft Dollar Products are available only from the Broker providing them. In other cases, Soft Dollar Products may be obtainable from alternative sources in return for cash payments. Invesco Aim believes that because Broker research supplements rather than replaces Invesco Aim's research, the receipt of such research tends to improve the quality of Invesco Aim's investment advice. The advisory fee paid by the Funds is not reduced because Invesco Aim receives such services. To the extent the Funds' portfolio transactions are used to obtain Soft Dollar Products, the brokerage commissions obtained by the Funds might exceed those that might otherwise have been paid.
Invesco Aim may determine target levels of brokerage 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; and (2) the research services provided by the Broker. Portfolio transactions may be effected through Brokers that recommend the Funds to their clients, or that act as agent in the purchase of a Fund's shares for their clients, provided that Invesco Aim believes such Brokers provide best execution and such transactions are executed in compliance with Invesco Aim's policy against using directed brokerage to compensate Brokers for promoting or selling AIM Fund shares. Invesco Aim will not enter into a binding commitment with Brokers to place trades with such Brokers involving brokerage commissions in precise amounts.
DIRECTED BROKERAGE (RESEARCH SERVICES)
Directed brokerage (research services) paid by each of the Funds during the last fiscal year ended December 31, 2007 are found in Appendix K.
REGULAR BROKERS
Information concerning the Funds' acquisition of securities of their regular Brokers during the last fiscal year ended December 31, 2007 is found in Appendix K.
ALLOCATION OF PORTFOLIO TRANSACTIONS
Invesco Aim and its affiliates manage numerous AIM Funds and other accounts. Some of these accounts may have investment objectives similar to the Funds. Occasionally, identical securities will be appropriate for investment by one of the Funds and by another Fund or one or more other accounts. However, the position of each account in the same security and the length of time that each account may hold its investment in the same security 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 other accounts, and is considered at or about the same time, Invesco Aim will allocate transactions in such securities among the Fund(s) and these
accounts on a pro rata basis based on order size or in such other manner believed by Invesco Aim to be fair and equitable. Invesco 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.
ALLOCATION OF EQUITY INITIAL PUBLIC OFFERING ("IPO") TRANSACTIONS
Certain of the AIM Funds or other accounts managed by Invesco Aim may become interested in participating in equity IPOs. Purchases of equity IPOs by one AIM Fund or other account may also be considered for purchase by one or more other AIM Funds or accounts. Invesco Aim shall combine indications of interest for equity IPOs for all AIM Funds and accounts participating in purchase transactions for that IPO. When the full amount of all IPO orders for such AIM Funds and accounts cannot be filled completely, Invesco Aim shall allocate such transactions in accordance with the following procedures:
Invesco Aim or the Sub-Advisor will determine the eligibility of each AIM Fund and account that seeks to participate in a particular equity IPO by reviewing a number of factors, including market capitalization/liquidity suitability and sector/style suitability of the investment with the AIM Fund's or account's investment objective, policies, strategies and current holdings. Invesco Aim will allocate equity securities issued in IPOs to eligible AIM Funds and accounts on a pro rata basis based on order size.
[Invesco Institutional allocates equity IPOs on a pro rata basis based on account size or in such other manner believed by Invesco Institutional to be fair and equitable.]
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 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 monitors for possible conflicts among separate accounts (and will do so for plans) buying shares of the Funds. Conflicts could develop for a variety of reasons. For example, violation of the federal tax laws by one separate account investing in a fund could cause the contracts or policies funded through another separate account to lose their tax-deferred status, unless remedial actions were taken. For example, differences in treatment under tax and other laws or the failure by a separate account to comply with such laws could cause a conflict. To eliminate a conflict, the Board 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
For AIM V.I. Money Market Fund: The net asset value per share of the Fund is determined daily as of 12:00 noon and 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 the Fund 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) attributable to a particular class, less all of its liabilities (including accrued expenses and dividends payable) attributable to that class, by the number of shares outstanding of that class and rounding the resulting per share net asset value to the nearest one cent. Determination of the net asset value per share is made in accordance with generally accepted accounting principles.
The Fund uses the amortized cost method to determine its net asset value. Under the amortized cost method, each investment is valued at its cost and thereafter any discount or premium is amortized on a constant basis to maturity. While this method provides certainty of valuation, it may result in periods in which the amortized cost value of the Fund's investments is higher or lower than the price that would be received if the investments were sold. During periods of declining interest rates, use by the Fund of the amortized cost method of valuing its portfolio may result in a lower value than the market value of the portfolio, which could be an advantage to new investors relative to existing shareholders. The converse would apply in a period of rising interest rates.
The Fund may use the amortized cost method to determine its net asset value so long as the Fund does not (a) purchase any instrument with a remaining maturity greater than 397 days (for these purposes, repurchase agreements shall not be deemed to involve the purchase by the Fund of the securities pledged as collateral in connection with such agreements) or (b) maintain a dollar-weighted average portfolio maturity in excess of 90 days, and otherwise complies with the terms of rules adopted by the SEC.
The Board has established procedures designed to stabilize the Fund's net asset value per share at $1.00, to the extent reasonably possible. Such procedures include review of portfolio holdings by the trustees at such intervals as they may deem appropriate. The reviews are used to determine whether net asset value, calculated by using available market quotations, deviates from $1.00 per share and, if so, whether such deviation may result in material dilution or is otherwise unfair to investors or existing shareholders. In the event the trustees determine that a material deviation exists, they intend to take such corrective action as they deem necessary and appropriate. Such actions may include selling portfolio securities prior to maturity in order to realize capital gains or losses or to shorten average portfolio maturity, withholding dividends, redeeming shares in kind, or establishing a net asset value per share by using available market quotations, in which case the net asset value could possibly be more or less than $1.00 per share. AIM V.I. Money Market 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.
Under the amortized cost method, each investment is valued at its cost and thereafter any discount or premium is amortized on a constant basis to maturity. While this method provides certainty of valuation, it may result in periods in which the amortized cost value of the Fund's investments is higher or lower than the price that would be received if the investments were sold.
For All Other Funds: Each Fund determines its net asset value per share once daily as of the close of the customary trading session of the 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, each Fund determines its net asset value per share as of the close of the NYSE on such day. 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 NYSE. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are
principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. The Funds determine net asset value per share 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 its liabilities (including accrued expenses and dividends payable) attributable to that class, by the total number of shares outstanding of that class. Determination of a Fund's net asset value per share is made in accordance with generally accepted accounting principles. The net asset value for shareholder transactions may be different than the net asset value reported in the Fund's financial statements due to adjustments required by generally accepted accounting principles made to the net assets of the Fund at period end.
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
A security listed or traded on an exchange (excluding convertible bonds) held by a Fund is valued at its last sales price or official closing price on the exchange where the security is principally traded or, lacking any sales on a particular day, the security may be valued at the closing bid price on that day. Each equity security traded in the over-the-counter market is valued on the basis of prices furnished by independent pricing vendors or market makers. Debt securities (including convertible bonds) and unlisted equities are fair valued using an evaluated quote on the basis of prices provided by an independent pricing vendor. Evaluated quotes provided by the pricing vendor 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, 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 may be 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 ask prices. Short-term obligations having 60 days or less to maturity and commercial paper are priced at amortized cost, which approximates value.
Generally, trading in corporate bonds, U.S. Government securities and money market instruments is substantially completed each day at various times prior to the close of the customary trading session of the NYSE. The values of such securities used in computing the net asset value of the Fund's shares are determined at such times. Occasionally, events affecting the values of such securities may occur between the times at which such values are determined and the close of the customary trading session of the NYSE. If Invesco Aim believes a development/event has actually caused a closing price to no longer reflect current market value, the closing price may be adjusted to reflect the fair value of the affected security as of the close of the NYSE as determined in good faith using procedures approved by the Board.
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process from a pricing vendor to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current market value as of the close of the NYSE. For foreign securities where Invesco Aim believes, at the approved degree of certainty, that the price is not reflective of current market value, Invesco Aim will use the indication of fair value from the pricing vendor to determine the fair value of the
security. The pricing vendor, pricing methodology or degree of certainty may change from time to time. Multiple factors may be considered by the pricing vendor in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs, domestic and foreign index futures, and exchange-traded funds.
Fund securities primarily traded in foreign markets may be traded in such markets on days that 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 value of the portfolio securities of a Fund that invests in foreign securities may be significantly affected on days when an investor cannot exchange or redeem shares of the Fund.
Swap agreements are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service are based on a model that may include end of day net present values, spreads, ratings, industry, and company performance.
Securities for which market prices are not provided by any of the above methods may be 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 ask prices.
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value.
For financial reporting purposes and shareholder transactions on the last day of the fiscal quarter, transactions are normally accounted for on a trade date basis. For purposes of executing shareholder transactions in the normal course of business (other than shareholder transactions at a fiscal period-end), each non-money market fund's portfolio securities transactions are recorded no later than the first business day following the trade date. Transactions in money market fund portfolio securities transactions are recorded no later than the first business day following the trade date. Transactions in money market fund portfolio securities are normally accounted for on a trade date basis.
REDEMPTIONS IN KIND
Although the Funds, except AIM V.I. Money Market Fund, generally intend to pay redemption proceeds solely in cash, the Funds reserve the right to determine, in their sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind). For instance, a Fund may make a redemption in kind if a cash redemption would disrupt its operations or performance. Securities that will be delivered as payment in redemptions in kind will be valued using the same methodologies that the Fund typically utilizes in valuing such securities. Shareholders receiving such securities are likely to incur transaction and brokerage costs on their subsequent sales of such securities, and the securities may increase or decrease in value until the shareholder sells them. The Trust, on behalf of the Funds, has made an election under Rule 18f-1 under the 1940 Act (a "Rule 18f-1 Election"), and therefore, the Trust, on behalf of the Fund, is obligated to redeem for cash all shares presented to such Fund for redemption by any one shareholder in an amount up to the lesser of $250,000 or 1% of that Fund's net assets in any 90-day period. The Rule 18f-1 Election is irrevocable while Rule 18f-1 under the 1940 Act is in effect unless the SEC by order permits withdrawal of such Rule 18f-1 Election.
PAYMENTS TO PARTICIPATING INSURANCE COMPANIES AND/OR THEIR AFFILIATES
Invesco Aim or Invesco Aim Distributors may, from time to time, at their expense out of their own financial resources, make cash payments to Participating Insurance Companies and/or their affiliates, as an incentive to promote the Funds and/or to retain Participating Insurance Companies' assets in the Funds. Such cash payments may be calculated on the average daily net assets of the
applicable Fund(s) attributable to that particular Participating Insurance Company ("Asset-Based Payments"), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Invesco Aim or Invesco Aim Distributors may also make other cash payments to Participating Insurance Companies and/or their affiliates in addition to or in lieu of Asset-Based Payments, in the form of: payment for travel expenses, including lodging, incurred in connection with trips taken by qualifying registered representatives of those dealer firms and their families to places within or outside the United States; meeting fees; entertainment; transaction processing and transmission charges; advertising or other promotional expenses; or other expenses as determined in Invesco Aim's or Invesco Aim Distributors' discretion. In certain cases these other payments could be significant to the Participating Insurance Companies and/or their affiliates. Generally, commitments to make such payments are terminable upon notice to the Participating Insurance Company and/or their affiliates. However, Invesco Aim and Invesco Aim Distributors have entered into unique agreements with RiverSource Life Insurance Company and its affiliates ("RiverSource"), where the payment obligation of Invesco Aim or Invesco Aim Distributors can only be terminated on the occurrence of certain specified events. For example, in the event that RiverSource obtains an SEC order to substitute out such RiverSource assets in the Funds or such RiverSource assets in the Funds falls below a pre-determined level, payments by Invesco Aim or Invesco Aim Distributors to RiverSource can then be terminated. Any payments described above will not change the price paid by RiverSource for the purchase of the applicable Fund's shares or the amount that any particular Fund will receive as proceeds from such sales. Invesco Aim or Invesco Aim Distributors determines the cash payments described above in its discretion in response to requests from RiverSource, based on factors it deems relevant. RiverSource may not use sales of the Funds' shares to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any state.
A list of certain entities that received payments as described in this Statement of Additional Information during the 2007 calendar year is attached as Appendix L. The list is not necessarily current and will change over time. Certain arrangements are still being negotiated, and there is a possibility that payments will be made retroactively to entities not listed below. Accordingly, please contact your Participating Insurance Company to determine whether they currently may be receiving such payments and to obtain further information regarding any such payments.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
It is the present policy of each Fund to declare and distribute dividends representing substantially all net investment income as follows:
DIVIDENDS DIVIDENDS
DECLARED PAID
--------- ---------
AIM V.I. Basic Balanced Fund ......... annually annually
AIM V.I. Basic Value 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. Diversified Income Fund...... annually annually
AIM V.I. Dynamics Fund................ annually annually
AIM V.I. Financial Services Fund...... annually annually
AIM V.I. Global Health Care Fund...... annually annually
AIM V.I. Global Real Estate Fund ..... annually annually
AIM V.I. Government Securities Fund... annually annually
AIM V.I. High Yield Fund ............. annually annually
AIM V.I. International Growth Fund.... annually annually
AIM V.I. Large Cap Growth Fund........ annually annually
AIM V.I. Leisure Fund................. annually annually
AIM V.I. Mid Cap Core Equity Fund..... annually annually
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AIM V.I. Money Market Fund ........... daily monthly AIM V.I. Small Cap Equity Fund........ annually annually AIM V.I. Technology Fund.............. annually annually AIM V.I. Utilities Fund............... annually annually |
It is also each Fund's intention to distribute annually substantially all of its capital gains net income (access of capital gains over capital losses). 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.
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.
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 gain, if any, more frequently.
It is each Fund's intention to distribute substantially all of its net investment income and realized net capital gain to separate accounts of participating life insurance companies. 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.
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 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 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
The following is only a summary of certain additional tax considerations generally affecting the Funds and their shareholders that are not described in the Prospectus. No attempt is made to present a detailed explanation of the tax treatment of each Fund or its shareholders, and the discussion here and in the Prospectus is not intended as a substitute for careful tax planning.
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.
Each series of shares of each Fund is treated as a separate association taxable as a corporation. Each Fund intends to qualify under the the "Code", as a 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 investment company taxable income and net capital gains as discussed below.
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 and net income derived from certain publicly traded partnerships; and (B) Each Fund must satisfy an asset diversification test (the "Asset Diversification Test").
The Asset Diversification Test requires that at the close of each quarter of each Fund's taxable year, at least 50% of the value of the Fund's assets must consist of cash and cash items, U.S. Government securities, securities of other RICs, and securities of other issuers, as to which the Fund has not invested more than 5% of the value of the Fund's total assets in securities of such issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of such issuer, and no more than 25% of the value of its total assets may be invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies), or of two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses, or, collectively, in the securities of certain publicly traded partnerships.
For purposes of the Asset Diversification Test, the IRS has ruled that the issuer of a purchased listed call option on stock is the issuer of the stock underlying the option. The IRS has also informally ruled that, in general, the issuers of purchased or written call and put options on securities, of long and short positions on futures contracts on securities and of options on such futures contracts are the issuers of the securities underlying such financial instruments where the instruments are traded on an exchange.
Where the writer of a listed call option owns the underlying securities, the IRS has ruled that the Asset Diversification Test will be applied solely to such securities and not to the value of the option itself. With respect to options on securities indexes, futures contracts on securities indexes and options on such futures contracts, the IRS has informally ruled that the issuers of such options and futures contracts are the separate entities whose securities are listed on the index, in proportion to the weighting of securities in the computation of the index. It is unclear under present law who should be treated as the issuer of forward foreign currency exchange contracts, of options on foreign currencies, or of foreign currency futures and related options. It has been suggested that the issuer in each case may be the foreign central bank or the foreign government backing the particular currency. Due to this uncertainty and because the Funds may not rely on informal rulings of the IRS, the Funds may find it necessary to seek a ruling from the IRS as to the application of the Asset Diversification Test to certain of the foregoing types of financial instruments or to limit its holdings of some or all such instruments in order to stay within the limits of such test.
Under an IRS revenue procedure, a Fund may treat its position as lender under a repurchase agreement as a U.S. Government security for purposes of the Asset Diversification Test where the repurchase agreement is fully collateralized (under applicable SEC standards) with securities that constitute U.S. Government securities.
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. Section 817(h) provides, as a safe harbor, that a separate account will be treated as being adequately diversified if the Asset Diversification is 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. 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. 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 insurance company division other than as described in the applicable prospectuses of the various insurance company separate accounts.
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) (the "Distribution Requirement"). 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.
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. In any calendar year in which the investment made by Invesco Aim and its affiliates in a Fund does not exceed $250,000, the Fund will qualify for an exemption from the excise tax regardless of whether it has satisfied the foregoing distribution requirements. Funds that do not qualify for this exemption intend to make sufficient distributions to avoid imposition of the excise tax.
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.
SWAP AGREEMENTS. A Fund may enter into swap agreements as permitted by each Fund's prospectus. Certain requirements that must be met under the Code in order for a Fund to qualify as a RIC may limit the extent to which a Fund will be able to engage in certain types of swap agreements. Moreover, the rules governing the tax aspects of certain types of these agreements are in a developing stage and are not entirely clear in certain respects. Accordingly, while a Fund intends to account for such transactions in a manner deemed to be appropriate, the IRS might not accept such treatment. If it did not, the status of a Fund as a RIC might be affected. Each Fund intends to monitor developments in this area.
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 Invesco Aim Distributors compensation at the annual rate of 0.25% of average daily net assets of Series II shares.
The Plan compensates Invesco Aim Distributors for the purpose of financing any activity which is primarily intended to result in the sale of Series II shares of the Funds. Distribution activities appropriate for financing under the Plan include, but are not limited to, the following: expenses relating to the development, preparation, printing and distribution of advertisements and sales literature and other promotional materials describing and/or relating to the Fund; expenses of training sales personnel regarding the Fund; expenses of organizing and conducting seminars and sales meetings designed to promote the distribution of the Series II shares; compensation to financial intermediaries and broker-
dealers to pay or reimburse them for their services or expenses in connection with the distribution of the Series II shares to fund variable annuity and variable insurance contracts investing directly in the Series II shares; compensation to sales personnel in connection with the allocation of cash values and premium of variable annuity and variable insurance contracts to investments in the Series II shares; compensation to and expenses of employees of Invesco Aim Distributors, including overhead and telephone expenses, who engage in the distribution of the Series II shares; and the costs of administering the Plan.
Amounts payable by a Fund under the Plan need not be directly related to the expenses actually incurred by Invesco Aim Distributors on behalf of each Fund. The Plan does not obligate the Funds to reimburse Invesco Aim Distributors for the actual expenses Invesco Aim Distributors may incur in fulfilling its obligations under the Plan. Thus, even if Invesco Aim Distributors' actual expenses exceed the fee payable to Invesco Aim Distributors at any given time, the Funds will not be obligated to pay more than that fee. If Invesco Aim Distributors' expenses are less than the fee it receives, Invesco Aim Distributors will retain the full amount of the fee. No provision of this Distribution Plan shall be interpreted to prohibit any payments by the Trust during periods when the Trust has suspended or otherwise limited sales. Payments pursuant to the Plan are subject to any applicable limitations imposed by rules of the National Association of Securities Dealers, Inc. ("NASD").
Invesco 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, Invesco 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 Invesco Aim Distributors and the Fund.
Invesco Aim Distributors has entered into agreements with Participating Insurance Companies and other financial intermediaries to provide the distribution services in furtherance of the Plan. Currently, Invesco Aim Distributors pays Participating Insurance Companies and others at the annual rate of 0.25% of average daily net assets of Series II shares attributable to the Contracts issued by the Participating Insurance Company as compensation for providing such distribution services. Invesco Aim Distributors does not act as principal, but rather as agent for the Funds, in making distribution service payments. These payments are an obligation of the Funds and not of Invesco Aim Distributors.
See Appendix M for a list of the amounts paid by Series II shares to Invesco Aim Distributors pursuant to the Plan for the year, or period, ended December 31, 2007 and Appendix N 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 31,2007.
As required by Rule 12b-1, the Plan approved by the Board, 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 Series II class of the Funds and its respective shareholders by, among other things, providing broker-dealers with an incentive to sell additional shares of the Trust, thereby helping to satisfy the Trust's liquidity needs and helping to increase the Trust's investment flexibility.
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, including a majority of the Rule 12b-1 Trustees. The Plan requires Invesco Aim Distributors to provide the Board at least quarterly with a written report of the amounts expended pursuant to the Distribution Plan and the purposes for which such expenditures were made. The Board reviews these reports in connection with their decisions with respect to the Plan. A Plan may be terminated as to any Fund or Series II shares by the vote of a majority of the Rule 12b-1 Trustees or, with respect to the Series II shares, by the vote of a majority of the outstanding voting securities of the Series II shares.
Any change in the Plan that would increase materially the distribution expenses paid by the Series II shares requires shareholder approval. No material amendment to the Plan may be made unless approved by the affirmative vote of a majority of the Rule 12b-1 Trustees cast in person at a meeting called for the purpose of voting upon such amendment.
DISTRIBUTOR
The Trust has entered into a master distribution agreement relating to the Funds (the "Distribution Agreement") with Invesco Aim Distributors, a registered broker-dealer and a wholly owned subsidiary of Invesco Aim, pursuant to which Invesco Aim Distributors acts as the distributor of shares of the Funds. The address of Invesco Aim Distributors is P.O. Box 4739, Houston, Texas 77210-4739. Certain trustees and officers of the Trust are affiliated with Invesco Aim Distributors. See "Management of the Trust."
The Distribution Agreement provides Invesco 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 Invesco 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.
FINANCIAL STATEMENTS
Each Fund's Financial Statements for the period ended December 31, 2007, including the Financial Highlights and the report of the independent registered public accounting firm pertaining thereto, are incorporated by reference into this Statement of Additional Information ("SAI") from such Fund's Annual Report to shareholders contained in the Trust's Form N-CSR filed on February ___, 2008.
The portions of such Annual Reports that are not specifically listed above are not incorporated by reference into this SAI and are not a part of this Registration Statement.
PENDING LITIGATION
Settled Enforcement Actions Related to Market Timing
On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment advisor to certain AIM Funds), Invesco Aim and Invesco Aim Distributors reached final settlements with certain regulators, including the SEC, the New York Attorney General and the Colorado Attorney General, to resolve civil enforcement actions and/or investigations related to market timing and related activity in the AIM Funds, including those formerly advised by IFG. As part of the settlements, a $325 million fair fund ($110 million of which is civil penalties) has been created to compensate shareholders harmed by market timing and related activity in funds formerly advised by IFG. Additionally, Invesco Aim and Invesco Aim Distributors created a $50 million fair fund ($30 million of which is civil penalties) to compensate shareholders harmed by market timing and related activity in funds advised by Invesco Aim, which was done pursuant to the terms of the settlements. These two fair funds will be distributed in accordance with a methodology to be determined by Invesco Aim's independent distribution consultant, in consultation with Invesco Aim and the independent trustees of the AIM Funds and acceptable to the staff of the SEC.
The AIM Funds expect that the SEC will, in the near future, provide notice to the public that it has approved the distribution methodology (the "IDC Plan") determined by Invesco Aim's independent distribution consultant, as described above, and that payments from the two fair funds may be distributed in accordance with the terms of the IDC Plan. Invesco Aim has informed the AIM Funds that, as soon as practicable upon the SEC's issuance of such notice, Invesco Aim intends to make or cause to be made available further details regarding the IDC Plan and planned distributions thereunder on Invesco
Aim's website, available at http://www.invescoaim.com. Invesco Aim's website is not a part of this Statement of Additional Information or the prospectus of any AIM Fund. While the AIM Funds expect that the SEC will make the above-described notice available in the near future, neither Invesco Aim nor the AIM Funds are able to guarantee this or make any specific representation as to the actual timing of such notice's availability.
Regulatory Action Alleging Market Timing
On August 30, 2005, the West Virginia Office of the State Auditor - Securities Commission ("WVASC") issued a Summary Order to Cease and Desist and Notice of Right to Hearing to Invesco Aim and Invesco Aim Distributors (Order No. 05-1318). The WVASC makes findings of fact that Invesco Aim and Invesco Aim Distributors entered into certain arrangements permitting market timing of the AIM Funds and failed to disclose these arrangements in the prospectuses for such Funds, and conclusions of law to the effect that Invesco Aim and Invesco Aim Distributors violated the West Virginia securities laws. The WVASC orders Invesco Aim and Invesco Aim Distributors to cease any further violations and seeks to impose monetary sanctions, including restitution to affected investors, disgorgement of fees, reimbursement of investigatory, administrative and legal costs and an "administrative assessment," to be determined by the Commissioner. Initial research indicates that these damages could be limited or capped by statute. By agreement with the Commissioner of Securities, Invesco Aim's time to respond to that Order has been indefinitely suspended.
Private Civil Actions Alleging Market Timing
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, certain AIM Funds, IFG, Invesco Aim, Invesco Aim Management Group, Inc. ("Invesco Aim Management"), and certain related entities, certain of their current and former officers and/or certain unrelated third parties) based on allegations of improper market timing and related activity in the AIM Funds. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal and state securities laws; (ii) violation of various provisions of ERISA; (iii) breach of fiduciary duty; and/or (iv) breach of contract. These lawsuits were initiated in both Federal and state courts and seek such remedies as compensatory damages; restitution; injunctive relief; disgorgement of management fees; imposition of a constructive trust; removal of certain directors and/or employees; various corrective measures under ERISA; rescission of certain Funds' advisory agreements; interest; and attorneys' and experts' fees. A list identifying such lawsuits (excluding those lawsuits that have been recently transferred as mentioned herein) that have been served on IFG, Invesco Aim, the AIM Funds or related entities, or for which service of process has been waived is set forth in Appendix O-1.
All lawsuits based on allegations of market timing, late trading, and related issues have been transferred to the United States District Court for the District of Maryland (the "MDL Court") for consolidated or coordinated pre-trial proceedings. Pursuant to an Order of the MDL Court, plaintiffs in these lawsuits consolidated their claims for pre-trial purposes into three amended complaints against various Invesco Aim- and IFG-related parties. A list identifying the amended complaints in the MDL Court is included in Appendix O-1. Plaintiffs in two of the underlying lawsuits transferred to the MDL Court continue to seek remand of their action to state court. These lawsuits are identified in Appendix O-1.
Private Civil Actions Alleging Improper Use of Fair Value Pricing
Multiple civil class action lawsuits have been filed against various parties (including, depending on the lawsuit, certain AIM Funds, IFG and/or Invesco Aim) alleging that certain AIM Funds inadequately employed fair value pricing. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violations of various provisions of the Federal securities laws; (ii) common law breach of duty; and (iii) common law negligence and gross negligence. These lawsuits have been filed in both Federal and state courts and seek such remedies as compensatory and punitive damages; interest; and attorneys' fees and costs. A list identifying such lawsuits that have been served on IFG, Invesco Aim, the AIM Funds or related entities, or for which service of process has been waived is set forth in Appendix O-2.
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 LONG-TERM DEBT RATINGS
Moody's corporate ratings areas follows:
Aaa: Bonds and preferred stock 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-edged." 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 and preferred stock 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 in Aa rated bonds appear somewhat larger than those securities rated Aaa.
A: Bonds and preferred stock 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 and preferred stock 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 and preferred stock 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 and preferred stock 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 and preferred stock 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 and preferred stock 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 and preferred stock 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. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.
MOODY'S SHORT-TERM PRIME RATING SYSTEM
Moody's short-term ratings are opinions of the ability of issuers to honor senior financial obligations and contracts. Such obligations generally have an original maturity not exceeding one year, unless explicitly noted.
Moody's employs the following designations, all judged to be investment grade , to indicate the relative repayment ability of rated issuers.
PRIME-1: Issuers (or supporting institutions) rated Prime-1 have a superior
ability for repayment of senior short-term obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well-established industries; high rates of return on
funds employed; conservative capitalization structure 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 (or supporting institutions) rated Prime-2 have a strong ability to repay senior short-term debt 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, may 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 (or supporting institutions) rated Prime-3 have an acceptable ability for repayment of senior short-term debt obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require 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: In addition, in certain countries the prime rating may be modified by the issuer's or guarantor's senior unsecured long-term debt rating.
Moody's municipal ratings are as follows:
MOODY'S U.S. LONG-TERM MUNICIPAL BOND RATING DEFINITIONS
Municipal Ratings are opinions of the investment quality of issuers and issues in the US municipal and tax-exempt markets. As such, these ratings incorporate Moody's assessment of the default probability and loss severity of these issuers and issues.
Municipal Ratings are based upon the analysis of four primary factors relating to municipal finance: economy, debt, finances, and administration/management strategies. Each of the factors is evaluated individually and for its effect on the other factors in the context of the municipality's ability to repay its debt.
Aaa: Issuers or issues rated Aaa demonstrate the strongest creditworthiness relative to other US municipal or tax-exempt issuers or issues.
Aa: Issuers or issues rated Aa demonstrate very strong creditworthiness relative to other US municipal or tax-exempt issuers or issues.
A: Issuers or issues rated A present above-average creditworthiness relative to other US municipal or tax-exempt issuers or issues.
Baa: Issuers or issues rated Baa represent average creditworthiness relative to other US municipal or tax-exempt issuers or issues.
Ba: Issuers or issues rated Ba demonstrate below-average creditworthiness relative to other US municipal or tax-exempt issuers or issues.
B: Issuers or issues rated B demonstrate weak creditworthiness relative to other US municipal or tax-exempt issuers or issues.
Caa: Issuers or issues rated Caa demonstrate very weak creditworthiness relative to other US municipal or tax-exempt issuers or issues.
Ca: Issuers or issues rated Ca demonstrate extremely weak creditworthiness relative to other US municipal or tax-exempt issuers or issues.
C: Issuers or issues rated C demonstrate the weakest creditworthiness relative to other US municipal or tax-exempt issuers or issues.
Note: Also, Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa to Caa. 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 MIG/VMIG US SHORT-TERM RATINGS
In municipal debt issuance, there are three rating categories for short-term obligations that are considered investment grade. These ratings are designated as Moody's Investment Grade (MIG) and are divided into three levels - MIG 1 through MIG 3.
In addition, those short-term obligations that are of speculative quality are designated SG, or speculative grade.
In the case of variable rate demand obligations (VRDOs), a two-component rating is assigned. The first element represents Moody's evaluation of the degree of risk associated with scheduled principal and interest payments. The second element represents Moody's evaluation of the degree of risk associated with the demand feature, using the MIG rating scale.
The short-term rating assigned to the demand feature of VRDOs is designated as VMIG. When either the long- or short-term aspect of a VRDO is not rated, that piece is designated NR, e.g., Aaa/NR or NR/VMIG 1.
MIG ratings expire at note maturity. By contrast, VMIG rating expirations will be a function of each issue's specific structural or credit features.
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 superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support or demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2: This designation denotes strong credit quality. Margins of protection are ample although not as large as in the preceding group.
MIG 3/VMIG 3: This designation denotes acceptable credit quality. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established.
SG: This designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient margins of protection.
STANDARD & POOR'S LONG-TERM CORPORATE AND MUNICIPAL RATINGS
Issue credit ratings are based in varying degrees, on the following considerations: likelihood of payment - capacity and willingness of the obligor to meet its financial commitment on an obligation 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.
The issue ratings definitions are expressed in terms of default risk. As such, they pertain to senior obligations of an entity. Junior obligations are typically rated lower than senior obligations, to reflect the lower priority in bankruptcy, as noted above.
S&P describes its ratings for corporate and municipal 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 meet its financial commitments 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 exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to meet its financial commitment on the obligation.
BB-B-CCC-CC-C: Debt rated BB, B, CCC, CC and C is regarded as having significant speculative characteristics with respect to capacity to pay interest and repay principal. BB indicates the least degree of speculation and C the highest. While such debt will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.
NR: Not Rated.
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 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.
These 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 rated 'B' 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 rated 'D' 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 Standard & Poor's believes such payments will be made during such grace period.
S&P SHORT-TERM MUNICIPAL RATINGS
An S&P note rating reflect the liquidity factors and market-access risks
unique to notes. Notes due 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 it will be treated as a note); and source of payment
(the more dependant the issue is on the market for its refinancing, the more
likely it will be treated as a note).
Note rating symbols are as follows:
SP-1: Strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay debt service is 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.
FITCH LONG-TERM CREDIT RATINGS
Fitch Ratings provides an opinion on the ability of an entity or of a securities issue to meet financial commitments, such as interest, preferred dividends, or repayment of principal, on a timely basis. These credit ratings apply to a variety of entities and issues, including but not limited to sovereigns,
governments, structured financings, and corporations; debt, preferred/preference stock, bank loans, and counterparties; as well as the financial strength of insurance companies and financial guarantors.
Credit ratings are used by investors as indications of the likelihood of
getting their money back in accordance with the terms on which they invested.
Thus, the use of credit ratings defines their function: "investment grade"
ratings (international Long-term 'AAA' - 'BBB' categories; Short-term 'F1' -
'F3') indicate a relatively low probability of default, while those in the
"speculative" or "non-investment grade" categories (international Long-term 'BB'
- 'D'; Short-term 'B' - 'D') either signal a higher probability of default or
that a default has already occurred. Ratings imply no specific prediction of
default probability. However, for example, it is relevant to note that over the
long term, defaults on 'AAA' rated U.S. corporate bonds have averaged less than
0.10% per annum, while the equivalent rate for 'BBB' rated bonds was 0.35%, and
for 'B' rated bonds, 3.0%.
Fitch ratings do not reflect any credit enhancement that may be provided by insurance policies or financial guaranties unless otherwise indicated.
Entities or issues 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 credit and research 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 of any security.
The ratings are based on information obtained from issuers, other obligors, underwriters, their experts, and other sources Fitch Ratings believes to be reliable. Fitch Ratings does not audit or verify the truth or accuracy of such information. Ratings may be changed or withdrawn as a result of changes in, or the unavailability of, information or for other reasons.
Our program ratings relate only to standard issues made under the program concerned; it should not be assumed that these ratings apply to every issue made under the program. In particular, in the case of non-standard issues, i.e., those that are linked to the credit of a third party or linked to the performance of an index, ratings of these issues may deviate from the applicable program rating.
Credit ratings do not directly address any risk other than credit risk. In particular, these ratings do not deal with the risk of loss due to changes in market interest rates and other market considerations.
AAA: Bonds considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong capacity for timely payment of financial commitments, which is unlikely to be affected by foreseeable events.
AA: Bonds considered to be investment grade and of very high credit quality. The obligor has a very strong capacity for timely payment of financial commitments which is not significantly vulnerable to foreseeable events.
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 good credit quality. The obligor's ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances are more likely to impair this capacity.
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.
WITHDRAWN: A rating will be withdrawn when an issue matures or is called or refinanced and at Fitch's discretion, when Fitch Ratings deems the amount of information available to be inadequate for ratings purposes.
RATINGWATCH: Ratings are placed on RatingWatch to notify investors that there is a reasonable possibility of 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," if ratings may be raised, lowered or maintained. RatingWatch is typically resolved over a relatively short period.
FITCH SPECULATIVE GRADE BOND RATINGS
BB: Bonds are considered speculative. There is a possibility of credit risk developing, particularly as the result of adverse economic changes over time. However, business and financial alternatives may be available to allow financial commitments to be met. '
B: Bonds are considered highly speculative. Significant credit risk is present but a limited margin of safety remains. While bonds in this class are currently meeting financial commitments, the capacity for continued payment is contingent upon a sustained, favorable business and economic environment.
CCC: Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic developments.
CC: Default of some kind appears probable.
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 are valued on the basis of their prospects for achieving partial or full 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 categories below CCC.
FITCH SHORT-TERM CREDIT RATINGS
The following ratings scale applies to foreign currency and local currency ratings. A Short-term rating has a time horizon of less than 12 months for most obligations, or up to three years for U.S. public finance securities, and thus places greater emphasis on the liquidity necessary to meet financial commitments in a timely manner.
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 in the case of the higher 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 result in a reduction to non-investment grade.
B: Speculative. Minimal capacity for timely payment of financial commitments, plus vulnerability to near-term adverse changes in financial and economic conditions.
C: High default risk. Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon a sustained, favorable business and economic environment.
D: Default. Issues assigned this rating are in actual or imminent payment default.
APPENDIX B
PERSONS TO WHOM INVESCO AIM PROVIDES
NON-PUBLIC PORTFOLIO HOLDINGS ON AN ONGOING BASIS
(AS OF MARCH 31, 2008)
SERVICE PROVIDER DISCLOSURE CATEGORY
----------------------------------------------------- -----------------------------------------------------------------------
ABN AMRO Financial Services, Inc. Broker (for certain AIM Funds)
Anglemyer & Co. Analyst (for certain AIM Funds)
Ballard Spahr Andrews & Ingersoll, LLP Legal Counsel
BB&T Capital Markets Broker (for certain AIM Funds)
Bear, Stearns Pricing Direct Pricing Vendor (for certain AIM Funds)
BOSC, Inc. Broker (for certain AIM Funds)
BOWNE & Co. Financial Printer
Brown Brothers Harriman & Co. Securities Lender (for certain AIM Funds)
Cabrera Capital Markets Broker (for certain AIM Funds)
CENVEO Financial Printer
Charles River Systems, Inc. System Provider
Citigroup Global Markets, Inc. Broker (for certain AIM Funds)
Classic Printers Inc. Financial Printer
Color Dynamics Financial Printer
Commerce Capital Markets Broker (for certain AIM Funds)
D.A. Davidson & Co. Broker (for certain AIM Funds)
Dechert LLP Legal Counsel
Earth Color Houston Financial Printer
EMCO Press Financial Printer
Empirical Research Partners Analyst (for certain AIM Funds)
Finacorp Securities Broker (for certain AIM Funds)
First Albany Capital Broker (for certain AIM Funds)
First Tryon Securities Broker (for certain AIM Funds)
F T Interactive Data Corporation Pricing Vendor
GainsKeeper Software Provider (for certain AIM Funds)
GCom2 Solutions Software Provider (for certain AIM Funds)
George K. Baum & Company Broker (for certain AIM Funds)
Glass, Lewis & Co. System Provider (for certain AIM Funds)
Global Trend Alert Analyst (for certain AIM Funds)
Greater Houston Publishers Financial Printer
Grover Printing Financial Printer
Gulfstream Graphics Corp. Financial Printer
Hattier, Sanford & Reynoir Broker (for certain AIM Funds)
Hutchinson, Shockey, Erley & Co. Broker (for certain AIM Funds)
Imageset Financial Printer
iMoneyNet, Inc. Rating & Ranking Agency (for certain AIM Funds)
Infinity Web, Inc. Financial Printer
Initram Data, Inc. Pricing Vendor
Institutional Shareholder Services, Inc. Proxy Voting Service (for certain AIM Funds)
Invesco Aim Investment Services, Inc. Transfer Agent
Invesco Senior Secured Management, Inc. System Provider (for certain AIM Funds)
Investortools, Inc. Broker (for certain AIM Funds)
ITG, Inc. Pricing Vendor (for certain AIM Funds)
J.P. Morgan Securities, Inc. Analyst (for certain AIM Funds)
JPMorgan Securities Inc.\Citigroup Global Markets
Inc.\JPMorgan Chase Bank, N.A. Lender (for certain AIM Funds)
John Hancock Investment Management Services, LLC Sub-advisor (for certain sub-advised accounts)
Jorden Burt LLP Special Insurance Counsel
Kramer, Levin Naftalis & Frankel LLP Legal Counsel
|
SERVICE PROVIDER DISCLOSURE CATEGORY
----------------------------------------------------- -----------------------------------------------------------------------
Lipper, Inc. Rating & Ranking Agency (for certain AIM Funds)
Loan Pricing Corporation Pricing Service (for certain AIM Funds)
Loop Capital Markets Broker (for certain AIM Funds)
MarkIt Group Limited Pricing Vendor (for certain AIM Funds)
Merrill Communications, LLC Financial Printer
Mesirow Financial, Inc. Broker (for certain AIM Funds)
Moody's Investors Service Rating & Ranking Agency (for certain AIM Funds)
Morgan Keegan & Company, Inc. Broker (for certain AIM Funds)
Morrison Foerster LLP Legal Counsel
MS Securities Services, Inc. and Morgan Stanley & Co.
Incorporated Securities Lender (for certain AIM Funds)
Muzea Insider Consulting Services, LLC Analyst (for certain AIM Funds)
Ness USA System provider
Noah Financial, LLC Analyst (for certain AIM Funds)
OMGEO Oasys Trading System
Page International Financial Printer
PCP Publishing Financial Printer
Piper Jaffray Analyst (for certain AIM Funds)
Prager, Sealy & Co. Broker (for certain AIM Funds)
PricewaterhouseCoopers LLP Independent Registered Public Accounting Firm (for all AIM Funds)
Protective Securities Broker (for certain AIM Funds)
Ramirez & Co., Inc. Broker (for certain AIM Funds)
Raymond James & Associates, Inc. Broker (for certain AIM Funds)
RBC Capital Markets Analyst (for certain AIM Funds)
RBC Dain Rauscher Incorporated Broker (for certain AIM Funds)
Reuters America, LLC Pricing Service (for certain AIM Funds)
Robert W. Baird & Co. Incorporated Broker (for certain AIM Funds)
RR Donnelley Financial Financial Printer
Ryan Beck & Co. Broker (for certain AIM Funds)
Seattle-Northwest Securities Corporation Broker (for certain AIM Funds)
Siebert Brandford Shank & Co., L.L.C. Broker (for certain AIM Funds)
Signature Financial Printer
Simon Printing Company Financial Printer
Southwest Precision Printers, Inc. Financial Printer
Standard and Poor's/Standard and Poor's Securities Pricing Service and Rating and Ranking Agency (each, respectively, for
Evaluations, Inc. certain AIM Funds)
StarCompliance, Inc. System Provider
State Street Bank and Trust Company Custodian, Lender, Securities Lender, and System Provider (each,
respectively, for certain AIM Funds)
Sterne, Agee & Leach, Inc. Broker (for certain AIM Funds)
Stifel, Nicolaus & Company, Incorporated Broker (for certain AIM Funds)
Stradley Ronon Stevens & Young, LLP Legal Counsel
The Bank of New York Custodian and Securities Lender (each, respectively, for certain AIM
Funds)
The MacGregor Group, Inc. Software Provider
The Savader Group Broker (for certain AIM Funds)
Thomson Information Services Incorporated Software Provider
UBS Financial Services, Inc. Broker (for certain AIM Funds)
VCI Group Inc. Financial Printer
Wachovia National Bank, N.A. Broker (for certain AIM Funds)
Western Lithograph Financial Printer
Wiley Bros. Aintree Capital L.L.C. Broker (for certain AIM Funds)
William Blair & Co. Broker (for certain AIM Funds)
XSP, LLC\Solutions PLUS, Inc. Software Provider
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APPENDIX C
TRUSTEES AND OFFICERS
As of March 31, 2008
The address of each trustee and officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees 104 portfolios in the AIM Funds complex. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust's organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
OTHER
TRUSTEE TRUSTEESHIP(s)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIPS(s)
POSITION(s) HELD WITH THE OFFICER HELD BY
TRUST SINCE PRINCIPAL OCCUPATION(s) DURING PAST 5 YEARS TRUSTEE/DIRECTOR
-------------------------------- -------- ------------------------------------------------------ -----------------
INTERESTED PERSONS
Martin L. Flanagan(1) - 1960 2007 Executive Director, Chief Executive Officer and None
Trustee President, Invesco Ltd. (ultimate parent of Invesco
Aim and a global investment management firm) and
Invesco Holding Company Limited (parent of Invesco
Aim and a global investment management firm);
Chairman, Invesco Aim Advisors, Inc. (registered
investment advisor); Director, Chairman, Chief
Executive Officer and President, IVZ Inc. (holding
company) and INVESCO North American Holdings, Inc.
(holding company); Chairman and President, INVESCO
Group Services, Inc. (service provider); Trustee, The
AIM Family of Funds(R); Vice Chairman, Investment
Company Institute; and Member of Executive Board, SMU
Cox School of Business
Formerly: Director, Chief Executive Officer and
President, Invesco Holding Company Limited (parent of
Invesco Aim and a global investment management firm);
Director, Invesco Ltd.; Chairman, Investment Company
Institute; and President, Co-Chief Executive Officer,
Co-President, Chief Operating Officer and Chief
Financial Officer, Franklin Resources, Inc. (global
investment management organization)
Philip A. Taylor(2) - 1954 2006 Director, Chief Executive Officer and President,
Trustee, President and Principal Invesco Trimark Dealer Inc./Courtage Invesco Trimark
Executive Officer Inc. (registered broker dealer), Invesco Aim
Advisors, Inc., Invesco Trimark Investment Management
Inc./Gestion de placements Invesco Trimark Inc. d/b/a
INVESCO Enterprise Services (registered investment
advisor and registered transfer agent), 1371
Preferred Inc. (holding company), AIM Trimark
Corporate Class Inc. (formerly AIM Trimark Global
Fund Inc.) (corporate mutual fund company) and AIM
Trimark Canada Fund Inc. (corporate mutual fund
company); Director, Chairman, Chief Executive Officer
and President, Invesco Aim Management Group, Inc.
(financial
|
(2) Mr. Taylor 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.
OTHER
TRUSTEE TRUSTEESHIP(s)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIPS(s)
POSITION(s) HELD WITH THE OFFICER HELD BY
TRUST SINCE PRINCIPAL OCCUPATION(s) DURING PAST 5 YEARS TRUSTEE/DIRECTOR
-------------------------------- -------- ------------------------------------------------------ -----------------
services holding company) and Invesco Aim
Capital Management, Inc. (registered investment
advisor); Director and President, INVESCO Funds
Group, Inc. (registered investment advisor and
registered transfer agent) and AIM GP Canada Inc.
(general partner for limited partnership); Director,
Invesco Aim Distributors, Inc. (registered broker
dealer); Director and Chairman, Invesco Aim
Investment Services, Inc. (registered transfer agent)
and INVESCO Distributors, Inc. (registered broker
dealer); Director, President and Chairman, IVZ Callco
Inc. (holding company), INVESCO Inc. (holding
company) and Invesco Canada Holdings Inc. (holding
company); Trustee, President and Principal Executive
Officer, The AIM Family of Funds(R) (other than AIM
Treasurer's Series Trust, Short-Term Investments
Trust and Tax-Free Investments Trust); Trustee and
Executive Vice President, The AIM Family of Funds(R)
(AIM Treasurer's Series Trust, Short-Term Investments
Trust and Tax-Free Investments Trust only) ; and
Manager, PowerShares Capital Management LLC
Formerly: Director and Chairman, Fund Management
Company (former registered broker dealer); President
and Principal Executive Officer, The AIM Family of
Funds(R) (AIM Treasurer's Series Trust, Short-Term
Investments Trust and Tax-Free Investments Trust
only); Chairman, AIM Canada Holdings, Inc.;
President, AIM Trimark Global Fund Inc. and AIM
Trimark Canada Fund Inc.; and Director, Trimark Trust
(federally regulated Canadian trust company) None
INDEPENDENT TRUSTEES
Bruce L. Crockett - 1944 1993 Chairman, Crockett Technology Associates (technology ACE Limited (insurance
Trustee and Chair consulting company) company); and Captaris,Inc.
(unified messaging provider)
Bob R. Baker - 1936 2004 Retired None
Trustee
Frank S. Bayley - 1939 2001 Retired
Trustee Formerly: Partner, law firm of Baker & McKenzie and None
Director, Badgley Funds, Inc. (registered investment
company) (2 portfolios)
James T. Bunch - 1942 2004 Founder, Green, Manning & Bunch Ltd. (investment
Trustee banking firm)
Formerly: Director, Policy Studies, Inc. and Van None
Gilder Insurance Corporation
|
OTHER
TRUSTEE TRUSTEESHIP(s)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIPS(s)
POSITION(s) HELD WITH THE OFFICER HELD BY
TRUST SINCE PRINCIPAL OCCUPATION(s) DURING PAST 5 YEARS TRUSTEE/DIRECTOR
-------------------------------- -------- ------------------------------------------------------ -----------------
Albert R. Dowden - 1941 2000 Director of a number of public and private business
Trustee corporations, including the Boss Group, Ltd. (private
investment and management), Reich & Tang Funds
(Chairman) (registered investment company) (7
portfolios), Daily Income Fund (4 portfolios),
California Daily Tax Free Income Fund, Inc.,
Connecticut Daily Tax Free Income Fund, Inc. and New
Jersey Daily Municipal Income Fund, Inc., Annuity and
Life Re (Holdings), Ltd. (insurance company), and
Homeowners of America Holding Corporation (property
casualty company)
Formerly: Director, CompuDyne Corporation (provider
of product and services to the public security
market); Director, President and Chief Executive
Officer, Volvo Group North America, Inc.; Senior Vice
President, AB Volvo; Director of various affiliated
Volvo companies; and Director, Magellan Insurance
Company None
Jack M. Fields - 1952 1997 Chief Executive Officer, Twenty First Century Group, Administaff
Trustee Inc. (government affairs company); and Owner and
Chief Executive Officer, Dos Angelos Ranch, L.P.
(cattle, hunting, corporate entertainment)
Formerly: Chief Executive Officer, Texana Timber LP
(sustainable forestry company) and Discovery Global
Education Fund (non-profit)
Carl Frischling - 1937 1993 Partner, law firm of Kramer Levin Naftalis and Director, Reich & Tang
Trustee Frankel LLP Funds (15 portfolios)
Prema Mathai-Davis - 1950 1998 Formerly: Chief Executive Officer, YWCA of the USA None
Trustee
Lewis F. Pennock - 1942 1993 Partner, law firm of Pennock & Cooper None
Trustee
Larry Soll - 1942 2004 Retired None
Trustee
Raymond Stickel, Jr. - 1944 2005 Retired
Trustee
Formerly: Partner, Deloitte & Touche; and Director,
Mainstay VP Series Funds, Inc. (25 portfolios) None
OTHER OFFICERS
Russell C. Burk - 1958 2005 Senior Vice President and Senior Officer, The AIM
Senior Vice President and Senior Family of Funds(R)
Officer
Formerly: Director of Compliance and Assistant
General Counsel, ICON Advisers, Inc.; Financial
Consultant, Merrill Lynch; and General Counsel and
Director of Compliance, ALPS Mutual Funds, Inc. N/A
|
OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIPS(S)
POSITION(S) HELD WITH THE OFFICER HELD BY
TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS TRUSTEE/DIRECTOR
-------------------------------- -------- ------------------------------------------------------ -----------------
John M. Zerr - 1962 2006 Director, Senior Vice President, Secretary and N/A
Senior Vice President, Chief General Counsel, Invesco Aim Management Group, Inc.,
Legal Officer and Secretary Invesco Aim Advisors, Inc. and Invesco Aim Capital
Management, Inc.; Director, Vice President and
Secretary, Invesco Aim Investment Services, Inc. and
INVESCO Distributors, Inc.; Director, Senior Vice
President and Secretary, Invesco Aim Distributors,
Inc.; Director and Vice President, INVESCO Funds
Group, Inc.; Senior Vice President, Chief Legal
Officer and Secretary, The AIM Family of Funds(R);
and Manager, PowerShares Capital Management LLC
Formerly: Director, Vice President and Secretary,
Fund Management Company; Vice President, Invesco Aim
Capital Management, Inc.; Chief Operating Officer,
Senior Vice President, General Counsel and Secretary,
Liberty Ridge Capital, Inc. (an investment adviser);
Vice President and Secretary, PBHG Funds (an
investment company); Vice President and Secretary,
PBHG Insurance Series Fund (an investment company);
General Counsel and Secretary, Pilgrim Baxter Value
Investors (an investment adviser); Chief Operating
Officer, General Counsel and Secretary, Old Mutual
Investment Partners (a broker-dealer); General
Counsel and Secretary, Old Mutual Fund Services (an
administrator); General Counsel and Secretary, Old
Mutual Shareholder Services (a shareholder servicing
center); Executive Vice President, General Counsel
and Secretary, Old Mutual Capital, Inc. (an
investment adviser); and Vice President and
Secretary, Old Mutual Advisors Funds (an investment
company)
Lisa O. Brinkley - 1959 2004 Global Compliance Director, Invesco Ltd.; and Vice N/A
Vice President President, The AIM Family of Funds(R)
Formerly: Senior Vice President, Invesco Aim
Management Group, Inc.; Senior Vice President and
Chief Compliance Officer, Invesco Aim Advisors, Inc.
and The AIM Family of Funds(R); Vice President and
Chief Compliance Officer, Invesco Aim Capital
Management, Inc. and Invesco Aim Distributors, Inc.;
Vice President, Invesco Aim Investment Services, Inc.
and Fund Management Company; and Senior Vice
President and Compliance Director, Delaware
Investments Family of Funds
|
OTHER
TRUSTEE TRUSTEESHIP(s)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIPS(s)
POSITION(s) HELD WITH THE OFFICER HELD BY
TRUST SINCE PRINCIPAL OCCUPATION(s) DURING PAST 5 YEARS TRUSTEE/DIRECTOR
-------------------------------- -------- ------------------------------------------------------ -----------------
Kevin M. Carome - 1956 2003 General Counsel, Secretary and Senior Managing
Vice President Director, Invesco Ltd.; Director and Secretary,
Invesco Holding Company Limited, IVZ, Inc. and
INVESCO Group Services, Inc; Director, INVESCO Funds
Group, Inc.; Secretary, INVESCO North American
Holdings, Inc.; and Vice President, The AIM Family of
Funds(R)
Formerly: Director, Senior Vice President, Secretary N/A
and General Counsel, Invesco Aim Management Group,
Inc. and Invesco Aim Advisors, Inc.; Senior Vice
President, Invesco Aim Distributors, Inc.; Director,
General Counsel and Vice President, Fund Management
Company; Vice President, Invesco Aim Capital
Management, Inc. and Invesco Aim Investment Services,
Inc.; Senior Vice President, Chief Legal Officer and
Secretary, The AIM Family of Funds(R); Director and
Vice President, INVESCO Distributors, Inc.; Chief
Executive Officer and President, INVESCO Funds Group;
and Senior Vice President and General Counsel,
Liberty Financial Companies, Inc.
Sidney M. Dilgren - 1961 2004 Vice President , Invesco Aim Advisors, Inc. and N/A
Vice President, Treasurer and Invesco Aim Capital Management, Inc.; and Vice
Principal Financial Officer President, Treasurer and Principal Financial Officer,
The AIM Family of Funds(R)
Formerly: Fund Treasurer, Invesco Aim Advisors,
Inc.; Senior Vice President, Invesco Aim Investment
Services, Inc. and Vice President, Invesco Aim
Distributors, Inc.
Karen Dunn Kelley - 1960 1993 Head of Invesco's World Wide Fixed Income and Cash
Vice President Management Group; Director of Cash Management and
Senior Vice President, Invesco Aim Advisors, Inc. and
Invesco Aim Capital Management, Inc.; Executive Vice
President, Invesco Aim Distributors, Inc.; Senior
Vice President, Invesco Aim Management Group, Inc.;
Vice President, The AIM Family of Funds(R) (other
than AIM Treasurer's Series Trust, Short-Term
Investments Trust and Tax-Free Investments Trust);
and President and Principal Executive Officer, The
AIM Family of Funds(R) (AIM Treasurer's Series Trust,
Short-Term Investments Trust and Tax-Free Investments
Trust only)
Formerly: Director and President, Fund Management N/A
Company; Chief Cash Management Officer and Managing
Director, Invesco Aim Capital Management, Inc.; and
Vice President, Invesco Aim Advisors, Inc. and The
AIM Family of Funds(R) (AIM Treasurer's Series Trust,
Short-Term Investments Trust and Tax-Free Investments
Trust only)
|
OTHER
TRUSTEE TRUSTEESHIP(s)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIPS(s)
POSITION(s) HELD WITH THE OFFICER HELD BY
TRUST SINCE PRINCIPAL OCCUPATION(s) DURING PAST 5 YEARS TRUSTEE/DIRECTOR
-------------------------------- -------- ------------------------------------------------------ -----------------
Lance A. Rejsek - 1967 2005 Anti-Money Laundering Compliance Officer, Invesco Aim N/A
Anti-Money Laundering Compliance Advisors, Inc., Invesco Aim Capital Management, Inc.,
Officer Invesco Aim Distributors, Inc., Invesco Aim
Investment Services, Inc., Invesco Aim Private Asset
Management, Inc. and The AIM Family of Funds(R)
Formerly: Anti-Money Laundering Compliance Officer,
Fund Management Company; and Manager of the Fraud
Prevention Department, Invesco Aim Investment
Services, Inc.
Todd L. Spillane - 1958 2006 Senior Vice President, Invesco Aim Management Group N/A
Chief Compliance Officer Inc.; Senior Vice President and Chief Compliance
Officer, Invesco Aim Advisors, Inc. and Invesco Aim
Capital Management, Inc.; Chief Compliance Officer,
The AIM Family of Funds(R), Invesco Global Asset
Management (N.A.), Inc. (registered investment
advisor), Invesco Institutional (N.A.), Inc.
(registered investment advisor), INVESCO Private
Capital Investments, Inc. (holding company), Invesco
Private Capital, Inc. (registered investment advisor)
and Invesco Senior Secured Management, Inc.
(registered investment advisor); and Vice President,
Invesco Aim Distributors, Inc. and Invesco Aim
Investment Services, Inc.
Formerly: Vice President, Invesco Aim Capital
Management, Inc. and Fund Management Company; Global
Head of Product Development, AIG-Global Investment
Group, Inc.; and Chief Compliance Officer and Deputy
General Counsel, AIG-SunAmerica Asset Management
|
TRUSTEE OWNERSHIP OF FUND SHARES AS OF DECEMBER 31, 2007
Aggregate Dollar Range of Equity
Securities in All Registered
Investment Companies Overseen by
Dollar Range of Equity Securities Trustee in The AIM Family of
Name of Trustee Per Fund Funds(R)
-------------------- --------------------------------- ---------------------------------
Martin L. Flanagan -0- Over $100,000
Philip A. Taylor -0- -0-
Bob R. Baker -0- Over $100,000
Frank S. Bayley -0- Over $100,000
James T. Bunch -0- Over $100,000(3)
Bruce L. Crockett -0- Over $100,000(3)
Albert R. Dowden -0- Over $100,000
Jack M. Fields -0- Over $100,000(3)
Carl Frischling -0- Over $100,000(3)
Prema Mathai-Davis -0- Over $100,000(3)
Lewis F. Pennock -0- Over $100,000
Larry Soll -0- Over $100,000(3)
Raymond Stickel, Jr. -0- Over $100,000
|
(3) Includes the total amount of compensation deferred by the trustee at his or her election pursuant to a deferred compensation plan. Such deferred compensation is placed in a deferral account and deemed to be invested in one or more of the AIM Funds.
APPENDIX D
TRUSTEE COMPENSATION TABLE
Set forth below is information regarding compensation paid or accrued for each trustee of the Trust who was not affiliated with Invesco Aim during the year ended December 31,2007:
RETIREMENT
AGGREGATE BENEFITS ESTIMATED TOTAL
COMPENSATION ACCRUED ANNUAL COMPENSATION
FROM THE BY ALL BENEFITS UPON FROM ALL AIM
TRUSTEE TRUST(1) AIM FUNDS(2) RETIREMENT(3) FUNDS(4)
-------------------- ------------ --------------- ---------------- --------------
Bob R. Baker $ $ 234,974 $ 188,144 $ 232,400
Frank S. Bayley 164,614 126,750 249,300
James T. Bunch 159,121 126,750 215,500
Bruce L. Crockett 85,879 126,750 452,100
Albert R. Dowden 115,299 126,750 249,300
Jack M. Fields 110,194 126,750 215,500
Carl Frischling(5) 96,575 126,750 215,500
Prema Mathai-Davis 109,077 126,750 232,400
Lewis F. Pennock 88,793 126,750 215,500
Ruth H. Quigley(6) 192,521 126,750 249,300
Larry Soll 203,535 147,748 215,500
Raymond Stickel, Jr. 85,977 126,750 249,300
OFFICER
Russell Burk N/A N/A N/A
|
(1) Amounts shown are based on the fiscal year ended December 31, 2007. The total amount of compensation deferred by all trustees of the Trust during the fiscal year ended December 31, 2007, including earnings, was $________.
(2) During the fiscal year ended December 31, 2007, the total amount of expenses allocated to the Trust in respect of such retirement benefits was $_______.
(3) These amounts represent the estimated annual benefits payable by the AIM Funds upon the trustee's retirement and assumes each trustee serves until his or her normal retirement date.
(4) All trustees currently serve as trustees of 16 registered investment companies advised byInvesco AIM.
(5) During the fiscal year ended December 31, 2007 the Trust paid $_______ 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.
(6) Miss Quigley retired effective December 31, 2007.
APPENDIX E
PROXY POLICY APPLIES TO THE FOLLOWING:
INVESCO AIM ADVISORS, INC.
INVESCO AIM PROXY VOTING GUIDELINES
(Effective as of March 31, 2008)
The following Invesco Aim Proxy Voting Guidelines are applicable to all funds and other accounts managed by Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc and Invesco Aim Private Asset Management, Inc. (collectively, "Invesco Aim").(1)
INTRODUCTION
OUR BELIEF
The AIM Funds Boards of Trustees and Invesco Aim's investment professionals expect a high standard of corporate governance from the companies in our portfolios so that Invesco Aim may fulfill its fiduciary obligation to our fund shareholders and other account holders. Well governed companies are characterized by a primary focus on the interests of shareholders, accountable boards of directors, ample transparency in financial disclosure, performance-driven cultures and appropriate consideration of all stakeholders. Invesco Aim believes well governed companies create greater shareholder wealth over the long term than poorly governed companies, so we endeavor to vote in a manner that increases the value of our investments and fosters good governance within our portfolio companies.
In determining how to vote proxy issues, Invesco Aim considers the probable business consequences of each issue and votes in a manner designed to protect and enhance fund shareholders' and other account holders' interests. Our voting decisions are intended to enhance each company's total shareholder value over Invesco Aim's typical investment horizon.
Proxy voting is an integral part of Invesco Aim's investment process. We believe that the right to vote proxies should be managed with the same care as all other elements of the investment process. The objective of Invesco Aim's proxy-voting activity is to promote good governance and advance the economic interests of our clients. At no time will Invesco Aim exercise its voting power to advance its own commercial interests, to pursue a social or political cause that is unrelated to our clients' economic interests, or to favor a particular client or business relationship to the detriment of others.
PROXY ADMINISTRATION
The Invesco Aim Proxy Committee (the "Proxy Committee") consists of members representing Invesco Aim's Investments, Legal and Compliance departments. Invesco Aim's Proxy Voting Guidelines (the "Guidelines") are revised annually by the Proxy Committee, and are approved by the AIM Funds Boards of Trustees. The Proxy Committee implements the Guidelines and oversees proxy voting.
The Proxy Committee has retained outside experts to assist with the analysis and voting of proxy issues. In addition to the advice offered by these experts, Invesco Aim uses information gathered from our own research, company managements, Invesco Aim's portfolio managers and outside shareholder groups to reach our voting decisions.
Generally speaking, Invesco Aim's investment-research process leads us to invest in companies led by management teams we believe have the ability to conceive and execute strategies to outperform their competitors. We select companies for investment based in large part on our assessment of their management teams' ability to create shareholder wealth. Therefore, in formulating our proxy-voting decisions, Invesco Aim gives proper consideration to the recommendations of a company's Board of Directors.
IMPORTANT PRINCIPLES UNDERLYING THE INVESCO AIM PROXY VOTING GUIDELINES
I. ACCOUNTABILITY
Management teams of companies are accountable to their boards of directors, and directors of publicly held companies are accountable to their shareholders. Invesco Aim endeavors to vote the proxies of its portfolio companies in a manner that will reinforce the notion of a board's accountability to its shareholders. Consequently, Invesco Aim votes against any actions that would impair the rights of shareholders or would reduce shareholders' influence over the board or over management.
The following are specific voting issues that illustrate how Invesco Aim applies this principle of accountability.
- Elections of directors. In uncontested director elections for companies that do not have a controlling shareholder, Invesco Aim votes in favor of slates if they are comprised of at least a majority of independent directors and if the boards' key committees are fully independent. Key committees include the Audit, Compensation and Governance or Nominating Committees. Invesco Aim's standard of independence excludes directors who, in addition to the directorship, have any material business or family relationships with the companies they serve.
Contested director elections are evaluated on a case-by-case basis and are decided within the context of Invesco Aim's investment thesis on a company.
- Director performance. Invesco Aim withholds votes from directors who exhibit a lack of accountability to shareholders, either through their level of attendance at meetings or by enacting egregious corporate-governance or other policies. In cases of material financial restatements, accounting fraud, habitually late filings, adopting shareholder rights plan ("poison pills") without shareholder approval, or other areas of poor performance, Invesco Aim may withhold votes from some or all of a company's directors. In situations where directors' performance is a concern, Invesco Aim may also support shareholder proposals to take corrective actions such as so-called "clawback" provisions.
- Auditors and Audit Committee members. Invesco Aim believes a company's Audit Committee has a high degree of responsibility to shareholders in matters of financial disclosure, integrity of the financial statements and effectiveness of a company's internal controls. Independence, experience and financial expertise are critical elements of a well-functioning Audit Committee. When electing directors who are members of a company's Audit Committee, or when ratifying a company's auditors, Invesco Aim considers the past performance of the Committee and holds its members accountable for the quality of the company's financial statements and reports.
- Majority standard in director elections. The right to elect directors is the single most important mechanism shareholders have to promote accountability. Invesco Aim supports the nascent effort to reform the U.S. convention of electing directors, and votes in favor of proposals to elect directors by a majority vote.
- Classified boards. Invesco Aim supports proposals to elect directors annually instead of electing them to staggered multi-year terms because annual elections increase a board's level of accountability to its shareholders.
- Supermajority voting requirements. Unless proscribed by law in the state of incorporation, Invesco Aim votes against actions that would impose any supermajority voting requirement, and supports actions to dismantle existing supermajority requirements.
- Responsiveness. Invesco Aim withholds votes from directors who do not adequately respond to shareholder proposals that were approved by a majority of votes cast the prior year.
- Cumulative voting. The practice of cumulative voting can enable minority shareholders to have representation on a company's board. Invesco Aim supports proposals to institute the practice of cumulative voting at companies whose overall corporate-governance standards indicate a particular need to protect the interests of minority shareholders.
- Shareholder access. On business matters with potential financial consequences, Invesco Aim votes in favor of proposals that would increase shareholders' opportunities to express their views to boards of directors, proposals that would lower barriers to shareholder action and proposals to promote the adoption of generally accepted best practices in corporate governance.
II. INCENTIVES
Invesco Aim believes properly constructed compensation plans that include equity ownership are effective in creating incentives that induce managements and employees of our portfolio companies to create greater shareholder wealth. Invesco Aim supports equity compensation plans that promote the proper alignment of incentives, and votes against plans that are overly dilutive to existing shareholders, plans that contain objectionable structural features, and plans that appear likely to reduce the value of an account's investment.
Following are specific voting issues that illustrate how Invesco Aim evaluates incentive plans.
- Executive compensation. Invesco Aim evaluates compensation plans for executives within the context of the company's performance under the executives' tenure. Invesco Aim believes independent compensation committees are best positioned to craft executive-compensation plans that are suitable for their company-specific circumstances. We view the election of those independent compensation committee members as the appropriate mechanism for shareholders to express their approval or disapproval of a company's compensation practices. Therefore, Invesco Aim generally does not support shareholder proposals to limit or eliminate certain forms of executive compensation. In the interest of reinforcing the notion of a compensation committee's accountability to shareholders, Invesco Aim supports proposals requesting that companies subject each year's compensation record to an advisory shareholder vote, or so-called "say on pay" proposals.
- Equity-based compensation plans. When voting to approve or reject equity-based compensation plans, Invesco Aim compares the total estimated cost of the plans, including stock options and restricted stock, against a carefully selected peer group and uses multiple performance metrics that help us determine whether the incentive structures in place are creating genuine shareholder wealth. Regardless of a plan's estimated cost relative to its peer group, Invesco Aim votes against plans that contain structural features that would impair the alignment of incentives between shareholders and management. Such features include the ability to reprice or reload options without shareholder approval, the ability to issue options below the stock's current market price, or the ability to automatically replenish shares without shareholder approval.
- Employee stock-purchase plans. Invesco Aim supports employee stock-purchase plans that are reasonably designed to provide proper incentives to a broad base of employees, provided that the price at which employees may acquire stock is at most a 15 percent discount from the market price.
- Severance agreements. Invesco Aim generally votes in favor of proposals requiring advisory shareholder ratification of executives' severance agreements. However, we oppose proposals requiring such agreements to be ratified by shareholders in advance of their adoption.
III. CAPITALIZATION
Examples of management proposals related to a company's capital structure include authorizing or issuing additional equity capital, repurchasing outstanding stock, or enacting a stock split or reverse stock split. On requests for additional capital stock, Invesco Aim analyzes the company's stated reasons for the request. Except where the request could adversely affect the fund's ownership stake or voting rights, AIM generally supports a board's decisions on its needs for additional capital stock. Some capitalization proposals require a case-by-case analysis within the context of Invesco Aim's investment thesis on a company. Examples of such proposals include authorizing common or preferred stock with special voting rights, or issuing additional stock in connection with an acquisition.
IV. MERGERS, ACQUISITIONS AND OTHER CORPORATE ACTIONS
Issuers occasionally require shareholder approval to engage in certain corporate actions such as mergers, acquisitions, name changes, dissolutions, reorganizations, divestitures and reincorporations. Invesco Aim analyzes these proposals within the context of our investment thesis on the company, and determines its vote on a case-by-case basis.
V. ANTI-TAKEOVER MEASURES
Practices designed to protect a company from unsolicited bids can adversely affect shareholder value and voting rights, and they create conflicts of interests among directors, management and shareholders. Except under special issuer-specific circumstances, Invesco Aim votes to reduce or eliminate such measures. These measures include adopting or renewing "poison pills", requiring supermajority voting on certain corporate actions, classifying the election of directors instead of electing each director to an annual term, or creating separate classes of common or preferred stock with special voting rights. Invesco Aim generally votes against management proposals to impose these types of measures, and generally votes for shareholder proposals designed to reduce such measures. Invesco Aim supports shareholder proposals directing companies to subject their anti-takeover provisions to a shareholder vote.
VI. SHAREHOLDER PROPOSALS ON CORPORATE GOVERNANCE
Invesco Aim generally votes for shareholder proposals that are designed to protect shareholder rights if a company's corporate-governance standards indicate that such additional protections are warranted.
VII. SHAREHOLDER PROPOSALS ON SOCIAL RESPONSIBILITY
The potential costs and economic benefits of shareholder proposals seeking to amend a company's practices for social reasons are difficult to assess. Analyzing the costs and economic benefits of these proposals is highly subjective and does not fit readily within our framework of voting to create greater shareholder wealth over Invesco Aim's typical investment horizon. Therefore, Invesco Aim abstains from voting on shareholder proposals deemed to be of a purely social, political or moral nature.
VIII. ROUTINE BUSINESS MATTERS
Routine business matters rarely have a potentially material effect on the economic prospects of fund holdings, so we generally support the board's discretion on these items. However, Invesco Aim votes against proposals where there is insufficient information to make a decision about the nature of the proposal. Similarly, Invesco Aim votes against proposals to conduct other unidentified business at shareholder meetings.
SUMMARY
These Guidelines provide an important framework for making proxy-voting decisions, and should give fund shareholders and other account holders insight into the factors driving Invesco Aim's decisions. The Guidelines cannot address all potential proxy issues, however. Decisions on specific issues must be made within the context of these Guidelines and within the context of the investment thesis of the funds and other accounts that own the company's stock. Where a different investment thesis is held by portfolio managers who may hold stocks in common, Invesco Aim may vote the shares held on a fund-by-fund or account-by-account basis.
EXCEPTIONS
In certain circumstances, Invesco Aim may refrain from voting where the economic cost of voting a company's proxy exceeds any anticipated benefits of that proxy proposal.
SHARE-LENDING PROGRAMS
One reason that some portion of Invesco Aim's position in a particular security might not be voted is the securities lending program. When securities are out on loan and earning fees for the lending fund, they are transferred into the borrower's name. Any proxies during the period of the loan are voted by the borrower. The lending fund would have to terminate the loan to vote the company's proxy, an action that is not generally in the best economic interest of fund shareholders. However, whenever Invesco Aim determines that the benefit to shareholders or other account holders of voting a particular proxy outweighs the revenue lost by terminating the loan, we recall the securities for the purpose of voting the fund's full position.
"SHARE-BLOCKING"
Another example of a situation where Invesco Aim may be unable to vote is in countries where the exercise of voting rights requires the fund to submit to short-term trading restrictions, a practice known as "share-blocking." Invesco Aim generally refrains from voting proxies in share-blocking countries unless the portfolio manager determines that the benefit to fund shareholders and other account holders of voting a specific proxy outweighs the fund's or other account's temporary inability to sell the security.
INTERNATIONAL CONSTRAINTS
An additional concern that sometimes precludes our voting non-U.S. proxies is our inability to receive proxy materials with enough time and enough information to make a voting decision. In the great majority of instances, however, we are able to vote non-U.S. proxies successfully. It is important to note that Invesco Aim makes voting decisions for non-U.S. issuers using these Guidelines as our framework, but also takes into account the corporate-governance standards, regulatory environment and generally accepted best practices of the local market.
EXCEPTIONS TO THESE GUIDELINES
Invesco Aim retains the flexibility to accommodate company-specific situations where strictly adhering to the Guidelines would lead to a vote that the Proxy Committee deems not to be in the best interest of the funds' shareholders and other account holders. In these situations, the Proxy Committee will vote the proxy in the manner deemed to be in the best interest of the funds' shareholders and other account holders, and will promptly inform the funds' Boards of Trustees of such vote and the circumstances surrounding it.
RESOLVING POTENTIAL CONFLICTS OF INTEREST
A potential conflict of interest arises when Invesco Aim votes a proxy for an issuer with which it also maintains a material business relationship. Examples could include issuers that are distributors of Invesco Aim's products, or issuers that employ Invesco Aim to manage portions of their retirement plans or treasury accounts. Invesco Aim reviews each proxy proposal to assess the extent, if any, to which there may be a material conflict between the interests of the fund shareholders or other account holders and Invesco Aim.
Invesco Aim takes reasonable measures to determine whether a potential conflict may exist. A potential conflict is deemed to exist only if one or more of the Proxy Committee members actually knew or should have known of the potential conflict.
If a material potential conflict is deemed to exist, Invesco Aim may resolve the
potential conflict in one of the following ways: (1) if the proposal that gives
rise to the potential conflict is specifically addressed by the Guidelines,
Invesco Aim may vote the proxy in accordance with the predetermined Guidelines;
(2) Invesco Aim may engage an independent third party to determine how the proxy
should be voted; or (3) Invesco Aim may establish an ethical wall or other
informational barrier between the persons involved in the potential conflict and
the
persons making the proxy-voting decision in order to insulate the potential conflict from the decision makers.
Because the Guidelines are pre-determined and crafted to be in the best economic interest of shareholders and other account holders, applying the Guidelines to vote client proxies should, in most instances, adequately resolve any potential conflict of interest. As an additional safeguard against potential conflicts, persons from Invesco Aim's marketing, distribution and other customer-facing functions are precluded from becoming members of the Proxy Committee.
On a quarterly basis, the AIM Funds Boards of Trustees review a report from Invesco Aim's Internal Compliance Controls Committee. The report contains a list of all known material business relationships that Invesco Aim maintains with publicly traded issuers. That list is cross-referenced with the list of proxies voted over the period. If there are any instances where Invesco Aim's voting pattern on the proxies of its material business partners is inconsistent with its voting pattern on all other issuers, they are brought before the Trustees and explained by the Chairman of the Proxy Committee.
Personal conflicts of interest. If any member of the Proxy Committee has a personal conflict of interest with respect to a company or an issue presented for voting, that Proxy Committee member will inform the Proxy Committee of such conflict and will abstain from voting on that company or issue.
Funds of funds. Some AIM Funds offering diversified asset allocation within one investment vehicle own shares in other AIM Funds. A potential conflict of interest could arise if an underlying AIM Fund has a shareholder meeting with any proxy issues to be voted on, because Invesco Aim's asset-allocation funds or target-maturity funds may be large shareholders of the underlying fund. In order to avoid any potential for a conflict, the asset-allocation funds and target maturity funds vote their shares in the same proportion as the votes of the external shareholders of the underlying fund.
POLICIES AND VOTE DISCLOSURE
A copy of these Guidelines and the voting record of each AIM Fund are available on our web site, www.invescoaim.com. In accordance with Securities and Exchange Commission regulations, all funds file a record of all proxy-voting activity for the prior 12 months ending June 30th. That filing is made on or before August 31st of each year.
FOOTNOTES
(1) AIM Funds not managed by Invesco Aim Advisors, Inc., are governed by the proxy voting policies of their respective sub-advisors. Proxy Voting Guidelines applicable to AIM CHINA FUND, AIM FLOATING RATE FUND, AIM GLOBAL REAL ESTATE FUND, AIM INTERNATIONAL CORE EQUITY FUND, AIM INTERNATIONAL TOTAL RETURN FUND, AIM JAPAN FUND, AIM LIBOR ALPHA FUND, AIM REAL ESTATE FUND, AIM S&P 500 INDEX FUND, AIM SELECT REAL ESTATE INCOME FUND, AIM STRUCTURED CORE FUND, AIM STRUCTURED GROWTH FUND, AIM STRUCTURED VALUE FUND, AIM TRIMARK ENDEAVOR FUND, AIM TRIMARK FUND, AIM TRIMARK SMALL COMPANIES FUND, SERIES C and SERIES M are available at our website, http://www.invescoaim.com.
PROXY POLICY APPLIES TO THE FOLLOWING:
INVESCO ASSET MANAGEMENT DEUTSCHLAND, GMBH
(INVESCO LOGO)
PROXY VOTING POLICY
INVESCO ASSET MANAGEMENT
DEUTSCHLAND GMBH
December 2007
GENERAL POLICY
INVESCO has responsibility for making investment decisions that are in the best interests of its clients. As part of the investment management services it provides to clients, INVESCO may be authorized by clients to vote proxies appurtenant to the shares for which the clients are beneficial owners.
INVESCO believes that it has a duty to manage clients' assets in the best economic interests of the clients and that the ability to vote proxies is a client asset.
INVESCO reserves the right to amend its proxy policies and procedures from time to time without prior notice to its clients.
PROXY VOTING POLICIES
VOTING OF PROXIES
INVESCO will on a fund by fund basis, decide whether it will vote proxies and if so, for which parts of the portfolio it will voted for. If INVESCO decides to vote proxies, it will do so in accordance with the procedures set forth below. If the client retains in writing the right to vote or if INVESCO determines that any benefit the client might gain from voting a proxy would be outweighed by the costs associated therewith, it will refrain from voting.
BEST ECONOMIC INTERESTS OF CLIENTS
In voting proxies, INVESCO will take into consideration those factors that may affect the value of the security and will vote proxies in a manner in which, in its opinion, is in the best economic interests of clients. INVESCO endeavors to resolve any conflicts of interest exclusively in the best economic interests of clients.
CERTAIN PROXY VOTES MAY NOT BE CAST
In some cases, INVESCO may determine that it is not in the best economic interests of clients to vote proxies. For example, proxy voting in certain countries outside the United States requires share blocking. Shareholders who wish to vote their proxies must deposit their shares 7 to 21 days before the date of the meeting with a designated depositary. During the blocked period, shares to be voted at the meeting cannot be sold until the meeting has taken place and the shares have been returned to the Custodian/Sub-Custodian bank. In addition, voting certain international securities may involve unusual costs to clients. In other cases, it may not be possible to vote certain proxies despite good faith efforts to do so, for instance when inadequate notice of the matter is provided. In the instance of loan securities, voting of proxies typically requires termination of the loan, so it is not usually in the best economic interests of clients to vote proxies on loaned securities. INVESCO typically will not, but reserves the right to, vote where share blocking restrictions, unusual costs or other barriers to efficient voting apply. If
INVESCO does not vote, it would have made the determination that the cost of voting exceeds the expected benefit to the client.
ISS SERVICES
INVESCO has contracted with Institutional Shareholder Services ("ISS"), an
independent third party service provider, to vote INVESCO's clients' proxies
according to ISS's proxy voting recommendations. In addition, ISS will provide
proxy analyses, vote recommendations, vote execution and record-keeping services
for clients for which INVESCO has proxy voting responsibility. On an annual
basis, INVESCO will review information obtained from ISS to ascertain whether
ISS (i) has the capacity and competency to adequately analyze proxy issues, and
(ii) can make such recommendations in an impartial manner and in the best
economic interest of INVESCO's clients. This may include a review of ISS'
Policies, Procedures and Practices Regarding Potential Conflicts of Interests
and obtaining information about the work ISS does for corporate issuers and the
payments ISS receives from such issuers.
Custodians forward proxy materials for clients who rely on INVESCO to vote proxies to ISS. ISS is responsible for exercising the voting rights in accordance with the ISS proxy voting guidelines. If INVESCO receives proxy materials in connection with a client's account where the client has, in writing, communicated to INVESCO that the client, plan fiduciary or other third party has reserved the right to vote proxies, INVESCO will forward to the party appointed by client any proxy materials it receives with respect to the account. In order to avoid voting proxies in circumstances where INVESCO, or any of its affiliates have or may have any conflict of interest, real or perceived, INVESCO has engaged ISS to provide the proxy analyses, vote recommendations and voting of proxies.
In the event that (i) ISS recuses itself on a proxy voting matter and makes no recommendation or (ii) INVESCO decides to override the ISS vote recommendation, the Proxy Voting Committee (PVC) of the International Structured Products Group and the Compliance Officer will review the issue and direct ISS how to vote the proxies as described below.
ISS RECUSAL
When ISS makes no recommendation on a proxy voting issue or is recused due to a conflict of interest, the Proxy Voting Committee (PVC) of the International Structured Products Group and the Compliance Officer will review the issue and, if INVESCO does not have a conflict of interest, direct ISS how to vote the proxies. In such cases where INVESCO has a conflict of interest, INVESCO, in its sole discretion, shall either (a) vote the proxies pursuant to ISS's general proxy voting guidelines, (b) engage an independent third party to provide a vote recommendation, or (c) contact its client(s) for direction as to how to vote the proxies.
OVERRIDE OF ISS RECOMMENDATION
There may be occasions where the INVESCO investment personnel or senior officers seek to override ISS's recommendations if they believe that ISS's recommendations are not in accordance with the best economic interests of clients. In the event that an individual listed above
in this section disagrees with an ISS recommendation on a particular voting issue, the individual shall document in writing the reasons that he/she believes that the ISS recommendation is not in accordance with clients' best economic interests and submit such written documentation to the Proxy Voting Committee (PVC) of the International Structured Products Group. Upon review of the documentation and consultation with the individual and others as the PVC deems appropriate, the PVC together with the Compliance Officer may make a determination to override the ISS voting recommendation if they determine that it is in the best economic interests of clients.
PROXY VOTING RECORDS
Clients may obtain information about how INVESCO voted proxies on their behalf by contacting their client services representative. Alternatively, clients may make a written request for proxy voting information.
CONFLICTS OF INTEREST
PROCEDURES TO ADDRESS CONFLICTS OF INTEREST AND IMPROPER INFLUENCE
In order to avoid voting proxies in circumstances where INVESCO or any of its affiliates have or may have any conflict of interest, real or perceived, INVESCO has contracted with ISS to provide proxy analyses, vote recommendations and voting of proxies. Unless noted otherwise by ISS, each vote recommendation provided by ISS to INVESCO includes a representation from ISS that ISS faces no conflict of interest with respect to the vote. In instances where ISS has recused itself and makes no recommendation on a particular matter or if an override submission is requested, the Proxy Voting Committee (PVC) of the International Structured Products Group together with the Compliance Officer shall determine how the proxy is to be voted and instruct accordingly in which case the conflict of interest provisions discussed below shall apply.
In effecting the policy of voting proxies in the best economic interests of clients, there may be occasions where the voting of such proxies may present a real or perceived conflict of interest between INVESCO, as the investment manager, and clients.
For each director, officer and employee of INVESCO ("INVESCO person"), the interests of INVESCO's clients must come first, ahead of the interest of INVESCO and any person within the INVESCO organization, which includes INVESCO's affiliates.
Accordingly, each INVESCO person must not put "personal benefit," whether tangible or intangible, before the interests of clients of INVESCO or otherwise take advantage of the relationship to INVESCO's clients. "Personal benefit" includes any intended benefit for oneself or any other individual, company, group or organization of any kind whatsoever, except a benefit for a client of INVESCO, as appropriate. It is imperative that each of INVESCO's directors, officers and employees avoid any situation that might compromise, or call into question, the exercise of fully independent judgment in the interests of INVESCO's clients.
Occasions may arise where a person or organization involved in the proxy voting process may have a conflict of interest. A conflict of interest may also exist if INVESCO has a business relationship with (or is actively soliciting business from) either the company soliciting the proxy or a third party that has a material interest in the outcome of a proxy vote or that is actively lobbying for a particular outcome of a proxy vote. An INVESCO person shall not be considered to have a conflict of interest if the INVESCO person did not know of the conflict of interest and did not attempt to influence the outcome of a proxy vote. Any individual with actual knowledge of a conflict of interest relating to a particular referral item shall disclose that conflict to the Compliance Officer.
The following are examples of situations where a conflict may exist:
- Business Relationships - where INVESCO manages money for a company or an employee group, manages pension assets or is actively soliciting any such business, or leases office space from a company;
- Personal Relationships - where a INVESCO person has a personal relationship with other proponents of proxy proposals, participants in proxy contests, corporate directors, or candidates for directorships; and
- Familial Relationships - where an INVESCO person has a known familial relationship relating to a company (e.g. a spouse or other relative who serves as a director of a public company or is employed by the company).
In the event that INVESCO (or an affiliate) manages assets for a company, its pension plan, or related entity and where clients' funds are invested in that company's shares, it will not take into consideration this relationship and will vote proxies in that company solely in the best economic interest of its clients.
It is the responsibility of the INVESCO person to report any real or potential conflict of interest of which such individual has actual knowledge to the Compliance Officer, who shall present any such information to the Head of Continental Europe Compliance. However, once a particular conflict has been reported to the Compliance Officer, this requirement shall be deemed satisfied with respect to all individuals with knowledge of such conflict.
In addition, any INVESCO person who submits an ISS override recommendation to the Proxy Voting Committee (PVC) of the International Structured Products Group shall certify as to their compliance with this policy concurrently with the submission of their override recommendation. A form of such certification is attached as Appendix A hereto.
In addition, the Proxy Voting Committee (PVC) of the International Structured Products Group must notify INVESCO's Compliance Officer with impunity and without fear of retribution or retaliation, of any direct, indirect or perceived improper influence made by anyone within INVESCO or by an affiliated company's representatives with regard to how INVESCO should vote proxies. The Compliance Officer will investigate the allegations and will report his or her findings to the INVESCO Risk Management Committee and to the Head of Continental Europe Compliance. In the event that it is determined that improper influence was made, the Risk Management Committee will determine the appropriate action to take which may include, but is
not limited to, (1) notifying the affiliated company's Chief Executive Officer, its Management Committee or Board of Directors, (2) taking remedial action, if necessary, to correct the result of any improper influence where clients have been harmed, or (3) notifying the appropriate regulatory agencies of the improper influence and to fully cooperate with these regulatory agencies as required. In all cases, the Proxy Voting Committee (PVC) of the International Structured Products Group together with the Compliance Officer shall not take into consideration the improper influence in determining how to vote proxies and will vote proxies solely in the best economic interest of clients.
ISS PROXY VOTING GUIDELINES
A copy of the most recent ISS Proxy Voting Guidelines Summary can be found on ISS's website at www.issproxy.com. From this website, click on ISS Governance Services tab, next click on "Policy Gateway", next click on "2008 Policy Information", and then click on "Download 2008 U.S. Proxy Voting Guidelines Summary."
APPENDIX A
ACKNOWLEDGEMENT AND CERTIFICATION
I acknowledge that I have read the INVESCO Proxy Voting Policy (a copy of which has been supplied to me, which I will retain for future reference) and agree to comply in all respects with the terms and provisions thereof. I have disclosed or reported all real or potential conflicts of interest to the INVESCO Compliance Officer and will continue to do so as matters arise. I have complied with all provisions of this Policy.
PROXY POLICY APPLIES TO THE FOLLOWING:
INVESCO ASSET MANAGEMENT LIMITED
INVESCO PERPETUAL
POLICY ON CORPORATE GOVERNANCE
1. INTRODUCTION
INVESCO PERPETUAL (IP) has adopted a clear and considered policy towards its responsibility as a shareholder. As part of this policy, IP will take steps to satisfy itself about the extent to which the companies in which it invests comply with local recommendations and practices, such as the UK Combined Code issued by the Committee on Corporate Governance and/or the US Department of Labour Interpretive Bulletins.
2. RESPONSIBLE VOTING
IP has a responsibility to optimise returns to its clients. As a core part of the investment process, Fund Managers will endeavour to establish a dialogue with management to promote company decision making that is in the best interests of shareholders, and is in accordance with good Corporate Governance principles.
IP considers that shareholder activism is fundamental to good Corporate Governance. Whilst this does not entail intervening in daily management decisions, it does involve supporting general standards for corporate activity and, where necessary, taking the initiative to ensure those standards are met.
One important means of putting shareholder responsibility into practice is via the exercising of voting rights. In deciding whether to vote shares, IP will take into account such factors as the likely impact of voting on management activity, and where expressed, the preference of clients. As a result of these two factors, IP will tend to vote on all UK and European shares, but to vote on a more selective basis on other shares. (See Appendix I - Voting on non-UK/European shares)
IP considers that the voting rights attached to its clients' investments should be actively managed with the same duty of care as that applied to all other aspects of asset administration. As such, voting rights will be exercised on an informed and independent basis, and will not simply be passed back to the company concerned for discretionary voting by the Chairman. In doing this, IP will have in mind three objectives:
i) To protect the rights of its clients
ii) To minimise the risk of financial or business impropriety within the companies in which its clients are invested, and
iii) To protect the long-term value of its clients' investments.
It is important to note that, when exercising voting rights, a third option of abstention can also be used as a means of expressing dissatisfaction, or lack of support, to a Board on a particular issue. Additionally, in the event of a conflict of interest arising between IP and its clients over a specific issue, IP will either abstain or seek instruction from each client.
IP will exercise actively the voting rights represented by the shares it manages on behalf of its investors.
Note: Share Blocking
Generally, IP will not vote where this results in shares being blocked from trading for a period of more than a few hours. IP considers that it is not in the interest of clients that their shares are blocked at a potentially sensitive time, such as that around a shareholder meeting.
3. VOTING PROCEDURES
IP will endeavour to keep under regular review with trustees, depositaries and custodians the practical arrangements for circulating company resolutions and notices of meetings and for exercising votes in accordance with standing or special instructions.
IP will endeavour to review regularly any standing or special instructions on voting and where possible, discuss with company representatives any significant issues.
IP will take into account the implications of stock lending arrangements where this is relevant (that is, when stock is lent to the extent permitted by local regulations, the voting rights attaching to that stock pass to the borrower).
4. DIALOGUE WITH COMPANIES
IP will endeavour, where practicable in accordance with its investment processes, to enter into a dialogue with companies based on the mutual understanding of objectives. This dialogue is likely to include regular meetings with company representatives to explore any concerns about corporate governance where these may impact on the best interests of clients. In discussion with Company Boards and senior non-Executive Directors, IP will endeavour to cover any matters with particular relevance to shareholder value.
Specifically when considering resolutions put to shareholders, IP will pay attention to the companies' compliance with the relevant local requirements. In addition, when analysing the
company's prospects for future profitability and hence returns to shareholders, IP will take many variables into account, including but not limited to, the following:
- Nomination and audit committees
- Remuneration committee and directors' remuneration
- Board balance and structure
- Financial reporting principles
- Internal control system and annual review of its effectiveness
- Dividend and Capital Management policies
5. NON-ROUTINE RESOLUTIONS AND OTHER TOPICS
These will be considered on a case-by-case basis and where proposals are put to the vote will require proper explanation and justification by (in most instances) the Board. Examples of such would be all SRI issues (i.e. those with social, environmental or ethical connotations), political donations, and any proposal raised by a shareholder or body of shareholders (typically a pressure group).
Apart from the three fundamental voting objectives set out under 'Responsible Voting' above, considerations that IP might apply to non-routine proposals will include:
i) The degree to which the company's stated position on the issue could affect its reputation and/or sales, or leave it vulnerable to boycott or selective purchasing
ii) What other companies have done in response to the issue
iii) Whether implementation would achieve the objectives sought in the proposal
iv) Whether the matter is best left to the Board's discretion.
6. EVALUATION OF COMPANIES' CORPORATE GOVERNANCE ARRANGEMENTS
IP will, when evaluating companies' governance arrangements, particularly those relating to board structure and composition, give due weight to all relevant factors drawn to their attention.
7. DISCLOSURE
On request from clients, IP will in good faith provide records of voting instructions given to third parties such as trustees, depositaries and custodians provided that
(i) in IP's discretion, to do so does not conflict with the best interests of other clients and
(ii) it is understood that IP will not be held accountable for the expression of views within such voting instructions and
(iii) IP are not giving any assurance nor undertaking any obligation to ensure that such instructions resulted in any votes actually being cast. Records of voting instructions within the immediate preceding 3 months will not normally be provided.
Note: The record of votes will reflect the voting instruction of the relevant Fund Manager. This may not be the same as votes actually cast as IP is entirely reliant on third parties complying promptly with such instructions to ensure that such votes are cast correctly. Accordingly, the provision of information relating to an instruction does not mean that a vote was actually cast, just that an instruction was given in accordance with a particular view taken.
APPENDIX I
VOTING ON NON-UK/EUROPEAN SHARES
When deciding whether to exercise the voting rights attached to its clients' non-UK/European shares, IP will take into consideration a number of factors. These will include:
- the likely impact of voting on management activity, versus the cost to the client
- the portfolio management restrictions (e.g. share blocking) that may result from voting
- the preferences, where expressed, of clients
Generally, IP will vote on non-UK/European shares by exception only, except where the client or local regulator expressly requires voting on all shares.
SHARE BLOCKING
Generally, IP will not vote where this results in shares being blocked from trading for a period of more than a few hours. IP considers that it is not in the interest of clients that their shares are blocked at a potentially sensitive time, such as that around a shareholder meeting.
PROXY POLICY APPLIES TO THE FOLLOWING:
INVESCO ASSET MANAGEMENT (JAPAN) LIMITED
(Quick Translation)
INTERNAL RULES ON PROXY VOTING EXECUTION
(PURPOSE)
ARTICLE 1
INVESCO Asset Management (Japan) Limited (referred to as "INVESCO" thereafter)] assumes a fiduciary responsibility to vote proxies in the best interest of its trustors and beneficiaries. In addition, INVESCO acknowledges its responsibility as a fiduciary to vote proxies prudently and solely for the purpose of maximizing the economic values of trustors (investors) and beneficiaries. So that it may fulfill these fiduciary responsibilities to trustors (investors) and beneficiaries , INVESCO has adopted and implemented these internal rules reasonably designed to ensure that the business operations of the company to invest are appropriately conducted in the best interest of shareholders and are always monitored by the shareholders.
(PROXY VOTING POLICY)
ARTICLE 2
INVESCO exercises the voting right in the best interest of its trustors and beneficiaries not in the interests of the third parties. The interests of trustors and beneficiaries are defined as the increase of the value of the enterprise or the expansion of the economic value of the shareholders or to protect these values from the impairment.
(VOTING EXERCISE STRUCTURE)
ARTICLE 3
Please refer to the Article 2 of Proxy Voting basic Policy as per attached.
(PROXY VOTING GUIDELINES)
ARTICLE 4
Please refer to Proxy Voting Guidelines (Attachment 2).
(PROXY VOTING PROCESS)
ARTICLE 5
1. DOMESTIC EQUITIES
(1) Notification on the shareholder meeting will be delivered to Operations from trustee banks which will be in turn forwarded to the person in charge of equities investment. The instruction shall be handled by Operations.
(2) The person in charge of equities investment scrutinizes the subjects according to the "Screening Standard" and forward them to the proxy voting committee("Committee").
(3) In case of asking for the outside counsel, to forward our proxy voting guidelines("Guidlines") to them beforehand and obtain their advice
(4) In either case of [2] or [3], the person in charge shall make proposal to the committee to ask for their "For", "Against", "Abstention", etc.
(5) The committee scrutinizes the respective subjects and approves/disapproves with the quorum of two thirds according to the Guidelines.
(6) In case where as to the subject which the Committee judges as inappropriate according to the Guidelines and/or the subject which cannot obtain the quorum, the Committee will be held again to discuss the subject.
2. FOREIGN EQUITIES
(1) As to the voting exercise of the foreign equities, we shall consider the manners and customs of the foreign countries as well as the costs.
(2) As to the voting process, the above process of the domestic equities shall be accordingly adjusted and applied.
(DISCLOSURE OF INFORMATION)
ARTICLE 6
In case of the request from the customers, we can disclose the content.
(VOTING RECORD)
ARTICLE 7
[ ] The Committee preserves the record of Attachment 1 for one year.
[ ] The administration office is the Investment Division which shall preserve all the related documents of this voting process.
[ ] Operations which handle the instruction shall preserve the instruction documents for 10 years after the termination of the ITM funds or the termination of the investment advisory contracts.
Article 8 and addendum are omitted.
PROXY VOTING BASIC POLICY
1. Basic Thought on Proxy Voting
- INVESCO makes efforts to maximize the entrusted assets in terms of fiduciary duties in investing the funds entrusted by the trustors (investors ) and the beneficiaries.
- For the purpose of maximizing the invested assets and the value of the equities, INVESCO always monitors the invested companies to operate appropriately as a shareholder in the best interests of the shareholders.
- From the above point of view, INVESCO has adopted and implemented this Proxy Voting Basic Policy and Proxy Voting Policy and Procedure to fulfill the proxy voting rights properly.
- In exercising the proxy voting rights, INVESCO fulfills the voting rights in the benefits of the trustors (investors ) and the beneficiaries not in the benefits of the third parties.
2. Voting Process and Structure
- INVESCO establishes the Proxy Voting Committee (referred to as "Committee" thereafter) which executes the proxy voting rights.
- The Committee is composed of the chairman who is designated by Japanese Management Committee (referred to as "J-Mac" thereafter) and the members appointed by the chairman. Persons in charge of Investment Division and Legal & Compliance Division shall be mandatory members.
- The Committee has been delegated the judgment power to execute the voting right from the J-Mac.
- The Committee has worked out the subjects according to the pre-determined "Screening Standard" in terms of benefits of the shareholders and executes the voting rights based on the "Proxy Voting Guidelines".
- The Committee is occasionally taken the advice from the outside parties according to the "Proxy Voting Guidelines".
The Committee is held on a monthly basis and the result of the voting execution is to be reported to J-Mac on a monthly basis at least.
3. Screening Standard
For the purpose of efficient voting execution, INVESCO implements the following screening criteria. The companies fallen under this screening criteria shall be scrutinized according to "Voting Guidelines".
(1) Quantitative Standard
1) Low profit margin of operational income and recurrent income for certain periods
2) Negative Net Assets/Insolvency
3) Extremely High Dividend Ratios or Low Dividend Ratios
(2) Qualitative Standard
1) In breach of the substantial laws or anti-social activities for the past one year
2) Impairment of the interests of the shareholders for the past one year
(3) Others
1) External Auditor's Audit Report with the limited auditor's opinion
2) Shareholders' proposals
4. Proxy Voting Guidelines
(1) General Subjects
1) Any violation of laws and anti-social activities ?
2) Inappropriate disclosure which impairs the interests of shareholders ?
3) Enough Business Improvement Efforts ?
(2) Subjects on Financial Statements
Any reasonable reasons for Interest Appropriation/Loss Disposal ?
(3) Amendments to Articles of Incorporations, etc
Any possibility of the limitation to the shareholder's rights ?
(4) Directors/Statutory Auditors
Appointment of the unqualified person, or inappropriate amount of payment/gifts to the unqualified person ?
(5) Capital Policy/Business Policy
Unreasonable policy in terms of maximization of the shareholders' interests ?
(6) Others
1)Shareholder's Proposals
Contribution to the increase of the shareholders' economic interests ?
2)Appointment of Auditor
Any problem of independency ?
Voting Screening Criteria & Decision Making Documents (Attachment 1)
Company Name: Year Month ------------- ---- ----- |
Screening Criteria: Quantitative Criteria (consolidated or (single))
Yes No
--- ---
Consecutive unprofitable settlements for the past 3 years
Consecutive Non dividend payments for the past 3 years
Operational loss for the most recent fiscal year
Negative net assets for the most recent fiscal year
Less than 10% or more than 100% of the dividend ratios for the most
recent fiscal year
|
Screening Criteria/Qualitative Criteria
Yes No
--- ---
Substantial breach of the laws/anti-social activities for the past
one year
|
If Yes, describe the content of the breach of the law/anti-social activities:
Others, especially, any impairment of the value of the shareholders for the past one year
If Yes, describe the content of the impairment of the value of shareholders:
Others
Yes No
--- ---
External Auditor's report with the limited auditor's opinion
Shareholder's proposal
|
Person in charge of equities investment Initial Signature
- If all Nos (ARROW) No objection to the agenda of the shareholders' meeting
- If one or more Yes (ARROW)(Person in charge of equities investment shall fill Out the blanks below and forward to the Committee)
Proposal on Voting Execution
Reason for judgment
Chairman For Against Initial Signature |
Member For Against Initial Signature Member For Against Initial Signature Member For Against Initial Signature Member For Against Initial Signature Member For Against Initial Signature |
(Attachment 2)
Proxy Voting Guidelines
1. PURPORT OF GUIDELINES
Pursuant to Article 2 of Proxy Voting Policy and Procedure, INVESCO has adopted and implemented the following guidelines and hereby scrutinizes and decides the subjects one by one in light of the guidelines.
2. GUIDELINES
(1) General Subjects
1) Any violation of laws and anti-social activities ?
- To scrutinize and judge respectively the substantial impact over the company's business operations by the above subjects or the impairment of the shareholders' economic value.
2) Inappropriate disclosure which impairs the interests of shareholders ?
- To scrutinize and judge respectively the potential impairment of the shareholder's economic value.
3) Enough Business Improvement Efforts ?
- Although the continuous extremely unprofitable and the extremely bad performance, the management is in short of business improvement efforts. To scrutinize and judge respectively the cases.
(2) Subjects on Financial Statements
1) Interest Appropriation Plan
(1) Interest Appropriation Plan (Dividends)
- To basically approve unless the extremely overpayment or minimum payment of the dividends
(2) Interest Appropriation Plan (Bonus payment to corporate officers)
- To basically agree but in case where the extremely unprofitable, for example, the consecutive unprofitable and no dividend payments or it is apparent of the impairment of the shareholder's value, to request to decrease the amount or no bonus payment.
(3) To basically disagree to the interest appropriation plan if no dividend payments but to pay the bonus to the corporate officers without prior assessment.
2) Loss Disposal Plan
To scrutinize and judge respectively
(3) Amendments to Articles of Incorporation, etc.
1. Company Name Change/Address Change, etc.
2. Change of Purpose/Method of Public Announcement
3. Change of Business Operations, etc.
4. Change of Stipulations on Shareholders/Shareholders Meeting
5. Change of Stipulations on Directors/Board of Directors/Statutory Auditors
- To basically approve however, in case of the possibility of the limitation to the shareholders' rights, to judge respectively
(4) Subjects on Corporate Organization
1) Composition of Board of Directors Meeting, etc
- To basically approve the introduction of "Committee Installation Company" or "Substantial Asset Control Institution"
- To basically approve the introduction of the corporate officer institution. Provided, however, that in case where all directors are concurrent with those committee members and the institutions, to basically disagree. In case of the above introduction, to basically disapprove to the decrease of the board members or adjustment of the remuneration.
2) Appointment of Directors
- To basically disagree in case where the increase of the board members which is deemed to be overstaffed and no explanatory comments on the increase. In case of 21 or more board members, to respectively judge.
- To basically disagree the re-appointment of the existing directors in case where the consecutive unprofitable settlements for the past 3 years and the consecutive 3 year no dividend payments, or the consecutive decrease in the net profits for the past 5 years.
- To basically disagree the re-appointment of the existing directors in case where the scandal of the breach of the laws and the anti-social activities occurred and caused the substantial impact over the business operations during his/her assignment.
3) Appointment of Outside Directors
- To basically agree after the confirmation of its independency based on the information obtained from the possible data sources.
- To basically disagree the decrease in number.
- To basically disagree the job concurrence of the competitors' CEO, COO,CFO or concurrence of the outside directors of 4 or more companies.
- To basically disagree in case of no-independence of the company
- To basically disagree the extension of the board of directors' term.
4) Appointment of Statutory Auditors
- To basically disagree the appointment of the candidate who is appointed as a director and a statutory auditor by turns.
- To basically disagree the re-appointment of the existing directors in case where the scandal of the breach of the laws and the anti-social activities occurred and caused the substantial impact over the business operations during his/her assignment.
5) Appointment of Outside Statutory Auditors
- To basically disagree in case where the outside statutory auditor is not actually the outside auditor (the officer or employee of the parent company, etc.)
- To basically disagree in case where the reason of the decrease in the number is not clearly described.
- To basically agree in case where the introduction of the "Statutory Auditor Appointment Committee" which includes plural outside statutory auditors.
(5) Officer Remuneration/officer Retirement Allowances
1) Officer Remuneration
- To basically disagree the amendment of the officer remuneration (unless the decrease in amount or no payment) in case where the consecutive unprofitable settlements for the past 3 years and the consecutive 3 year no dividend payments, or the consecutive decrease in the net profits for the past 5 years.
- To basically disagree and scrutinize respectively in case where no sufficient explanation of the substantial increase (10% or more per head), or no decrease of the remuneration amount if the number of the officers decrease.
2) Officer Retirement Allowance
- To basically approve
- To basically disapprove in case where the payment of the allowance to the outside statutory auditors and the outside directors.
- To basically disapprove in case where the officer resigned or retired during his/her assignment due to the scandal of the breach of the laws and the anti-social activities.
- To basically disagree in case where the consecutive unprofitable settlements for the past 3 years and the consecutive 3 year no dividend payments, or the consecutive decrease in the net profits for the past 5 years.
(2) Capital Policy/Business Policy
1) Acquisition of Own shares
- To basically approve
- To basically approve the disposition of the own sharers if the disposition ratio of less than 10% of the total issued shares and the shareholders' equities. In case of 10% or more, to respectively scrutinize.
2) Capital Reduction
To basically disagree in case where the future growth of the business might be substantially decreased.
3) Increase of the authorized capital
To basically disagree in case of the substantial increase of the authorized capital taking into consideration the dilution of the voting right(10% or more) and incentive.
4) Granting of the stock options to Directors, Statutory Auditors and Employees :
- To basically approve
- To basically disagree in case where the substantial dilution of the value of the stocks (the potential dilution ration is to increase 5% of the total issued stock number) will occur and accordingly decrease of the shareholders' interests.
- To basically disagree in case where the exercise price is deviated by 10% or more from the market value as of the fiscal year-end
- To basically disagree the decrease of the exercise price
(re-pricing)
- To basically disagree in case where the exercise term remains less than 1 year.
- To basically disagree in case the scope of the option granted objectives (transaction countereparties)is not so closely connected with the better performance.
5) Mergers and Acquisitions
- To basically disagree in case where the terms and conditions are not advantageous and there is no assessment base by the thirdparty.
- To basically disagree in case where the content of the mergers and acquisitions can not be deemed to be reasonable in comparison with the business strategy.
6) Business Transfer/Acceptance
To basically disagree in case where the content of the mergers and acquisitions can not be deemed to be reasonable and extremely unprofitable in comparison with the business strategy.
7) Capital Increase by the allocation to the thirdparties
- To basically analyze on a case by case basis
- Provided, however, that to basically approve in case where the companies under the financial difficulties executes as the restructuring of the business.
(7) Others
1) Appointment of Accountant
- To basically approve
- To basically disapprove on suspicion of its independency.
[ ] To scrutinize the subjects in case where the decline of the re-appointment due to the conflict of the audit policy.
2) Shareholders' proposal
To basically analyze on a case by case basis The basic judgment criterion is the contribution to the increase of the shareholders' value. However, to basically disapprove in case where to maneuver as a method to resolve the specific social and political problems.
PROXY POLICY APPLIES TO THE FOLLOWING:
INVESCO AUSTRALIA LIMITED
PROXY VOTING POLICY
1. Purpose of this Policy
INVESCO recognises its fiduciary obligation to act in the best interests of all clients, be they superannuation trustees, institutional clients, unit-holders in managed investment schemes or personal investors. One way INVESCO represents its clients in matters of corporate governance is through the proxy voting process.
This document sets out INVESCO's policy in relation to proxy voting. It has been approved by the INVESCO Australia Limited Board.
2. Scope
This policy applies to all INVESCO portfolios with the following exceptions:
- "index" or "index like" funds where, due to the nature of the funds, INVESCO will generally abstain from voting;
- private client or discrete wholesale mandates, where the voting policy has been agreed within the mandate;
- where investment management of an international fund has been delegated to an overseas AMVESCAP or INVESCO company, proxy voting will rest with that delegated manager.
3. Policy
In accordance with industry practices and the IFSA standard on proxy voting, our policy is as follows:
- INVESCO's overriding principle is that votes will be cast in the best economic interests of investors.
- INVESCO's intention is to vote on all Australian Company shareholder resolutions however it recognises that in some circumstances it would be inappropriate to vote, or its vote may be immaterial. INVESCO will generally abstain from voting on "routine" company resolutions (eg approval of financial accounts or housekeeping amendments to Articles of Association or Constitution) unless its clients' portfolios in aggregate represent a significant proportion of the shareholdings of the company in question (a significant proportion in this context means 5% or more of the market capitalisation of the company).
- INVESCO will always vote on the following issues arising in company Annual General Meetings where it has the authority to do so on behalf of clients.
- contentious issues (eg. issues of perceived national interest, or where there has been extensive press coverage or public comment);
- employee and executive share and option schemes;
- approval of changes of substantial shareholdings;
- mergers or schemes of arrangement; and
- approval of major asset sales or purchases.
- Management agreements or mandates for individually-managed clients will provide direction as to who has responsibility for voting.
- In the case of existing management agreements which do not contain a provision concerning voting authority or are ambiguous on the subject,
INVESCO will not vote until clear instructions have been received from the client.
- In the case of clients who wish to place special conditions on the delegation of proxy voting powers, INVESCO will endeavour to accommodate those clients' requirements as far as practicable, subject to any administrative obstacles or additional costs that might arise in implementing the conditions.
- In considering proxy voting issues arising in respect of unit-holders in managed investment schemes, INVESCO will act solely in accordance with its fiduciary responsibility to take account of the collective interests of unit-holders in the scheme as a whole. INVESCO cannot accept instructions from individual unit-holders as to the exercise of proxy voting authority in a particular instance.
- In order to facilitate its proxy voting process, INVESCO may retain a professional proxy voting service to assist with in-depth proxy research, vote execution, and the necessary record keeping.
4. Reporting and Disclosure
A written record will be kept of the voting decision in each case, and of the reasons for each decision (including abstentions).
INVESCO will disclose on an annual basis, a summary of its proxy voting statistics on its website as required by IFSA standard No. 13 - Proxy Voting.
5. Conflicts of Interest
All INVESCO employees are under an obligation to be aware of the potential for conflicts of interest with respect to voting proxies on behalf of clients.
INVESCO acknowledges that conflicts of interest do arise and where a conflict of interest is considered material, INVESCO will not vote until a resolution has been agreed upon and implemented.
PROXY POLICY APPLIES
TO THE FOLLOWING:
INVESCO HONG KONG LIMITED
INVESCO HONG KONG LIMITED
PROXY VOTING POLICY
8 APRIL 2004
TABLE OF CONTENTS
Introduction 2 1. Guiding Principles 3 2. Proxy Voting Authority 4 3. Key Proxy Voting Issues 7 4. Internal Admistration and Decision-Making Process 10 5. Client Reporting 12 |
INTRODUCTION
This policy sets out Invesco's approach to proxy voting in the context of our broader portfolio management and client service responsibilities. It applies to Asia related equity portfolios managed by Invesco on behalf of individually-managed clients and pooled fund clients
Invesco's proxy voting policy is expected to evolve over time to cater for changing circumstances or unforeseen events.
1. GUIDING PRINCIPLES
1.1 Invesco recognises its fiduciary obligation to act in the best interests of all clients, be they retirement scheme trustees, institutional clients, unitholders in pooled investment vehicles or personal investors. The application of due care and skill in exercising shareholder responsibilities is a key aspect of this fiduciary obligation.
1.2 The sole objective of Invesco's proxy voting policy is to promote the economic interests of its clients. At no time will Invesco use the shareholding powers exercised in respect of its clients' investments to advance its own commercial interests, to pursue a social or political cause that is unrelated to clients' economic interests, or to favour a particular client or other relationship to the detriment of others.
1.3 Invesco also recognises the broader chain of accountability that exists in the proper governance of corporations, and the extent and limitations of the shareholder's role in that process. In particular, it is recognised that company management should ordinarily be presumed to be best placed to conduct the commercial affairs of the enterprise concerned, with prime accountability to the enterprise's Board of Directors which is in turn accountable to shareholders and to external regulators and exchanges. The involvement of Invesco as an institutional shareholder will not extend to interference in the proper exercise of Board or management responsibilities, or impede the ability of companies to take the calculated commercial risks which are essential means of adding value for shareholders.
1.4 The primary aim of the policy is to encourage a culture of performance among investee companies, rather than one of mere conformance with a prescriptive set of rules and constraints. Rigid adherence to a checklist approach to corporate governance issues is of itself unlikely to promote the maximum economic performance of companies, or to cater for circumstances in which non-compliance with a checklist is appropriate or unavoidable.
1.5 Invesco considers that proxy voting rights are an asset which should be managed with the same care as any other asset managed on behalf of its clients.
2. PROXY VOTING AUTHORITY
2.1 An important dimension of Invesco's approach to corporate governance is the exercise of proxy voting authority at the Annual General Meetings or other decision-making forums of companies in which we manage investments on behalf of clients.
2.2 An initial issue to consider in framing a proxy voting policy is the question of where discretion to exercise voting power should rest - with Invesco as the investment manager, or with each individual client? Under the first alternative, Invesco's role would be both to make voting decisions on clients' behalf and to implement those decisions. Under the second alternative, Invesco would either have no role to play, or its role would be limited solely to implementing voting decisions under instructions from our clients.
2.3 In addressing this issue, it is necessary to distinguish the different legal structures and fiduciary relationships which exist as between individually-managed clients, who hold investments directly on their own accounts, and pooled fund clients, whose investments are held indirectly under a trust structure.
2.4 INDIVIDUALLY-MANAGED CLIENTS
2.4.1 As a matter of general policy, Invesco believes that unless a client's mandate gives specific instructions to the contrary, discretion to exercise votes should normally rest with the investment manager, provided that the discretion is always exercised in the client's interests alone.
2.4.2 The reason for this position is that Invesco believes that, with its dedicated research resources and ongoing monitoring of companies, an investment manager is usually better placed to identify issues upon which a vote is necessary or desirable. We believe it is also more practical that voting discretion rests with the party that has the authority to buy and sell shares, which is essentially what investment managers have been engaged to do on behalf of their clients.
2.4.3 In cases where voting authority is delegated by an individually-managed client, Invesco recognises its responsibility to be accountable for the decisions it makes. If a client requires, an appropriate reporting mechanism will be put in place.
2.4.4 While it is envisaged that the above arrangements will be acceptable in the majority of cases, it is recognised that some individually-managed clients will wish to retain voting authority for themselves, or to place conditions on the circumstances in which it can be exercised by investment managers. In practice, it is believed that this option is generally only likely to arise with relatively large clients such as trustees of major superannuation funds or statutory corporations which have the resources to develop their own policies and to supervise their implementation by investment managers and custodians. In particular, clients who have multiple equity managers and utilise a master custody arrangement may be more likely to consider retaining voting authority in order to ensure consistency of approach across their total portfolio.
2.4.5 In any event, whatever decision is taken as to where voting authority should lie, Invesco believes that the matter should be explicitly covered by the terms of the investment management agreement and clearly understood by the respective parties.
2.4.6 Accordingly, Invesco will pursue the following policies with respect to the exercise of proxy voting authority for individually-managed clients:
PROXY VOTING AUTHORITY
Individually-Managed Clients
Unless an individually-managed client wishes to retain proxy voting authority, Invesco will assume proxy voting authority by way of delegation from the client, provided that the allocation of proxy voting responsibility is clearly set out in the investment management agreement.
In the case of clients who wish to place special conditions on the delegation of proxy voting powers, Invesco will endeavour to accommodate those clients' requirements as far as practicable, subject to any administrative obstacles or additional costs that might arise in implementing the conditions.
2.5 POOLED FUND CLIENTS
2.5.1 The legal relationship between an investment manager and its pooled fund clients is different in a number of important respects from that applying to individually-managed clients. These differences have a bearing on how proxy voting authority is exercised on behalf of pooled fund clients.
2.5.2 These legal relationships essentially mean that the manager is required to act solely in the collective interests of unitholders at large rather than as a direct agent or delegate of each unitholder. On the issue of proxy voting, as with all other aspects of our client relationships, Invesco will naturally continue to be receptive to any views and concerns raised by its pooled fund clients. However, the legal relationship that exists means it is not possible for the manager to accept instructions from a particular pooled fund client as to how to exercise proxy voting authority in a particular instance.
2.5.3 As in the case of individually-managed clients who delegate their proxy voting authority, Invesco's accountability to pooled fund clients in exercising its fiduciary responsibilities is best addressed as part of the manager's broader client relationship and reporting responsibilities.
2.5.4 Accordingly, Invesco will pursue the following policies with respect to the exercise of proxy voting authority for pooled fund clients:
PROXY VOTING AUTHORITY
Pooled Fund Clients
In considering proxy voting issues arising in respect of pooled fund shareholdings, Invesco will act solely in accordance with its fiduciary responsibility to take account of the collective interests of unitholders in the pooled fund as a whole.
Invesco cannot accept instructions from individual unitholders as to the exercise of proxy voting authority in a particular instance.
3. KEY PROXY VOTING ISSUES
3.1 This section outlines Invesco's intended approach in cases where proxy voting authority is being exercised on clients' behalf.
3.2 Invesco will vote on all material issues at all company meetings where it has the voting authority and responsibility to do so. We will not announce our voting intentions and the reasons behind them.
3.3 Invesco applies two underlying principles. First, our interpretation of 'material voting issues' is confined to those issues which affect the value of shares we hold on behalf of clients and the rights of shareholders to an equal voice in influencing the affairs of companies in proportion to their shareholdings. We do not consider it appropriate to use shareholder powers for reasons other than the pursuit of these economic interests. Second, we believe that a critical factor in the development of an optimal corporate governance policy is the need to avoid unduly diverting resources from our primary responsibilities to add value to our clients' portfolios through investment performance and client service.
3.4 In order to expand upon these principles, Invesco believes it is necessary to consider the role of proxy voting policy in the context of broader portfolio management and administrative issues which apply to our investment management business as a whole. These are discussed as follows.
3.5 PORTFOLIO MANAGEMENT ISSUES - ACTIVE EQUITY PORTFOLIOS
3.5.1 While recognising in general terms that issues concerning corporate governance practices can have a significant bearing on the financial performance of companies, the primary criterion for the selection and retention of a particular stock in active equity portfolios remains our judgment that the stock will deliver superior investment performance for our clients, based on our investment themes and market analysis.
3.5.2 In view of these dynamics, Invesco does not consider it feasible or desirable to prescribe in advance comprehensive guidelines as to how it will exercise proxy voting authority in all circumstances. The primary aim of Invesco's approach to corporate governance is to encourage a culture of performance among the companies in which we manage investments in order to add value to our clients' portfolios, rather than one of mere conformance with a prescriptive set of rules and constraints.
3.5.3 Nevertheless, Invesco has identified a limited range of issues upon which it will always exercise proxy voting authority - either to register disapproval of management proposals or to demonstrate support for company initiatives through positive use of voting powers. These issues are outlined as follows:
KEY VOTING ISSUES
Major Corporate Proposals
Invesco will always vote on the following issues arising in company General Meetings where it has the authority to do so on behalf of clients.
- contentious issues (eg. issues of perceived national interest, or where there has been extensive press coverage or public comment);
- approval of changes of substantial shareholdings;
- mergers or schemes of arrangement; and
- approval of major asset sales or purchases.
As a general rule, Invesco will vote against any actions that will reduce the rights or options of shareholders, reduce shareholder influence over the board of directors and management, reduce the alignment of interests between management and shareholders, or reduce the value of shareholders' investments, unless balanced by reasonable increase in net worth of the shareholding.
Where appropriate, Invesco will also use voting powers to influence companies to adopt generally accepted best corporate governance practices in areas such as board composition, disclosure policies and the other areas of recommended corporate governance practice.
Invesco's approach to significant proxy voting issues which fall outside these areas will be addressed on their merits.
3.6 ADMINISTRATIVE ISSUES
3.6.1 In addition to the portfolio management issues outlined above, Invesco's proxy voting policy also takes account of administrative and cost implications, together with the size of our holdings as compared to the issue size, involved in the exercise of proxy voting authority on our clients' behalf.
3.6.2 There are practical constraints to the implementation of proxy voting decisions. Proxy voting is a highly seasonal activity, with most company Annual General Meetings being collapsed into a few months, with short deadlines for the distribution and return of notice papers, multiple resolutions from multiple companies being considered simultaneously, and under a legal system which is essentially dependent upon paper-based communication and record-keeping.
3.6.3 In addition, for investment managers such as Invesco who do not invest as principals and who consequently do not appear directly on the share registers of companies, all of these communications are channelled through external custodians, among whom there is in turn a considerable variation in the nature and quality of systems to deal with the flow of information.
3.6.4 While Invesco has the systems in place to efficiently implement proxy voting decisions when required, it can be seen that administrative and cost considerations by necessity play an important role in the application of a responsible proxy voting policy. This is particularly so bearing in mind the extremely limited time period within which voting decisions must often be made and implemented (which can in practice be as little as a few days). This factor also explains why Invesco resists any suggestion that there should be compulsory proxy voting on all issues, as in our view this would only increase the costs to be borne by our clients with very little practical improvement in corporate performance in most cases.
3.6.5 These administrative constraints are further highlighted by the fact that many issues on which shareholders are in practice asked to vote are routine matters relating to the ongoing administration of the company - eg. approval of financial accounts or housekeeping amendments to Articles of Association. Generally in such cases, we will be in favour of the motion as most companies take seriously their duties and are acting in the best interests of shareholders. However, the actual casting of a "yes" vote on all such resolutions in our view would entail an unreasonable administrative workload and cost.
3.6.6 Accordingly, Invesco believes that an important consideration in the framing of a proxy voting policy is the need to avoid unduly diverting resources from our primary responsibilities to add value to our clients' investments through portfolio management and client service. The policies outlined below have been prepared on this basis.
KEY PROXY VOTING ISSUES
Administrative Constraints
In view of the administrative constraints and costs involved in the exercise of proxy voting powers, Invesco may (depending on circumstances) not exercise its voting right unless its clients' portfolios in aggregate represent a significant proportion of the shareholdings of the company in question.
A significant proportion in this context means 5% or more of the market capitalisation of the company.
4. INTERNAL ADMINISTRATION & DECISION-MAKING PROCESS
4.1 The following diagram illustrates the procedures adopted by Invesco for the administration of proxy voting:
(FLOW CHART)
4.2 As shown by the diagram, a central administrative role is performed by our Settlement Team, located within the Client Administration section. The initial role of the Settlement Team is to receive company notice papers via the range of custodians who hold shares on behalf of our clients, to ascertain which client portfolios hold the stock, and to initiate the decision-making process by distributing the company notice papers to the Primary Investment Manager responsible for the company in question.
4.3 A voting decision on each company resolution (whether a yes or no vote, or a recommended abstention) is made by the Primary Investment Manager responsible for the company in question. Invesco believes that this approach is preferable to the appointment of a committee with responsibility for handling voting issues across all companies, as it takes advantage of the expertise of individuals whose professional lives are occupied by analysing particular companies and sectors, and who are familiar with the issues facing particular companies through their regular company visits.
4.4 Moreover, the Primary Equity Manager has overall responsibility for the relevant market and this ensures that similar issues which arise in different companies are handled in a consistent way across the relevant market.
4.5 The voting decision is then documented and passed back to the Settlement Team, who issue the voting instructions to each custodian in advance of the closing date for receipt of proxies by the company. At the same time, the Settlement Team logs all proxy voting activities for record keeping or client reporting purposes.
4.6 A key task in administering the overall process is the capture and dissemination of data from companies and custodians within a time frame that makes exercising votes feasible in practice. This applies particularly during the company Annual General Meeting "season", when there are typically a large number of proxy
voting issues under consideration simultaneously. Invesco has no control over the former dependency and Invesco's ability to influence a custodian's service levels are limited in the case of individually-managed clients, where the custodian is answerable to the client.
4.7 The following policy commitments are implicit in these administrative and decision-making processes:
INTERNAL ADMINISTRATION AND DECISION-MAKING PROCESS
Invesco will consider all resolutions put forward in the Annual General Meetings or other decision-making forums of all companies in which investments are held on behalf of clients, where it has the authority to exercise voting powers. This consideration will occur in the context of our policy on Key Voting Issues outlined in Section 3.
The voting decision will be made by the Primary Investment Manager responsible for the market in question.
A written record will be kept of the voting decision in each case, and in case of an opposing vote, the reason/comment for the decision.
Voting instructions will be issued to custodians as far as practicable in advance of the deadline for receipt of proxies by the company. Invesco will monitor the efficiency with which custodians implement voting instructions on clients' behalf.
Invesco's ability to exercise proxy voting authority is dependent on timely receipt of notification from the relevant custodians.
5. CLIENT REPORTING
5.1 Invesco will keep records of its proxy voting activities.
5.2 Upon client request, Invesco will regularly report back to the client on proxy voting activities for investments owned by the client.
5.2 The following points summarise Invesco's policy commitments on the reporting of proxy voting activities to clients (other than in cases where specific forms of client reporting are specified in the client's mandate):
CLIENT REPORTING
Where proxy voting authority is being exercised on a client's behalf, a statistical summary of voting activity will be provided on request as part of the client's regular quarterly report.
Invesco will provide more detailed information on particular proxy voting issues in response to requests from clients wherever possible.
PROXY POLICY APPLIES TO THE FOLLOWING:
INVESCO INSTITUTIONAL (N.A.), INC.
INVESCO GLOBAL ASSET MANAGEMENT (N.A.), INC.
INVESCO SENIOR SECURED MANAGEMENT, INC.
(INVESCO LOGO)
PROXY VOTING POLICIES
AND
PROCEDURES
April 1, 2006
GENERAL POLICY
INVESCO Institutional (N.A.), Inc. and its wholly-owned subsidiaries, and INVESCO Global Asset Management (N.A.), Inc. (collectively, "INVESCO"), each has responsibility for making investment decisions that are in the best interests of its clients. As part of the investment management services it provides to clients, INVESCO may be authorized by clients to vote proxies appurtenant to the shares for which the clients are beneficial owners.
INVESCO believes that it has a duty to manage clients' assets in the best economic interests of the clients and that the ability to vote proxies is a client asset.
INVESCO reserves the right to amend its proxy policies and procedures from time to time without prior notice to its clients.
PROXY VOTING POLICIES
VOTING OF PROXIES
INVESCO will vote client proxies in accordance with the procedures set forth below unless the client for non-ERISA clients retains in writing the right to vote, the named fiduciary (e.g., the plan sponsor) for ERISA clients retains in writing the right to direct the plan trustee or a third party to vote proxies or INVESCO determines that any benefit the client might gain from voting a proxy would be outweighed by the costs associated therewith.
BEST ECONOMIC INTERESTS OF CLIENTS
In voting proxies, INVESCO will take into consideration those factors that may affect the value of the security and will vote proxies in a manner in which, in its opinion, is in the best economic interests of clients. INVESCO endeavors to resolve any conflicts of interest exclusively in the best economic interests of clients.
ISS SERVICES
INVESCO has contracted with Institutional Shareholder Services ("ISS"), an
independent third party service provider, to vote INVESCO's clients' proxies
according to ISS's proxy voting recommendations. In addition, ISS will provide
proxy analyses, vote recommendations, vote execution and record-keeping services
for clients for which INVESCO has proxy voting responsibility. On an annual
basis, INVESCO will review information obtained from ISS to ascertain whether
ISS (i) has the capacity and competency to adequately analyze proxy issues, and
(ii) can make such recommendations in an impartial manner and in the best
economic interest of INVESCO's clients. This may include a review of ISS'
Policies, Procedures and Practices Regarding Potential Conflicts of Interests
and obtaining information about the work ISS does for corporate issuers and the
payments ISS receives from such issuers.
Custodians forward proxy materials for clients who rely on INVESCO to vote proxies to ISS. ISS is responsible for exercising the voting rights in accordance with the ISS proxy voting guidelines. If INVESCO receives proxy materials in connection with a client's account where the client has, in writing, communicated to INVESCO that the client, plan fiduciary or other third party has reserved the right to vote proxies, INVESCO will forward to the party appointed by client any proxy materials it receives with respect to the account. In order to avoid voting proxies in circumstances where INVESCO, or any of its affiliates have or may have any conflict of interest, real or perceived, INVESCO has engaged ISS to provide the proxy analyses, vote recommendations and voting of proxies.
In the event that (i) ISS recuses itself on a proxy voting matter and makes no recommendation or (ii) INVESCO decides to override the ISS vote recommendation, the Proxy Committee will review the issue and direct ISS how to vote the proxies as described below.
PROXY COMMITTEE
The Proxy Committee shall have seven (7) members, which shall include representatives from portfolio management, operations, and legal/compliance or other functional departments as deemed appropriate who are knowledgeable regarding the proxy process. A majority of the members of the Proxy Committee shall constitute a quorum and the Proxy Committee shall act by a majority vote. The chair of the Proxy Committee shall be chosen by the Chief Compliance Officer of INVESCO. The Proxy Committee shall keep minutes of its meetings that shall be kept with the proxy voting records of INVESCO. The Proxy Committee will appoint a Proxy Manager to manage the proxy voting process, which includes the voting of proxies and the maintenance of appropriate records.
Proxy Committee meetings shall be called by the Proxy Manager when override submissions are made and in instances when ISS has recused itself from a vote recommendation. In these situations, the Proxy Committee shall meet and determine how proxies are to be voted in the best interests of clients.
The Proxy Committee periodically reviews new types of corporate governance issues, evaluates proposals not addressed by the ISS proxy voting guidelines in instances when ISS has recused itself, and determines how INVESCO should vote. The Committee monitors adherence to these Procedures, industry trends and reviews the ISS proxy voting guidelines.
ISS RECUSAL
When ISS makes no recommendation on a proxy voting issue or is recused due to a conflict of interest, the Proxy Committee will review the issue and, if INVESCO does not have a conflict of interest, direct ISS how to vote the proxies. In such cases where INVESCO has a conflict of interest, INVESCO, in its sole discretion, shall either (a) vote the proxies pursuant to ISS's general proxy voting guidelines, (b) engage an independent third party to provide a vote recommendation, or (c) contact its client(s) for direction as to how to vote the proxies.
OVERRIDE OF ISS RECOMMENDATION
There may be occasions where the INVESCO investment personnel, senior officers or a member of the Proxy Committee seek to override ISS's recommendations if they believe that ISS's recommendations are not in accordance with the best economic interests of clients. In the event that an individual listed
above in this section disagrees with an ISS recommendation on a particular voting issue, the individual shall document in writing the reasons that he/she believes that the ISS recommendation is not in accordance with clients' best economic interests and submit such written documentation to the Proxy Manager for consideration by the Proxy Committee. Upon review of the documentation and consultation with the individual and others as the Proxy Committee deems appropriate, the Proxy Committee may make a determination to override the ISS voting recommendation if the Committee determines that it is in the best economic interests of clients and the Committee has addressed conflict of interest issues as discussed below.
PROXY COMMITTEE MEETINGS
When a Proxy Committee Meeting is called, whether because of an ISS recusal or request for override of an ISS recommendation, the Proxy Committee shall review the report of the Chief Compliance Officer as to whether any INVESCO person has reported a conflict of interest.
The Proxy Committee shall review the information provided to it to determine if a real or perceived conflict of interest exists and the minutes of the Proxy Committee shall:
(1) describe any real or perceived conflict of interest,
(2) discuss any procedure used to address such conflict of interest,
(3) report any contacts from outside parties (other than routine communications from proxy solicitors), and
(4) include confirmation that the recommendation as to how the proxies are to be voted is in the best economic interests of clients and was made without regard to any conflict of interest.
Based on the above review and determinations, the Proxy Committee will direct ISS how to vote the proxies.
CERTAIN PROXY VOTES MAY NOT BE CAST
In some cases, INVESCO may determine that it is not in the best economic interests of clients to vote proxies. For example, proxy voting in certain countries outside the United States requires share blocking. Shareholders who wish to vote their proxies must deposit their shares 7 to 21 days before the date of the meeting with a designated depositary. During the blocked period, shares to be voted at the meeting cannot be sold until the meeting has taken place and the shares have been returned to the Custodian/Sub-Custodian bank. In addition, voting certain international securities may involve unusual costs to clients. In other cases, it may not be possible to vote certain proxies despite good faith efforts to do so, for instance when inadequate notice of the matter is provided. In the instance of loan securities, voting of proxies typically requires termination of the loan, so it is not usually in the best economic interests of clients to vote proxies on loaned securities. INVESCO typically will not, but reserves the right to, vote where share blocking restrictions, unusual costs or other barriers to efficient voting apply. If INVESCO does not vote, it would have made the determination that the cost of voting exceeds the expected benefit to the client. The Proxy Manager shall record the reason for any proxy not being voted, which record shall be kept with the proxy voting records of INVESCO.
PROXY VOTING RECORDS
Clients may obtain information about how INVESCO voted proxies on their behalf by contacting their client services representative. Alternatively, clients may make a written request for proxy voting information to: Proxy Manager, 1360 Peachtree Street, N.E., Atlanta, Georgia 30309.
CONFLICTS OF INTEREST
PROCEDURES TO ADDRESS CONFLICTS OF INTEREST AND IMPROPER INFLUENCE
In order to avoid voting proxies in circumstances where INVESCO or any of its affiliates have or may have any conflict of interest, real or perceived, INVESCO has contracted with ISS to provide proxy analyses, vote recommendations and voting of proxies. Unless noted otherwise by ISS, each vote recommendation provided by ISS to INVESCO includes a representation from ISS that ISS faces no conflict of interest with respect to the vote. In instances where ISS has recused itself and makes no recommendation on a particular matter or if an override submission is requested, the Proxy Committee shall determine how the proxy is to be voted and instruct the Proxy Manager accordingly in which case the conflict of interest provisions discussed below shall apply.
In effecting the policy of voting proxies in the best economic interests of clients, there may be occasions where the voting of such proxies may present a real or perceived conflict of interest between INVESCO, as the investment manager, and clients.
For each director, officer and employee of INVESCO ("INVESCO person"), the interests of INVESCO's clients must come first, ahead of the interest of INVESCO and any person within the INVESCO organization, which includes INVESCO's affiliates.
Accordingly, each INVESCO person must not put "personal benefit," whether tangible or intangible, before the interests of clients of INVESCO or otherwise take advantage of the relationship to INVESCO's clients. "Personal benefit" includes any intended benefit for oneself or any other individual, company, group or organization of any kind whatsoever, except a benefit for a client of INVESCO, as appropriate. It is imperative that each of INVESCO's directors, officers and employees avoid any situation that might compromise, or call into question, the exercise of fully independent judgment in the interests of INVESCO's clients.
Occasions may arise where a person or organization involved in the proxy voting process may have a conflict of interest. A conflict of interest may also exist if INVESCO has a business relationship with (or is actively soliciting business from) either the company soliciting the proxy or a third party that has a material interest in the outcome of a proxy vote or that is actively lobbying for a particular outcome of a proxy vote. An INVESCO person (excluding members of the Proxy Committee) shall not be considered to have a conflict of interest if the INVESCO person did not know of the conflict of interest and did not attempt to influence the outcome of a proxy vote. Any individual with actual knowledge of a conflict of interest relating to a particular referral item shall disclose that conflict to the Chief Compliance Officer.
The following are examples of situations where a conflict may exist:
- Business Relationships - where INVESCO manages money for a company or an employee group, manages pension assets or is actively soliciting any such business, or leases office space from a company;
- Personal Relationships - where a INVESCO person has a personal relationship with other proponents of proxy proposals, participants in proxy contests, corporate directors, or candidates for directorships; and
- Familial Relationships - where an INVESCO person has a known familial relationship relating to a company (e.g. a spouse or other relative who serves as a director of a public company or is employed by the company).
In the event that INVESCO (or an affiliate) manages assets for a company, its pension plan, or related entity or where any member of the Proxy Committee has a personal conflict of interest, and where clients' funds are invested in that company's shares, the Proxy Committee will not take into consideration this relationship and will vote proxies in that company solely in the best economic interest of its clients.
It is the responsibility of the Proxy Manager and each member of the Proxy Committee to report any real or potential conflict of interest of which such individual has actual knowledge to the Chief Compliance Officer, who shall present any such information to the Proxy Committee. However, once a particular conflict has been reported to the Chief Compliance Officer, this requirement shall be deemed satisfied with respect to all individuals with knowledge of such conflict.
In addition, the Proxy Manager and each member of the Proxy Committee shall certify annually as to their compliance with this policy. In addition, any INVESCO person who submits an ISS override recommendation to the Proxy Committee shall certify as to their compliance with this policy concurrently with the submission of their override recommendation. A form of such certification is attached as Appendix A hereto.
In addition, members of the Proxy Committee must notify INVESCO's Chief Compliance Officer, with impunity and without fear of retribution or retaliation, of any direct, indirect or perceived improper influence made by anyone within INVESCO or by an affiliated company's representatives with regard to how INVESCO should vote proxies. The Chief Compliance Officer will investigate the allegations and will report his or her findings to the INVESCO Risk Management Committee. In the event that it is determined that improper influence was made, the Risk Management Committee will determine the appropriate action to take which may include, but is not limited to, (1) notifying the affiliated company's Chief Executive Officer, its Management Committee or Board of Directors, (2) taking remedial action, if necessary, to correct the result of any improper influence where clients have been harmed, or (3) notifying the appropriate regulatory agencies of the improper influence and to fully cooperate with these regulatory agencies as required. In all cases, the Proxy Committee shall not take into consideration the improper influence in determining how to vote proxies and will vote proxies solely in the best economic interest of clients.
Furthermore, members of the Proxy Committee must advise INVESCO's Chief Compliance Officer and fellow Committee members of any real or perceived conflicts of interest he or she may have with
regard to how proxies are to be voted regarding certain companies (e.g., personal security ownership in a company, or personal or business relationships with participants in proxy contests, corporate directors or candidates for corporate directorships). After reviewing such conflict, upon advice from the Chief Compliance Officer, the Committee may require such Committee member to recuse himself or herself from participating in the discussions regarding the proxy vote item and from casting a vote regarding how INVESCO should vote such proxy.
ISS PROXY VOTING GUIDELINES
A copy of the most recent ISS US Proxy Voting Guidelines Summary can be found on ISS's website at www.issproxy.com. From this website, click on ISS Governance Services tab, next click on "Policy Gateway", next click on "2008 Policy Information", and then click on "Download 2008 U.S. Proxy Voting Guidelines Summary."
APPENDIX A
ACKNOWLEDGEMENT AND CERTIFICATION
I acknowledge that I have read the INVESCO Proxy Voting Policy (a copy of which has been supplied to me, which I will retain for future reference) and agree to comply in all respects with the terms and provisions thereof. I have disclosed or reported all real or potential conflicts of interest to the INVESCO Compliance Officer and will continue to do so as matters arise. I have complied with all provisions of this Policy.
PROXY POLICY APPLIES TO THE FOLLOWING:
INVESCO TRIMARK INVESTMENT MANAGEMENT INC.
- PROXY VOTING
Policy Number: B-6 Effective Date: May 1, 2001 Revision Date: November 6, 2006
PURPOSE AND BACKGROUND
In its trusteeship and management of mutual funds, AIM Trimark acts as fiduciary to the unitholders and must act in their best interests.
APPLICATION
AIM Trimark will make every effort to exercise all voting rights with respect to securities held in the mutual funds that it manages in Canada or to which it provides sub-advisory services, including a Fund registered under and governed by the US Investment Company Act of 1940, as amended (the "US Funds") (collectively, the "Funds"). Proxies for the funds distributed by AIM Trimark Investments and managed by an affiliate or a third party (a "Sub-Advisor") will be voted in accordance with the Sub-Advisor's policy, unless the sub-advisory agreement provides otherwise.
The portfolio managers have responsibility for exercising all proxy votes and in doing so, for acting in the best interest of the Fund. Portfolio managers must vote proxies in accordance with the Guidelines, as amended from time to time, a copy of which is attached to this policy.
When a proxy is voted against management's recommendation, the portfolio manager will provide to the CIO the reasons in writing for any vote in opposition to management's recommendation.
AIM Trimark may delegate to a third party the responsibility to vote proxies on behalf of all or certain Funds, in accordance with the Guidelines.
RECORDS MANAGEMENT
The Investment Department will endeavour to ensure that all proxies and notices are received from all issuers on a timely basis, and will maintain for all Funds
- A record of all proxies received;
- a record of votes cast;
- a copy of the reasons for voting against management; and for the US Funds
- the documents mentioned above; and
- a copy of any document created by AIM Trimark that was material to making a decision how to vote proxies on behalf of a US Fund and that memorializes the basis of that decision.
AIM Trimark has a dedicated Central Proxy Administrator who manages all proxy voting materials. Proxy voting circulars for all companies are received electronically through an external service provider. Circulars for North American companies and ADRs are generally also received in paper format.
Once a circular is received, the Administrator verifies that all shares and Funds affected are correctly listed. The Administrator then gives a copy of the proxy summary to each affected portfolio manager and maintains a tracking list to ensure that all proxies are voted within the prescribed deadlines.
Once voting information has been received from the portfolio managers, voting instructions are sent electronically to the service provider who then forwards the instructions to the appropriate proxy voting agent or transfer agent. The external service provider retains on behalf of AIM Trimark a record of the votes cast and agrees to provide AIM Trimark with a copy of proxy records promptly upon request. The service provider must make all documents available to AIM Trimark for a period of 6 years.
In the event that AIM Trimark ceases to use an external service provider, all documents would be maintained and preserved in an easily accessible place i) for a period of 2 years where AIM Trimark carries on business in Canada and ii) for a period of 3 years thereafter at the same location or at any other location.
REPORTING
The CIO will report on proxy voting to the Fund Boards on an annual basis with respect to all funds managed in Canada or distributed by AIM Trimark Investments and managed by a Sub-Advisor. The CIO will report on proxy voting to the Board of Directors of the US Funds as required from time to time.
In accordance with NI 81-106, proxy voting records for all Canadian mutual funds for years ending June 30th are posted on AIM Trimark's websites. The AIM Trimark Compliance department will review the proxy voting records held by AIM Trimark on an annual basis.
AIM TRIMARK INVESTMENTS
PROXY VOTING GUIDELINES (APRIL 17, 2006)
PURPOSE
The purpose of this document is to describe AIM Trimark's general guidelines for voting proxies received from companies held in AIM Trimark's Toronto-based funds. Proxy voting for the funds managed on behalf of AIM Trimark on a sub-advised basis (i.e. by other AMVESCAP business units or on a third party basis) are subject to the proxy voting policies & procedures of those other entities. As part of its regular due diligence, AIM Trimark will review the proxy voting policies & procedures of any new sub-advisors to ensure that they are appropriate in the circumstances.
INTRODUCTION
AIM Trimark has the fiduciary obligation to ensure that the long-term economic best interest of unitholders is the key consideration when voting proxies of portfolio companies.
As a general rule, AIM Trimark shall vote against any actions that would:
- reduce the rights or options of shareholders,
- reduce shareholder influence over the board of directors and management,
- reduce the alignment of interests between management and shareholders, or
- reduce the value of shareholders' investments.
At the same time, since AIM Trimark's Toronto-based portfolio managers follow an investment discipline that includes investing in companies that are believed to have strong management teams, the portfolio managers will generally support the management of companies in which they invest, and will accord proper weight to the positions of a company's board of directors. Therefore, in most circumstances, votes will be cast in accordance with the recommendations of the company's board of directors.
While AIM Trimark's proxy voting guidelines are stated below, the portfolio managers will take into consideration all relevant facts and circumstances (including country specific considerations), and retain the right to vote proxies as deemed appropriate.
These guidelines may be amended from time to time.
CONFLICTS OF INTEREST
When voting proxies, AIM Trimark's portfolio managers assess whether there are material conflicts of interest between AIM Trimark's interests and those of unitholders. A potential conflict of interest situation may include where AIM Trimark or an affiliate manages assets for, provides other financial services to, or otherwise has a material business relationship with, a company whose management is soliciting proxies, and failure to vote in favour of management of the company may harm AIM Trimark's relationship with the company. In all situations, the portfolio managers will not take AIM Trimark's relationship with the company into account, and will vote the proxies in the
best interest of the unitholders. To the extent that a portfolio manager has any conflict of interest with respect to a company or an issue presented, that portfolio manager should abstain from voting on that company or issue. Portfolio managers are required to report to the Chief Investment Officer any such conflicts of interest and/or attempts by outside parties to improperly influence the voting process.
BOARDS OF DIRECTORS
We believe that a board that has at least a majority of independent directors is integral to good corporate governance. Unless there are restrictions specific to a company's home jurisdiction, key board committees, including audit and compensation committees, should be completely independent.
VOTING ON DIRECTOR NOMINEES IN UNCONTESTED ELECTIONS
Votes in an uncontested election of directors are evaluated on a CASE-BY-CASE basis, considering factors that may include:
- Long-term company performance relative to a market index,
- Composition of the board and key board committees,
- Nominee's attendance at board meetings,
- Nominee's time commitments as a result of serving on other company boards,
- Nominee's investments in the company,
- Whether the chairman is also serving as CEO, and
- Whether a retired CEO sits on the board.
VOTING ON DIRECTOR NOMINEES IN CONTESTED ELECTIONS
Votes in a contested election of directors are evaluated on a CASE-BY-CASE basis, considering factors that may include:
- Long-term financial performance of the target company relative to its industry,
- Management's track record,
- Background to the proxy contest,
- Qualifications of director nominees (both slates),
- Evaluation of what each side is offering shareholders as well as the likelihood that the proposed objectives and goals can be met, and
- Stock ownership positions.
MAJORITY THRESHOLD VOTING FOR DIRECTOR ELECTIONS
We will generally vote FOR proposals that require directors to be elected with an affirmative majority of votes cast unless the relevant portfolio manager believes that the company has adopted formal corporate governance principles that present a meaningful alternative to the majority voting standard and provide an adequate and timely response to both new nominees as well as incumbent nominees who fail to receive a majority of votes cast.
REIMBURSEMENT OF PROXY SOLICITATION EXPENSES
Decisions to provide reimbursement for dissidents waging a proxy contest are made on a CASE-BY-CASE basis.
SEPARATING CHAIRMAN AND CEO
Shareholder proposals to separate the chairman and CEO positions should be evaluated on a CASE-BY-CASE basis.
While we generally support these proposals, some companies have governance structures in place that can satisfactorily counterbalance a combined position. Voting decisions will take into account factors such as:
- Designated lead director, appointed from the ranks of the independent board members with clearly delineated duties;
- Majority of independent directors;
- All-independent key committees;
- Committee chairpersons nominated by the independent directors;
- CEO performance is reviewed annually by a committee of outside directors; and
- Established governance guidelines.
MAJORITY OF INDEPENDENT DIRECTORS
While we generally support shareholder proposals asking that a majority of directors be independent, each proposal should be evaluated on a case-by-case basis.
We generally vote for shareholder proposals that request that the board's audit, compensation, and/or nominating committees be composed exclusively of independent directors.
STOCK OWNERSHIP REQUIREMENTS
We believe that individual directors should be appropriately compensated and motivated to act in the best interests of shareholders. Share ownership by directors better aligns their interests with those of other shareholders. Therefore, we believe that meaningful share ownership by directors is in the best interest of the company.
We generally vote FOR proposals that require a certain percentage of a director's compensation to be in the form of common stock.
SIZE OF BOARDS OF DIRECTORS
We believe that the number of directors is important to ensuring the board's effectiveness in maximizing long-term shareholder value. The board must be large enough to allow it to adequately discharge its responsibilities, without being so large that it becomes cumbersome.
While we will prefer a board of no fewer than 5 and no more than16 members, each situation will be considered on a CASE-BY-CASE basis taking into consideration the specific company circumstances.
CLASSIFIED OR STAGGERED BOARDS
In a classified or staggered board, directors are typically elected in two or more "classes", serving terms greater than one year.
We prefer the annual election of all directors and will generally NOT SUPPORT proposals that provide for staggered terms for board members. We recognize that there may be jurisdictions where staggered terms for board members is common practice and, in such situations, we will review the proposals on a CASE-BY-CASE basis.
DIRECTOR INDEMNIFICATION AND LIABILITY PROTECTION
We recognize that many individuals may be reluctant to serve as corporate directors if they were to be personally liable for all lawsuits and legal costs. As a result, limitations on directors' liability can benefit the corporation and its shareholders by helping to attract and retain qualified directors while providing recourse to shareholders on areas of misconduct by directors.
We generally vote FOR proposals that limit directors' liability and provide indemnification as long as the arrangements are limited to the director acting honestly and in good faith with a view to the best interests of the corporation and, in criminal matters, are limited to the director having reasonable grounds for believing the conduct was lawful.
AUDITORS
A strong audit process is a requirement for good corporate governance. A significant aspect of the audit process is a strong relationship with a knowledgeable and independent set of auditors.
RATIFICATION OF AUDITORS
We believe a company should limit its relationship with its auditors to the audit engagement, and certain closely related activities that do not, in the aggregate, raise an appearance of impaired independence.
We generally vote FOR the reappointment of the company's auditors unless:
- It is not clear that the auditors will be able to fulfill their function;
- There is reason to believe the auditors have rendered an opinion that is neither accurate nor indicative of the company's financial position; or
- The auditors have a significant professional or personal relationship with the issuer that compromises their independence.
DISCLOSURE OF AUDIT VS. NON-AUDIT FEES
Understanding the fees earned by the auditors is important for assessing auditor independence. Our support for the re-appointment of the auditors will take into consideration whether the management information circular contains adequate disclosure about the amount and nature of audit vs. non-audit fees.
There may be certain jurisdictions that do not currently require disclosure of audit vs. non-audit fees. In these circumstances, we will generally SUPPORT proposals that call for this disclosure.
COMPENSATION PROGRAMS
Appropriately designed equity-based compensation plans, approved by shareholders, can be an effective way to align the interests of long-term shareholders and the interests of management, employees and directors. Plans should not substantially dilute shareholders' ownership interests in the company, provide participants with excessive awards or have objectionable structural features. We will consider each compensation plan in its entirety (including all incentives, awards and other compensation) to
determine if the plan provides the right incentives to managers and directors and is reasonable on the whole.
While we generally encourage companies to provide more transparent disclosure related to their compensation programs, the following are specific guidelines dealing with some of the more common features of these programs (features not specifically itemized below will be considered on a CASE-BY-CASE basis taking into consideration the general principles described above):
CASH COMPENSATION AND SEVERANCE PACKAGES
We will generally SUPPORT the board's discretion to determine and grant appropriate cash compensation and severance packages.
EQUITY BASED PLANS - DILUTION
We will generally vote AGAINST equity-based plans where the total dilution (including all equity-based plans) is excessive.
EMPLOYEE STOCK PURCHASE PLANS
We will generally vote FOR the use of employee stock purchase plans to increase company stock ownership by employees, provided that shares purchased under the plan are acquired for no less than 85% of their market value. It is recognized that country specific circumstances may exist (e.g. tax issues) that require proposals to be reviewed on a CASE-BY-CASE basis.
LOANS TO EMPLOYEES
We will vote AGAINST the corporation making loans to employees to allow employees to pay for stock or stock options. It is recognized that country specific circumstances may exist that require proposals to be reviewed on a CASE-BY-CASE basis.
STOCK OPTION PLANS - BOARD DISCRETION
We will vote AGAINST stock option plans that give the board broad discretion in setting the terms and conditions of the programs. Such programs should be submitted with detail and be reasonable in the circumstances regarding their cost, scope, frequency and schedule for exercising the options.
STOCK OPTION PLANS - INAPPROPRIATE FEATURES
We will generally vote AGAINST plans that have any of the following structural features:
- ability to re-price "underwater" options without shareholder approval,
- ability to issue options with an exercise price below the stock's current market price,
- ability to issue "reload" options, or
- automatic share replenishment ("evergreen") features.
STOCK OPTION PLANS - DIRECTOR ELIGIBILITY
While we prefer stock ownership by directors, we will SUPPORT stock option plans for directors as long as the terms and conditions of director options are clearly defined and are reasonable.
STOCK OPTION PLANS - REPRICING
We will vote FOR proposals to re-price options if there is a value-for-value (rather than a share-for-share) exchange.
STOCK OPTION PLANS - VESTING
We will vote AGAINST stock option plans that are 100% vested when granted.
STOCK OPTION PLANS - AUTHORIZED ALLOCATIONS
We will generally vote AGAINST stock option plans that authorize allocation of 25% or more of the available options to any one individual.
STOCK OPTION PLANS - CHANGE IN CONTROL PROVISIONS
We will vote AGAINST stock option plans with change in control provisions that allow option holders to receive more for their options than shareholders would receive for their shares.
CORPORATE MATTERS
We will review management proposals relating to changes to capital structure, reincorporation, restructuring and mergers & acquisitions on a case-by-case basis, taking into consideration the impact of the changes on corporate governance and shareholder rights, anticipated financial and operating benefits, portfolio manager views, level of dilution, and a company's industry and performance in terms of shareholder returns.
COMMON STOCK AUTHORIZATION
We will review proposals to increase the number of shares of common stock authorized for issue on a CASE-BY-CASE basis.
DUAL CLASS SHARE STRUCTURES
Dual class share structures involve a second class of common stock with either superior or inferior voting rights to those of another class of stock.
We will generally vote AGAINST proposals to create or extend dual class share structures where certain stockholders have superior or inferior voting rights to another class of stock.
STOCK SPLITS
We will vote FOR proposals to increase common share authorization for a stock split, provided that the increase in authorized shares would not result in excessive dilution given a company's industry and performance in terms of shareholder returns.
REVERSE STOCK SPLITS
We will vote FOR management proposals to implement a reverse stock split, provided that the reverse split does not result in an increase of authorized but unissued shares of more than 100% after giving effect to the shares needed for the reverse split.
SHARE REPURCHASE PROGRAMS
We will vote AGAINST proposals to institute open-market share repurchase plans if all shareholders do not participate on an equal basis.
REINCORPORATION
Reincorporation involves re-establishing the company in a different legal jurisdiction.
We will generally vote FOR proposals to reincorporate the company provided that the board and management have demonstrated sound financial or business reasons for the move. Proposals to reincorporate will NOT BE SUPPORTED if solely as part of an anti-takeover defense or as a way to limit directors' liability.
MERGERS & ACQUISITIONS
We will vote FOR merger & acquisition proposals that the relevant portfolio managers believe, based on their review of the materials:
- will result in financial and operating benefits,
- have a fair offer price,
- have favourable prospects for the combined companies, and
- will not have a negative impact on corporate governance or shareholder rights.
SOCIAL RESPONSIBILITY
We recognize that to effectively manage a corporation, directors and management must consider not only the interests of shareholders, but the interests of employees, customers, suppliers, and creditors, among others.
We believe that companies and their boards must give careful consideration to social responsibility issues in order to enhance long-term shareholder value.
We SUPPORT efforts by companies to develop policies and practices that consider social responsibility issues related to their businesses.
SHAREHOLDER PROPOSALS
Shareholder proposals can be extremely complex, and the impact on the interests of all stakeholders can rarely be anticipated with a high degree of confidence. As a result, shareholder proposals will be reviewed on a CASE-BY-CASE basis with consideration of factors such as:
- the proposal's impact on the company's short-term and long-term share value,
- its effect on the company's reputation,
- the economic effect of the proposal,
- industry and regional norms applicable to the company,
- the company's overall corporate governance provisions, and
- the reasonableness of the request.
We will generally SUPPORT shareholder proposals that require additional disclosure regarding corporate responsibility issues where the relevant portfolio manager believes:
- the company has failed to adequately address these issues with shareholders,
- there is information to suggest that a company follows procedures that are not in compliance with applicable regulations, or
- the company fails to provide a level of disclosure that is comparable to industry peers or generally accepted standards.
We will generally NOT SUPPORT shareholder proposals that place arbitrary or artificial constraints on the board, management or the company.
ORDINARY BUSINESS PRACTICES
We will generally SUPPORT the board's discretion regarding shareholder proposals that involve ordinary business practices.
PROTECTION OF SHAREHOLDER RIGHTS
We will generally vote FOR shareholder proposals that are designed to protect shareholder rights if the company's corporate governance standards indicate that such additional protections are warranted.
BARRIERS TO SHAREHOLDER ACTION
We will generally vote FOR proposals to lower barriers to shareholder action.
SHAREHOLDER RIGHTS PLANS
We will generally vote FOR proposals to subject shareholder rights plans to a shareholder vote.
OTHER
We will vote AGAINST any proposal where the proxy materials lack sufficient information upon which to base an informed decision.
We will vote AGAINST any proposals to authorize the company to conduct any other business that is not described in the proxy statement (including the authority to approve any further amendments to an otherwise approved resolution).
APPENDIX F
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 January 31, 2008.
AIM V.I. BASIC BALANCED FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
--------------------------------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT 57.63% -
P.O. BOX 94210
PALATINE, IL 60094-4210
ALLSTATE LIFE INSURANCE CO.
GLAC AIM VA1 AND SPVL-VL
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 12.37% -
ALLSTATE LIFE INSURANCE CO. OF NEW YORK
NY PROPRIETARY
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 7.49% -
ALLSTATE LIFE INSURANCE CO.
ATTN: FINANCIAL CONTROL UNIT
P.O. BOX 94200
PALATINE, IL 60094-4200 5.51% -
ALLSTATE LIFE INSURANCE CO.
GLAC VA3
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 - 33.22%
|
AIM V.I. BASIC BALANCED FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
--------------------------------------------- ---------------- ----------------
MINNESOTA LIFE INSURANCE CO.
Attn:A6-5216
400 ROBERT ST. N
ST PAUL, MN 55101-2037 - 58.86%
|
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
--------------------------------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO.
AIM VI-AIM VA3
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 - 5.45%
ALLSTATE LIFE INSURANCE COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 5.26% -
AMERICAN ENTERPRISE LIFE INS CO.
1497 AXP FINANCIAL CTR.
MINNEAPOLIS, MN 55474-0014 - 13.88%
COMMONWEALTH ANNUITY AND LIFE
INSURANCE COMPANY
SEPARATE ACCOUNTING
MAIL STATION S310
440 LINCOLN ST.
WORCESTER, MA 01653-0002 - 7.40%
GE LIFE AND ANNUITY ASSURANCE CO.
VARIABLE EXTRA CREDIT
Attn: VARIABLE ACCOUNTING
6610 W. BROAD ST.
RICHMOND, VA 23230-1702 - 8.74%
HARTFORD LIFE AND ANNUITY
SEPARATE ACCOUNT
Attn: DAVE TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999 58.03% -
|
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
--------------------------------------------- ---------------- ----------------
HARTFORD LIFE SEPARATE ACCOUNT
Attn: DAVE TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999 20.61% -
LINCOLN BENEFIT LIFE
2940 S 84TH ST.
LINCOLN, NE 68506-4142 5.66% -
NATIONWIDE INSURANCE COMPANY NWVAII
C/O IPO PORTFOLIO ACCOUNTING
P.O. BOX 182029
COLUMBUS, OH 43218-2029 - 16.76%
TRANSAMERICA LIFE INSURANCE CO.
LANDMARK
Attn: FMD OPERATIONAL ACCOUNTING
4333 EDGEWOOD RD. NE
CEDAR RAPIDS, IA 52499-0001 - 13.43%
|
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
P.O. BOX 94200
PALATINE, IL 60094-4200 7.08% -
ALLSTATE LIFE INSURANCE COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 8.07% -
HARTFORD LIFE AND ANNUITY
SEPARATE ACCOUNT
Attn: DAVE TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999 10.08% -
|
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
--------------------------------------------- ---------------- ----------------
IDS LIFE INSURANCE CO.
222 AXP FINANCIAL CENTER
MINNEAPOLIS, MN 55474-0002 9.17% %
IDS LIFE INSURANCE CO.
222 AXP FINANCIAL CENTER
MINNEAPOLIS, MN 55474-0002 - 63.37
ING LIFE INSURANCE AND ANNUITY CO.
CONVEYOR
ONE ORANGE WAY B3N
WINDSOR, CT 06095 6.44% -
MERRILL LYNCH PIERCE FENNER & SMITH
FBO THE SOLE BENEFIT OF CUSTOMERS
4800 DEER LAKE DR. E.
JACKSONVILLE, FL 32246-6484 7.40% -
NATIONWIDE INSURANCE CO. NWVAII
C/O IPO PORTFOLIO ACCOUNTING
P.O. BOX 182029
COLUMBUS, OH 43218-2029 - 5.05%
PHOENIX HOME LIFE
Attn: BRIAN COOPER
P.O. BOX 22012
ALBANY, NY 12201-2012 6.39% -
|
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
--------------------------------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE COMPANY
GLAC PROPRIETARY
P.O. BOX 94210
PALATINE, IL 60094-4210 12.20% -
ANNUITY INVESTORS LIFE INSURANCE CO.
Attn: TODD GAYHART
580 WALNUT ST.
CINCINNATI, OH 45202-3110 15.59% -
IDS LIFE INSURANCE CO.
222 AXP FINANCIAL CENTER
MINNEAPOLIS, MN 55474-0002 45.08% %
|
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
--------------------------------------------- ---------------- ----------------
IDS LIFE INSURANCE CO.
222 AXP FINANCIAL CTR.
MINNEAPOLIS, MN 55474-0002 - 43.69%
NATIONWIDE INSURANCE CO. NWLVI4
C/O IPO PORTFOLIO ACCOUNTING
P.O. BOX 182029
COLUMBUS, OH 43218-2029 10.92 %
NATIONWIDE INSURANCE CO. NWVAII
C/O IPO PORTFOLIO ACCOUNTING
P.O. BOX 182029
COLUMBUS, OH 43218-2029 - 14.73%
SECURITY BENEFIT LIFE
VARIFLEX Q NAVISYS
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66636-0001 - 11.23%
SECURITY BENEFIT LIFE
FBO UNBUNDLED
C/O VARIABLE ANNUITY DEPT 1
SW SECURITY BENEFIT PL.
TOPEKA, KS 66606-2444 - 5.91%
SBL VARIABLE FLEX NQ NAVISYS
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66606-2444 - 5.46%
|
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
--------------------------------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO.
AIM VI-AIM VA3
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 - 10.03%
HARTFORD LIFE SEPARATE ACCOUNT
Attn: DAVE TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999 5.68% -
|
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
--------------------------------------------- ---------------- ----------------
HARTFORD LIFE AND ANNUITY SEPARATE
ACCOUNT
Attn: DAVE TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999 14.71% -
IDS LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR.
MINNEAPOLIS, MN 55474-0002 23.46% -
ING LIFE INSURANCE AND ANNUITY CO.
CONVEYOR
ONE ORANGE WAY B3N
WINDSOR, CT 06095 5.21% -
LINCOLN BENEFIT LIFE
2940 S 84TH ST.
LINCOLN, NE 68506-4142 - 22.99%
LINCOLN NATIONAL LIFE INS. COMPANY
Attn: SHIRLEY SMITH
1300 S CLINTON ST.
FORT WAYNE, IN 46802-3506 - 20.22%
MERRILL LYNCH PIERCE FENNER & SMITH
THE SOLE BENEFIT OF CUSTOMERS
4800 DEER LAKE DR. E.
JACKSONVILLE, FL 32246-6484 5.67% -
NATIONWIDE INSURANCE COMPANY NWVA7
C/O IPO PORTFOLIO ACCOUNTING
P.O. BOX 182029
COLUMBUS, OH 43218-2029 - 5.34%
PRINCIPAL LIFE INSURANCE COMPANY
Attn: ROSE PFALTZGRAFF
711 HIGH ST.
DES MOINES, IA 50392-9992 - 8.38%
PRUDENTIAL INSURANCE CO. OF AMERICA
Attn: IGG FINL REP SEP. ACCTS.
213 WASHINGTON ST. 7TH FL.
NEWARK, NJ 07102-2992 7.23% -
|
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
P.O. BOX 94200
PALATINE, IL 60094-4200 20.11% -
ALLSTATE LIFE INSURANCE COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 33.06% -
ALLSTATE LIFE INSURANCE COMPANY
GLAC VA1
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 10.63% -
ALLSTATE LIFE INSURANCE CO.
GLAC VA3
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 - 85.46%
ALLSTATE LIFE OF NEW YORK
3100 SANDERS ROAD
NORTHBROOK, IL 60062-7155 - 14.54%
ALLSTATE LIFE INSURANCE CO.
GLAC AIM VA1 AND SPVL-VL
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 7.14% -
GENERAL AMERICAN LIFE INSURANCE
SEPARATE ACCOUNTS B1-08
13045 TESSON FERRY RD.
ST LOUIS, MO 63128-3499 5.75% -
|
AIM V.I. DYNAMICS FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
--------------------------------------------- ---------------- ----------------
INVESCO AIM ADVISORS INC
Attn: CORPORATE CONTROLLER
1360 PEACHTREE ST NE
ATLANTA, GA 30309-3283 - 100.00%
|
AIM V.I. DYNAMICS FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
--------------------------------------------- ---------------- ----------------
AMERICAN SKANDIA LIFE ASSURANCE CO.
VARIABLE ACCOUNT / SAQ
Attn: INVESTMENT ACCOUNTING
P.O. BOX 883
1 CORPORATE DR.
SHELTON, CT 06484-6208 48.00% -
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT VA
5900 O ST
LINCOLN, NE 68510-2234 5.08% -
AUL AMERICAN INDIVIDUAL
VARIABLE ANNUITY UNIT TRUST B
AMERICAN UNITED LIFE INS CO.
ONE AMERICAN SQUARE
P.O. BOX 368
INDIANAPOLIS, IN 46206-0368 6.82% -
IDS LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR
MINNEAPOLIS, MN 55474-0002 14.32% -
|
AIM V.I. FINANCIAL SERVICES FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
--------------------------------------------- ---------------- ----------------
AMERICAN SKANDIA LIFE ASSURANCE CO.
VARIABLE ACCOUNT / SAQ
Attn: INVESTMENT ACCOUNTING
P.O. BOX 883
1 CORPORATE DR.
SHELTON, CT 06484-6208 43.59% -
CM LIFE INSURANCE CO.
FUND OPERATIONS
1295 STATE ST.
SPRINGFIELD, MA 01111-0001 7.62% -
IDS LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR.
MINNEAPOLIS, MN 55474-0002 23.49% -
IDS LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR.
MINNEAPOLIS, MN 55474-0002 - 83.93%
|
AIM V.I. FINANCIAL SERVICES FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
--------------------------------------------- ---------------- ----------------
IDS LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR
MINNEAPOLIS, MN 55474-0002 - 16.07%
MASS MUTUAL LIFE INS. CO.
FUND OPERATIONS/N255
1295 STATE ST
SPRINGFIELD, MA 01111-0001 6.12% -
|
AIM V.I. GLOBAL HEALTH CARE FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
--------------------------------------------- ---------------- ----------------
AMERICAN SKANDIA LIFE ASSURANCE CO.
VARIABLE ACCOUNT / SAQ
Attn: INVESTMENT ACCOUNTING
P.O. BOX 883
1 CORPORATE DR.
SHELTON, CT 06484-6208 39.53% -
CM LIFE INSURANCE CO.
FUND OPERATIONS/N255
1295 STATE ST.
SPRINGFIELD, MA 01111-0001 7.89% -
COMMONWEALTH ANNUITY AND LIFE
INSURANCE COMPANY
SEPARATE ACCOUNTING
440 LINCOLN ST
MAIL STATION S310
WORCESTER, PA 01653-0002 6.99% -
IDS LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR.
MINNEAPOLIS, MN 55474-0002 - 89.76%
IDS LIFE INSURANCE COMPANY OF NY
222 AXP FINANCIAL CENTER
MINNEAPOLIS, MN 55474-0014 - 9.83%
MASS MUTUAL LIFE INS CO.
FUND OPERATIONS/N255
1295 STATE ST.
SPRINGFIELD, MA 01111-0001 8.25% -
|
AIM V.I. GLOBAL HEALTH CARE FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
--------------------------------------------- ---------------- ----------------
PRINCIPAL LIFE INSURANCE CO
FVA-PRINCIPAL VARIABLE ANNUITY
Attn: LISA DAGUE - IND ACG G-008-N10
711 HIGH ST.
DES MOINES, IA 50392-0001 6.32% -
|
AIM V.I. GLOBAL REAL ESTATE FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
--------------------------------------------- ---------------- ----------------
AMERICAN NATL GROUP UNALLOCATED
1 MOODY PLAZA
GALVESTON, TX 77550-7947 5.49% -
GE CAPITAL LIFE ASSURANCE CO. OF NY
NY CHOICE 160BP
6610 W BROAD ST.
BLDG 3, 5TH FLOOR
RICHMOND, VA 23230-1702 - 21.34%
GE LIFE AND ANNUITY ASSURANCE CO.
VARIABLE EXTRA CREDIT
Attn: VARIABLE ACCOUNTING
6610 W BROAD ST.
RICHMOND, VA 23230-1702 - 9.05%
JEFFERSON NATIONAL LIFE INSURANCE
9920 CORPORATE CAMPUS DR. STE. 1000
LOUISVILLE, KY 40223-4051 7.15% -
KEMPER INVESTORS LIFE INSURANCE CO.
VARIABLE SEPARATE ACCOUNT
2500 WESTFIELD DR
ELGIN, IL 60124-7836 10.14% -
MET LIFE ANNUITY OPERATIONS
SECURITY FIRST LIFE SEPARATE AC
Attn: SHAR NEVENHOVEN CPA
4700 WESTOWN PLSY., STE. 200
WEST DES MOINES, IA 50266 - 59.59%
|
AIM V.I. GLOBAL REAL ESTATE FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
--------------------------------------------- ---------------- ----------------
MIDLAND NATIONAL LIFE INSURANCE CO.
ANNUITY DIVISION
Attn : VARIABLE ANNUITIES
P.O. BOX 79907
DES MOINES, IA 50325-0907 - 9.73%
SECURITY BENEFIT LIFE
FBO UNBUNDLED
C/O VARIABLE ANNUITY DEPARTMENT
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66636-1000 21.48% -
SECURITY BENEFIT LIFE
VARIFLEX Q NAVISYS
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66606-2444 6.56% -
SYMETRA LIFE INSURANCE CO.
Attn: MICHEAL ZHANG
SEP. ACCTS. SC-15
777 108TH AVE. NE , STE. 1200
BELLEVUE, WA 98004-5135 19.46% -
|
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
--------------------------------------------- ---------------- ----------------
ANNUITY INVESTORS LIFE INSURANCE
580 WALNUT ST
CINCINNATI, OH 45202-3110 - 7.59%
ALLSTATE LIFE INSURANCE CO.
GLAC VA3
P.O. BOX 94210
PALATINE, IL 60094-4210 - 10.75%
GUARDIAN INSURANCE & ANNUITY
Attn: PAUL IANNELLI
EQUITY ACCOUNTING 3-S
3900 BURGESS PL.
BETHLEHEM, PA 18017-9097 - 24.04%
GUARDIAN INSURANCE & ANNUITY
Attn: PAUL IANNELLI
EQUITY ACCOUNTING 3-S
3900 BURGESS PL.
BETHLEHEM, PA 18017-9097 - 13.66%
HARTFORD LIFE AND ANNUITY
SEPARATE ACCOUNT
Attn: DAVE TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999 68.35% -
HARTFORD LIFE
SEPARATE ACCOUNT
Attn: DAVE TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999 25.89% -
LINCOLN NATIONAL LIFE INS COMPANY
Attn: SHIRLEY SMITH
1300 SOUTH CLINTON STREET
FORT WAYNE, IN 46802-3506 - 22.49%
SAGE LIFE ASSURANCE OF AMERICA
175 KING ST.
ARMONK, NY 10504-1606 - 8.19%
TRANSAMERICA LIFE INSURANCE CO.
PREFERRED ADVANTAGE
Attn: FMD OPERATIONAL ACCOUNTING
4333 EDGEWOOD RD. NE
CEDAR RAPIDS, IA 52499-0001 - 12.24%
|
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 COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 16.63% -
ALLSTATE LIFE INSURANCE CO.
GLAC VA3
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 - 97.64%
ANNUITY INVESTORS LIFE INS CO.
Attn: TODD GAYHART
580 WALNUT ST.
CINCINNATI, OH 45202-3110 5.79% -
AUL AMERICAN INDIVIDUAL VARIABLE
ANNUITY UNIT TRUST B
AMERICAN UNITED LIFE INS CO.
ONE AMERICAN SQUARE
P.O. BOX 368
INDIANAPOLIS, IN 46206-0368 26.02% -
GREAT-WEST LIFE & ANNUITY
UNIT VALUATIONS 2T2
Attn: MUTUAL FUND TRADING 2T2
8515 E ORCHARD RD.
ENGLEWOOD, CO 80111-5002 9.45% -
HARTFORD LIFE INSURANCE CO.
SEPARATE ACCOUNT 2
Attn: DAVID TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999 9.05% -
JEFFERSON NATIONAL LIFE INSURANCE
9920 CORPORATE CAMPUS DR. ,STE. 1000
LOUISVILLE, KY 40223-4051 11.60% -
|
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
--------------------------------------------- ---------------- ----------------
GE LIFE AND ANNUITY ASSURANCE CO.
VARIABLE EXTRA CREDIT
Attn: VARIABLE ACCOUNTING - 11.81%
6610 WEST BROAD ST.
RICHMOND, VA 23230-1702
HARTFORD LIFE AND ANNUITY
SEPARATE ACCOUNT
Attn: DAVE TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999 28.90% -
HARTFORD LIFE SEPARATE ACCOUNT
Attn: DAVE TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999 9.89% -
IDS LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR.
MINNEAPOLIS, MN 55474-0002 - 50.47%
METLIFE INSURANCE COMPANY
OF CONNECTICUT
Attn: SHAREHOLDER ACCOUNTS
ONE TOWER SQUARE 6MS
HARTFORD, CT 06183-0003 8.02% -
RIVERSOURCE LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR.
MINNEAPOLIS, MN 55474-0002 - 8.63%
SECURITY BENEFIT LIFE
FBO UNBUNDLED
C/O VARIABLE ANNUITY DEPT.
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66606-2444 - 7.42%
|
AIM V.I. LARGE CAP GROWTH FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
--------------------------------------------- ---------------- ----------------
ALLSTATE LIFE OF NEW YORK
3100 SANDERS RD.
NORTHBROOK, IL 60062-7155 - 11.30%
|
AIM V.I. LARGE CAP 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 COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 13.25% -
ALLSTATE LIFE INSURANCE CO.
GLAC VA3
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 - 87.65%
COMMONWEALTH ANNUITY AND LIFE
INSURANCE COMPANY
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66636-0001 11.62% -
HARTFORD LIFE AND ANNUITY
SEPARATE ACCOUNT
Attn: DAVE TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999 46.02% -
HARTFORD LIFE SEPARATE ACCOUNT
Attn: DAVE TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999 19.01% -
|
AIM V.I. LEISURE FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
--------------------------------------------- ---------------- ----------------
INVESCO AIM ADVISORS, INC.
Attn: CORPORATE CONTROLLER
1360 PEACHTREE ST. NE
ATLANTA, GA 30309-3283 - 100.00%
ING USA ANNUITY AND LIFE INSURANCE CO.
ONE ORANGE WAY B3N
WINDSOR, CT 06095 99.32% -
|
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
--------------------------------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO.
AIM VI-AIM VA3
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 - 6.19%
AMERICAN ENTERPRISE LIFE INS CO.
1497 AXP FINANCIAL CTR.
MINNEAPOLIS, MN 55474-0014 - 8.73%
HARTFORD LIFE AND ANNUITY
SEPARATE ACCOUNT
Attn: DAVE TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999 66.57% -
HARTFORD LIFE SEPARATE ACCOUNT
Attn: DAVE TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999 20.29% -
LINCOLN BENEFIT LIFE
2940 S 84TH ST.
LINCOLN, NE 68506-4142 - 20.83%
METLIFE INSURANCE COMPANY OF
CONNECTICUT
Attn: SHAREHOLDER ACCOUNTING
ONE TOWER SQUARE 6MS
HARTFORD, CT 06183-0002 - 6.34%
SECURITY BENEFIT LIFE INSURANCE CO.
FBO SBL ADVISOR DESIGNS - NAVISYS
UNBUNDLED VARIABLE
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66636-0001 - 16.83%
SECURITY BENEFIT LIFE
FBO UNBUNDLED
C/O VARIABLE ANNUITY DEPARTMENT
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66636-1000 - 12.37%
SECURITY BENEFIT LIFE
VARIFLEX Q NAVISYS
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66606-2444 - 5.23%
|
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
P.O. BOX 94200
PALATINE, IL 60094-4200 20.04% -
ALLSTATE LIFE INSURANCE CO.
GLAC AIM VA1 AND SPVL-VL
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 7.17% -
ALLSTATE LIFE OF NEW YORK
3100 SANDERS ROAD
NORTHBROOK, IL 60062-7155 - 6.65%
ALLSTATE LIFE INSURANCE COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 39.06% -
ALLSTATE LIFE INSURANCE COMPANY
GLAC VA1
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 9.03% -
ALLSTATE LIFE INSURANCE CO.
GLAC VA3
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 - 93.35%
SAGE LIFE ASSURANCE OF AMERICA
175 KING ST.
ARMONK, NY 10504-1606 13.36% -
|
AIM V.I. SMALL CAP EQUITY FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
--------------------------------------------- ---------------- ----------------
INVESCO AIM ADVISORS INC.
Attn: CORPORATE CONTROLLER
1360 PEACHTREE ST. NE
ATLANTA, GA 30309-3283 - 44.97%
|
AIM V.I. SMALL CAP EQUITY FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
--------------------------------------------- ---------------- ----------------
HARTFORD LIFE & ANNUITY
SEPARATE ACCOUNT
Attn: DAVE TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999 66.44% -
HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT
Attn: DAVE TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999 20.08% -
MINNESOTA LIFE INSURANCE CO.
Attn: A6-5216
400 ROBERT ST. N
ST PAUL, MN 55101-2037 - 53.26%
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AIM V.I. 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.
GLAC VA3
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 - 90.16%
ALLSTATE LIFE OF NEW YORK
3100 SANDERS RD.
NORTHBROOK, IL 60062-7155 - 9.84%
AMERICAN SKANDIA LIFE ASSURANCE CO.
VARIABLE ACCOUNT / SAQ
Attn: INVESTMENT ACCOUNTING
P.O. BOX 883
1 CORPORATE DR.
SHELTON, CT 06484-0883 31.72% -
CM LIFE INSURANCE CO.
FUND OPERATIONS/N255
1295 STATE ST.
SPRINGFIELD, MA 01111-0001 6.15% -
IDS LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR.
MINNEAPOLIS, MN 55474-0002 21.94% -
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AIM V.I. TECHNOLOGY FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
--------------------------------------------- ---------------- ----------------
MASS MUTUAL LIFE INS CO.
FUND OPERATIONS/N255
1295 STATE ST.
SPRINGFIELD, MA 01111-0001 6.83% -
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AIM V.I. 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.
GLAC VA3
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 - 30.78%
ALLSTATE LIFE INSURANCE COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210 6.91% -
ANNUITY INVESTORS LIFE INSURANCE
580 WALNUT
CINCINNATI, OH 45202-3110 - 66.88%
COMMONWEALTH ANNUITY AND LIFE
INSURANCE COMPANY
SEPARATE ACCOUNTING
440 LINCOLN ST.
MAIL STATION S310
WORCESTER, MA 01653-0002 11.21% -
GUARDIAN INSURANCE & ANNUITY CO.
Attn: EQUITY ACCOUNTING DEPT 3-S-18
BETHLEHEM, PA 18017-9097 6.43% -
KEMPER INVESTORS LIFE INSURANCE CO.
VARIABLE SEPARATE ACCOUNT
2500 WESTFIELD DR.
ELGIN, IL 60124-7836 5.23% -
KEMPER INVESTORS LIFE INSURANCE CO.
Attn: INVESTMENT ACCOUNTING LL-2W
P.O. BOX 19097
GREENVILLE, SC 29602-9097 34.25% -
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MANAGEMENT OWNERSHIP
As of January 31, 2008, the trustees and officers as a group owned less than 1% of the shares outstanding of each class of any Fund.
APPENDIX G
MANAGEMENT FEES
For the last three fiscal years ended December 31, the management fees payable by each Fund, the amounts waived by Invesco Aim and the net fees paid by each Fund were as follows:
2007 2006 2005
-------------------------------------- ----------------------------------- --------------------------------------
NET
MANAGEMENT MANAGEMENT NET MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT NET MANAGEMENT
FUND NAME FEE PAYABLE FEE WAIVERS FEE PAID FEE PAYABLE FEE WAIVERS FEE PAID FEE PAYABLE FEE WAIVERS FEE PAID
------------------ ----------- ----------- -------------- ----------- ----------- ----------- ----------- ----------- --------------
AIM V.I. Basic
Balanced Fund $ 695,975 $ (223,387) $ 472,588 $ 740,114 $ (199,504) $ 540,610
AIM V.I. Basic 5,871,702 393,306) 5,478,396 6,010,305 (404,786) 5,605,519
Value Fund
AIM V.I. Capital 8,764,720 (6,238) 8,758,482 6,447,166 (8,070) 6,439,096
Appreciation Fund
AIM V.I. Capital 1,709,822 (13,606) 1,696,216 1,427,053 (11,009) 1,416,044
Development Fund
AIM V.I. Core
Equity Fund 13,537,705 (73,332) 13,464,373 8,283,089 (24,520) 8,258,569
AIM V.I.
Diversified
Income Fund 308,867 (179,148) 129,719 365,805 (111,016) 254,789
AIM V.I. Dynamics 981,967 (7,647) 974,320 859,238 (7,530) 851,708
Fund
AIM V.I. Financial 1,003,239 (1,374) 1,001,865 1,254,039 (2,512) 1,251,527
Services Fund
|
2007 2006
---------------------------------- ------------------------------------------
NET
MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT NET MANAGEMENT
FUND NAME FEE PAYABLE FEE WAIVERS FEE PAID FEE PAYABLE FEE WAIVERS FEE PAID
------------------- ----------- ----------- ---------- ------------ ------------ --------------
AIM V.I. Global
Health Care Fund $ 2,129,997 $ (7,362) $ 2,122,635
AIM V.I. Global 1,195,348 (200,570) 994,778
Real Estate Fund
AIM V.I. Government 4,037,516 (449,190) 3,588,326
Securities Fund
AIM V.I. High Yield 337,335 (120,651) 216,684
Fund
AIM V.I.
International 4,271,146 (6,840) 4,264,306
Growth Fund
AIM V.I. Large Cap 534,625 (148,589) 386,036
Growth Fund
AIM V.I. Leisure 389,712 (130,401) 259,311
Fund
AIM V.I. Mid Cap 4,575,563 (23,981) 4,551,582
Core Equity Fund
AIM V.I. Money 193,553 -0- 193,553
Market Fund
AIM V.I. Small Cap 569,320 (116,879) 452,441
Equity Fund
AIM V.I. Technology 1,365,254 (1,278) 1,363,976
Fund
AIM V.I. Utilities 726,202 (29,683) 696,519
Fund
2005
------------------------------------------
MANAGEMENT MANAGEMENT NET MANAGEMENT
FUND NAME FEE PAYABLE FEE WAIVERS FEE PAID
------------------- ------------- ----------- --------------
AIM V.I. Global
Health Care Fund $ 2,307,364 $ (9,866) $ 2,297,498
AIM V.I. Global 774,807 (131,049) 643,758
Real Estate Fund
AIM V.I. Government 3,556,610 (218,537) 3,338,073
Securities Fund
AIM V.I. High Yield 460,257 (112,430) 347,827
Fund
AIM V.I.
International 2,975,590 (5,724) 2,969,866
Growth Fund
AIM V.I. Large Cap 17,816 (17,816) -0-
Growth Fund
AIM V.I. Leisure 391,455 (82,448) 309,007
Fund
AIM V.I. Mid Cap 4,227,362 (20,795) 4,206,567
Core Equity Fund
AIM V.I. Money 218,849 -0- 218,849
Market Fund
AIM V.I. Small Cap 278,323 (115,253) 163,070
Equity Fund
AIM V.I. Technology 1,352,694 (2,094) 1,350,600
Fund
AIM V.I. Utilities 1,043,296 (43,450) 999,846
Fund
|
APPENDIX H
PORTFOLIO MANAGERS
PORTFOLIO MANAGER FUND HOLDINGS AND INFORMATION ON OTHER MANAGED ACCOUNTS
Invesco Aim's portfolio managers develop investment models which are used in connection with the management of certain AIM Funds as well as other mutual funds for which Invesco Aim or an affiliate acts as sub-advisor, other pooled investment vehicles that are not registered mutual funds, and other accounts managed for organizations and individuals. The following chart reflects the portfolio managers' investments in the Funds that they manage. The chart also reflects information regarding accounts other than the Funds for which each portfolio manager has day-to-day management responsibilities. Accounts are grouped into three categories: (i) mutual funds, (ii) other pooled investment vehicles, and (iii) other accounts. To the extent that any of these accounts pay advisory fees that are based on account performance ("performance-based fees"), information on those accounts is specifically broken out. In addition, any assets denominated in foreign currencies have been converted into U.S. Dollars using the exchange rates as of the applicable date.
The following information is as of December 31,2007:
OTHER POOLED
OTHER REGISTERED MUTUAL INVESTMENT VEHICLES OTHER ACCOUNTS
FUNDS MANAGED (ASSETS MANAGED (ASSETS IN MANAGED
IN MILLIONS) MILLIONS) (ASSETS IN MILLIONS)
----------------------- ------------------- --------------------
DOLLAR RANGE
OF NUMBER NUMBER NUMBER
PORTFOLIO INVESTMENTS OF OF OF
MANAGER IN EACH FUND(1) ACCOUNTS ASSETS ACCOUNTS ASSETS ACCOUNTS ASSETS
---------------- --------------- --------- ---------- -------- -------- --------- -------
AIM V.I. BASIC BALANCED FUND
R. Canon
Coleman II
Jan H. Friedli
Brendan D. Gau
Matthew W.
Seinsheimer
Michael J. Simon
Bret W. Stanley
AIM V.I. BASIC VALUE FUND
R. Canon
Coleman II
Matthew W.
Seinsheimer
|
(2) These are accounts of individual investors for which Invesco Aim's affiliate, Invesco Aim Private Asset Management, Inc. ("IPAM") provides investment advice. IPAM offers separately managed accounts that are managed according to the investment models developed by Invesco Aim's portfolio managers and used in connection with the management of certain AIM Funds. IPAM accounts may be invested in accordance with one or more of those investment models and investments held in those accounts are traded in accordance with the applicable models.
(3) This amount includes one fund that pays performance-based fees with $140.0 M in total assets under management.
OTHER POOLED
OTHER REGISTERED MUTUAL INVESTMENT VEHICLES OTHER ACCOUNTS
FUNDS MANAGED (ASSETS MANAGED (ASSETS IN MANAGED
IN MILLIONS) MILLIONS) (ASSETS IN MILLIONS)
----------------------- ------------------- --------------------
DOLLAR RANGE
OF NUMBER NUMBER NUMBER
PORTFOLIO INVESTMENTS OF OF OF
MANAGER IN EACH FUND(1) ACCOUNTS ASSETS ACCOUNTS ASSETS ACCOUNTS ASSETS
---------------- --------------- --------- ---------- -------- -------- --------- -------
Michael J. Simon
Bret W. Stanley
AIM V.I. CAPITAL APPRECIATION FUND
Ryan A. Amerman
Robert J. Lloyd
AIM V.I. CAPITAL DEVELOPMENT FUND
Karl F. Farmer
Paul J. Rasplicka
AIM V.I. CORE EQUITY FUND
Tyler Dann II
Brian Nelson
Ronald S. Sloan
AIM V.I. DIVERSIFIED INCOME FUND
Peter Ehret
Jan H. Friedli
Brendan D. Gau
Carolyn L. Gibbs
Darren S. Hughes
AIM V.I. DYNAMICS FUND
Karl Farmer
Paul J. Rasplicka
AIM V.I. FINANCIAL SERVICES FUND
Michael J. Simon
Meggan M. Walsh
AIM V.I. GLOBAL HEALTH CARE FUND
Derek Tanner
AIM V.I. GLOBAL REAL ESTATE FUND
Mark D. Blackburn
James Cowen
|
OTHER POOLED
OTHER REGISTERED MUTUAL INVESTMENT VEHICLES OTHER ACCOUNTS
FUNDS MANAGED (ASSETS MANAGED (ASSETS IN MANAGED
IN MILLIONS) MILLIONS) (ASSETS IN MILLIONS)
----------------------- ------------------- --------------------
DOLLAR RANGE
OF NUMBER NUMBER NUMBER
PORTFOLIO INVESTMENTS OF OF OF
MANAGER IN EACH FUND(1) ACCOUNTS ASSETS ACCOUNTS ASSETS ACCOUNTS ASSETS
--------------------- --------------- --------- ---------- -------- -------- --------- --------
Paul Curbo
Joe V. Rodriguez, Jr.
James W. Trowbridge
Ping-Ying Wang
AIM V.I. GOVERNMENT SECURITIES FUND
Jan H. Friedli
Brendan G. Gau
AIM V.I. HIGH YIELD FUND
Peter Ehret
Carolyn L. Gibbs
Darren S. Hughes
AIM V.I. INTERNATIONAL GROWTH FUND
Shuxin Cao
Matthew W. Dennis
Jason T. Holzer
Clas G. Olsson
Barrett K. Sides
AIM V.I. LARGE CAP GROWTH FUND
Geoffrey V. Keeling
Robert L. Shoss None 3 $ 2,981.3 None None 41 $ 11.5(2)
AIM V.I. LEISURE FUND
Mark D. Greenberg None 2 $ 1,507.6 1 $101.4 None None
AIM V.I. MID CAP CORE EQUITY FUND
Dan Asiello
Brian Nelson
Ronald S. Sloan
AIM V.I. SMALL CAP EQUITY FUND
Juliet S. Ellis
|
OTHER POOLED
OTHER REGISTERED MUTUAL INVESTMENT VEHICLES OTHER ACCOUNTS
FUNDS MANAGED (ASSETS MANAGED (ASSETS IN MANAGED
IN MILLIONS) MILLIONS) (ASSETS IN MILLIONS)
----------------------- ------------------- --------------------
DOLLAR RANGE
OF NUMBER NUMBER NUMBER
PORTFOLIO INVESTMENTS OF OF OF
MANAGER IN EACH FUND(1) ACCOUNTS ASSETS ACCOUNTS ASSETS ACCOUNTS ASSETS
------------------ --------------- --------- ---------- -------- -------- --------- --------
Juan R. Hartsfield
AIM V.I. TECHNOLOGY FUND
Warren W. Tennant
AIM V.I. UTILITIES FUND
John S. Segner
|
POTENTIAL CONFLICTS OF INTEREST
Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one Fund or other account. More specifically, portfolio managers who manage multiple Funds and /or other accounts may be presented with one or more of the following potential conflicts:
- The management of multiple Funds and/or other accounts may result in a portfolio manager devoting unequal time and attention to the management of each Fund and/or other account. Invesco Aim seeks to manage such competing interests for the time and attention of portfolio managers by having portfolio managers focus on a particular investment discipline. Most other accounts managed by a portfolio manager are managed using the same investment models that are used in connection with the management of the Funds.
- If a portfolio manager identifies a limited investment opportunity which may be suitable for more than one Fund or other account, a Fund may not be able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders across all eligible Funds and other accounts. To deal with these situations, Invesco Aim and the Funds have adopted procedures for allocating portfolio transactions across multiple accounts.
- With respect to securities transactions for the Funds, Invesco Aim determines which broker to use to execute each order, consistent with its duty to seek best execution of the transaction. However, with respect to certain other accounts (such as mutual funds for which Invesco Aim or an affiliate acts as sub-advisor, other pooled investment vehicles that are not registered mutual funds, and other accounts managed for organizations and individuals), Invesco Aim may be limited by the client with respect to the selection of brokers or may be instructed to direct trades through a particular broker. In these cases, trades for a Fund in a particular security may be placed separately from, rather than aggregated with, such other accounts. Having separate transactions with respect to a security may temporarily affect the market price of the security or the execution of the transaction, or both, to the possible detriment of the Fund or other account(s) involved.
- Finally, the appearance of a conflict of interest may arise where Invesco Aim has an incentive, such as a performance-based management fee, which relates to the management of one Fund or account but not all Funds and accounts with respect to which a portfolio manager has day-to-day management responsibilities.
Invesco Aim and the Funds have adopted certain compliance procedures which are designed to address these types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.
DESCRIPTION OF COMPENSATION STRUCTURE
INVESCO AIM ADVISORS, INC.
Invesco Aim seeks to maintain a compensation program that is competitively positioned to attract and retain high-caliber investment professionals. Portfolio managers receive a base salary, an incentive bonus opportunity, an equity compensation opportunity, a benefits package, and a relocation package if such benefit is applicable. Portfolio manager compensation is reviewed and may be modified each year as appropriate to reflect changes in the market, as well as to adjust the factors used to determine bonuses to promote good sustained fund performance. Invesco Aim evaluates competitive market compensation by reviewing compensation survey results conducted by an independent third party of investment industry compensation. Each portfolio manager's compensation consists of the following five elements:
- BASE SALARY. Each portfolio manager is paid a base salary. In setting the base salary, Invesco Aim's intention is to be competitive in light of the particular portfolio manager's experience and responsibilities.
- ANNUAL BONUS. Each portfolio manager is eligible to receive an annual cash bonus which has quantitative and non-quantitative components. Generally, 70% of the bonus is quantitatively determined, based typically on a four-year rolling average of pre-tax performance of all registered investment company accounts for which a portfolio manager has day-to-day management responsibilities versus the performance of a pre-determined peer group. In instances where a portfolio manager has responsibility for management of more than one fund, an asset weighted four-year rolling average is used.
High fund performance (against applicable peer group) would deliver compensation generally associated with top pay in the industry (determined by reference to the third-party provided compensation survey information) and poor fund performance (versus applicable peer group) could result in no bonus. The amount of fund assets under management typically has an impact on the bonus potential (for example, managing more assets increases the bonus potential); however, this factor typically carries less weight than relative performance. The remaining 30% portion of the bonus is discretionary as determined by Invesco Aim and takes into account other subjective factors.
- EQUITY-BASED COMPENSATION. Portfolio managers may be awarded options to purchase common shares and/or granted restricted shares of Invesco stock from pools determined from time to time by the Remuneration Committee of the Invesco Board of Directors. Awards of equity-based compensation typically vest over time, so as to create incentives to retain key talent.
- PARTICIPATION IN GROUP INSURANCE PROGRAMS. Portfolio managers are provided life insurance coverage in the form of a group variable universal life insurance policy, under which they may make additional contributions to purchase additional insurance coverage or for investment purposes.
- PARTICIPATION IN DEFERRED COMPENSATION PLAN. Portfolio managers are eligible to participate in a non-qualified deferred compensation plan, which affords participating employees the tax benefits of deferring the receipt of a portion of their cash compensation.
Portfolio managers also participate in benefit plans and programs available generally to all employees.
INVESCO INSTITUTIONAL (N.A.), INC.
Invesco Institutional (N.A.), Inc. seeks to maintain a compensation program that is competitively positioned to attract and retain high-caliber investment professionals. Portfolio managers receive, as more fully described below, a base salary, an incentive bonus opportunity, an equity compensation opportunity, a benefits package, and a relocation package if such benefit is applicable. Portfolio manager
compensation is reviewed and may be modified each year as appropriate to reflect changes in the market, as well as to adjust the factors used to determine bonuses to promote good sustained fund performance. Invesco Institutional (N.A.), Inc. evaluates competitive market compensation by reviewing compensation survey results conducted by an independent third party of investment industry compensation. Each portfolio manager's compensation consists of the following five elements:
- BASE SALARY. Each portfolio manager is paid a base salary which is set at a level determined to be appropriate based upon an individual's experience and responsibilities through the use of independent compensation surveys of the investment management industry.
- ANNUAL BONUS. Each portfolio manager is paid an annual cash bonus which has a performance driven component and a discretionary component, the combined total of which will typically range from 50 to over 100 percent of the manager's base salary. Generally, the majority of the bonus is pre-tax performance driven, based on the success of the team's investment results which are measured against appropriate market benchmarks and peer groups. The remaining portion of the bonus is discretionary and is determined by the sub-advisor's Chief Investment Officer and Chief Executive Officer.
- EQUITY-BASED COMPENSATION. Portfolio managers may be awarded options to purchase common shares and/or granted restricted shares or deferred shares of Invesco stock from pools determined from time to time by the Remuneration Committee of the Invesco Board of Directors. Awards of equity-based compensation typically vest over time, so as to create incentives to retain key talent.
- PARTICIPATION IN GROUP INSURANCE PROGRAMS. Portfolio managers are provided life insurance coverage in the form of a group variable universal life insurance policy, under which they may make additional contributions to purchase additional insurance coverage or for investment purposes.
PARTICIPATION IN DEFERRED COMPENSATION PLAN. Portfolio managers are eligible to participate in a non-qualified deferred compensation plan, which affords participating employees the tax benefits of deferring the receipt of a portion of their cash compensation.
Portfolio managers also participate in benefit plans and programs available generally to all employees.
INVESCO GLOBAL ASSET MANAGEMENT (N.A.), INC.
Invesco Global Asset Management (N.A.), Inc. seeks to maintain a compensation program that is competitively positioned to attract and retain high-caliber investment professionals. Portfolio managers receive, as more fully described below, a base salary, an incentive bonus opportunity, an equity compensation opportunity, a benefits package, and a relocation package if such benefit is applicable. Portfolio manager compensation is reviewed and may be modified each year as appropriate to reflect changes in the market, as well as to adjust the factors used to determine bonuses to promote good sustained fund performance. Invesco Global Asset Management (N.A.), Inc. evaluates competitive market compensation by reviewing compensation survey results conducted by an independent third party of investment industry compensation. Each portfolio manager's compensation consists of the following five elements:
- BASE SALARY. Each portfolio manager is paid a base salary which is set at a level determined to be appropriate based upon an individual's experience and responsibilities through the use of independent compensation surveys of the investment management industry.
- ANNUAL BONUS. Each portfolio manager is paid an annual cash bonus which has a performance driven component and a discretionary component, the combined total of which will typically range from 50 to over 100 percent of the manager's base salary. Generally, the majority of the bonus is pre-tax performance driven, based on the success of the team's investment results which are measured against appropriate market benchmarks and peer groups. The remaining portion of the
bonus is discretionary and is determined by the sub-advisor's Chief Investment Officer and Chief Executive Officer.
- EQUITY-BASED COMPENSATION. Portfolio managers may be awarded options to purchase common shares and/or granted restricted shares or deferred shares of Invesco stock from pools determined from time to time by the Remuneration Committee of the Invesco Board of Directors. Awards of equity-based compensation typically vest over time, so as to create incentives to retain key talent.
- PARTICIPATION IN GROUP INSURANCE PROGRAMS. Portfolio managers are provided life insurance coverage in the form of a group variable universal life insurance policy, under which they may make additional contributions to purchase additional insurance coverage or for investment purposes.
- PARTICIPATION IN DEFERRED COMPENSATION PLAN. Portfolio managers are eligible to participate in a non-qualified deferred compensation plan, which affords participating employees the tax benefits of deferring the receipt of a portion of their cash compensation.
Portfolio managers also participate in benefit plans and programs available generally to all employees.
INVESCO SENIOR SECURED MANAGEMENT, INC.
Invesco Senior Secured Management, Inc. seeks to maintain a compensation program that is competitively positioned to attract and retain high-caliber investment professionals. Portfolio managers receive, as more fully described below, a base salary, an incentive bonus opportunity, an equity compensation opportunity, a benefits package, and a relocation package if such benefit is applicable. Portfolio manager compensation is reviewed and may be modified each year as appropriate to reflect changes in the market, as well as to adjust the factors used to determine bonuses to promote good sustained fund performance. Invesco Senior Secured Management, Inc. evaluates competitive market compensation by reviewing compensation survey results conducted by an independent third party of investment industry compensation. Each portfolio manager's compensation consists of the following five elements:
- BASE SALARY. Each portfolio manager is paid a base salary which is set at a level determined to be appropriate based upon an individual's experience and responsibilities through the use of independent compensation surveys of the investment management industry.
- ANNUAL BONUS. Each portfolio manager is paid an annual cash bonus which has a performance driven component and a discretionary component, the combined total of which will typically range from 50 to over 100 percent of the manager's base salary.
- EQUITY-BASED COMPENSATION. Portfolio managers may be awarded options to purchase common shares and/or granted restricted shares or deferred shares of Invesco stock from pools determined from time to time by the Remuneration Committee of the Invesco Board of Directors. Awards of equity-based compensation typically vest over time, so as to create incentives to retain key talent.
- PARTICIPATION IN GROUP INSURANCE PROGRAMS. Portfolio managers are provided life insurance coverage in the form of a group variable universal life insurance policy, under which they may make additional contributions to purchase additional insurance coverage or for investment purposes.
- PARTICIPATION IN DEFERRED COMPENSATION PLAN. Portfolio managers are eligible to participate in a non-qualified deferred compensation plan, which affords participating employees the tax benefits of deferring the receipt of a portion of their cash compensation.
Portfolio managers also participate in benefit plans and programs available generally to all employees.
INVESCO TRIMARK INVESTMENT MANAGEMENT INC.
Invesco Trimark Investment Management Inc.'s compensation practices for its Investment team are aimed at retaining and motivating employees in order to maximize investment performance. Accordingly, the compensation packages offered to the portfolio managers are competitive with opportunities in the best managed firms in the investment management industry. Portfolio managers receive a competitive base salary, an incentive bonus opportunity, equity compensation and a benefits package. Total cash compensation, as described below, is set for each portfolio manager relative to his or her performance. Portfolio manager compensation is reviewed and modified each year as appropriate. Each portfolio manager's compensation consists of the following elements:
- BASE SALARY. Each portfolio manager is paid a base salary. In setting the base salary, Invesco Trimark Investment Management Inc.'s intention is to be competitive in light of the particular portfolio manager's experience and responsibilities.
- ANNUAL BONUS. Each portfolio manager is eligible to receive an annual cash bonus which has quantitative and qualitative components. Generally, 75% of the bonus is quantitatively determined, based primarily on the 3 and 5-year investment results of the funds for which the portfolio manager has day-to-day responsibility. In instances where a portfolio manager has responsibility for more than one fund, consideration is given to both the overall assets under management as well as the individual fund performances.
The remaining 25% portion of the bonus is discretionary as determined by Invesco Trimark Investment Management Inc. and takes into account other subjective factors.
- EQUITY-BASED COMPENSATION. Portfolio managers may be awarded options to purchase common shares and/or may be granted restricted shares of Invesco stock from pools determined by the Remuneration Committee of the Invesco Board of Directors. Awards of equity-based compensation typically vest over time, so as to create incentives to retain key talent.
- PARTICIPATION IN GROUP INSURANCE PROGRAMS. Portfolio managers are provided life insurance coverage in the form of a group term life insurance policy. They also have the opportunity of purchasing optional life insurance for their spouse and dependents.
Portfolio managers also participate in benefit plans and programs available generally to all employees.
INVESCO ASSET MANAGEMENT LIMITED (INVESCO ASSET MANAGEMENT)
The success of the Invesco Worldwide Fixed Income division of INVESCO Asset Management drives its financial rewards. Compensation is paid in the form of salary and incentive bonus and is designed to be competitive with industry standards. Bonuses are based on a combination of INVESCO Asset Management's profitability, Fixed Income Group profitability, and individual contribution to the investment process and performance. Investment professionals are also eligible for the Invesco Partnership program in which employees can share in the ownership of the firm. Employees who achieve consistent outstanding performance results may receive merit options. INVESCO Asset Management's compensation structure was developed to encourage employees, especially key investment professionals, to remain with the firm. Our compensation structure involves the following key components:
- SALARY AND BONUS. INVESCO Asset Management's compensation policy and practices are aimed at attracting and retaining highly talented employees and rewarding them for excellence in investment performance, client service, and business management. Salary ranges from 50% to 75% and bonus ranges from 25% to 50% of total compensation. The 70% of the bonus, which is quantitatively determined, is based on a 1 year and 3 year performance measurement against the performance of a pre-determined peer group. The compensation packages offered to all employees are benchmarked to be highly competitive with other leading firms in the investment management industry. INVESCO
Asset Management's compensation packages have strong links to both the firm's and the individual's performance. Salaries are adjusted periodically based on individual contribution.
All employees are eligible for bonuses. High performing professionals can receive upper quartile bonuses depending on individual performance and the firm's financial success. For portfolio managers, performance is measured against predetermined client benchmarks.
Our compensation objective is to attract and retain the best-qualified talent in the investment management industry. INVESCO Asset Management participates in annual compensation surveys, and targets the median to upper quartile of total compensation (depending on performance), to ensure that INVESCO Limited is highly competitive in the market for talent.
Stock Options and Eligibility. Portfolio managers may be awarded options to purchase common shares and/or granted restricted shares or deferred shares of Invesco stock from pools determined from time to time by the Remuneration Committee of the Invesco Board of Directors. Awards of equity-based compensation typically vest over time, so as to create incentives to retain key talent.
INVESCO ASSET MANAGEMENT (JAPAN) LIMITED (INVESCO JAPAN)
Invesco Japan offers its employees competitive salaries and attractive benefits packages. Remuneration is to a large extent dependent on performance and the generation of ideas, both from the individual and the team.
Individual fund managers are paid a competitive salary and a bonus measured by business contribution. The bonus is largely based upon the underlying performance of the funds that they manage over a rolling one and three-year period, together with their overall contribution to the success of the team. This contribution is defined in terms of research, teamwork, marketing and revenue. As a rough standard, 70% is reviewed from quantitative measurement such as performance, growth of AUM, and 30% from qualitative measurement, such as contribution to development in investment process.
Portfolio managers may be awarded options to purchase common shares and/or granted restricted shares or deferred shares of Invesco stock from pools determined from time to time by the Remuneration Committee of the Invesco Board of Directors. Awards of equity-based compensation typically vest over time, so as to create incentives to retain key talent.
Although we are a large public company, Invesco Japan's management structure is de-centralised to promote an entrepreneurial mindset. Senior professionals have significant responsibility and authority, and we believe that our structure allows each operating group to focus on and maximise local investment opportunities, service clients more effectively, and operate more efficiently. In this environment, stock ownership by management and other employees is an important means of aligning their interests with those of our shareholders. Invesco Japan has implemented various employee benefit plans to promote stock ownership by management and employees.
INVESCO HONG KONG LIMITED (INVESCO HONG KONG)
Invesco Hong Kong strives to have a compensation policy and practices for portfolio managers to attract and retain highly talented portfolio managers and reward them for excellence in investment performance, client service, and business management. The compensation packages offered to them are benchmarked to be highly competitive with other leading firms in the investment management industry in accordance with their experience and responsibilities and would be reviewed annually.
Portfolio Managers receive a base salary, bonus and a benefit package which available generally to all employees.
- BASE SALARY. The portfolio managers receives a base salary. The level of the base salary is based on the experience and responsibilities.
- ANNUAL BONUS. The portfolio managers are entitled to receive an annual bonus which has quantitative and qualitative components. In principle, 70% weighting is nqunatitatively determined while 30% is qualitatively determined. High performing professionals can receive upper quartile bonuses depending on individual performance and the firm's financial success. Specifically, portfolio managers' performance is measured against predetermined client benchmarks.
- EQUITY-BASED COMPENSATION: In addition to salary and bonus, Invesco Hong Kong Limited provides a comprehensive benefit program such as pension scheme, medical and life insurances and share saving plans to all employees including portfolio managers. Invesco Hong Kong Limited believes that employee ownership is one of the key motivating factors contributing to the stability of our organization. In addition, any key employees who achieve consistent outstanding performance results and contributions to the businesss can also be rewarded for merit options.
APPENDIX I
ADMINISTRATIVE SERVICES FEES
The Funds paid Invesco Aim the following amounts for administrative services for the last three fiscal periods:
FUND NAME 2007 2006 2005
------------------------------------ ---- ----------- ------------
AIM V.I. Basic Balanced Fund $ 244,188 $ 255,807
AIM V.I. Basic Value Fund 2,219,812 2,271,261
AIM V.I. Capital Appreciation Fund 3,684,721 2,660,779
AIM V.I. Capital Development Fund 613,485 506,813
AIM V.I. Core Equity Fund 5,785,524 3,555,685
AIM V.I. Diversified Income Fund 141,102 154,692
AIM V.I. Dynamics Fund 376,725 335,943
AIM V.I. Financial Services Fund 384,973 465,794
AIM V.I. Global Health Care Fund 781,280 840,377
AIM V.I. Global Real Estate Fund(1) 350,878 241,239
AIM V.I. Government Securities Fund 2,318,900 2,024,797
AIM V.I. High Yield Fund 175,709 223,050
AIM V.I. International Growth Fund 1,500,504 996,048
AIM V.I. Large Cap Growth Fund 221,467 51,916
AIM V.I. Leisure Fund 179,720 180,452
AIM V.I. Mid Cap Core Equity Fund 1,724,200 1,586,512
AIM V.I. Money Market Fund 141,239 151,196
AIM V.I. Small Cap Equity Fund 215,952 130,414
AIM V.I. Technology Fund 499,415 494,632
AIM V.I. Utilities Fund 322,038 463,332
|
(1) Prior to April 30, 2004, IFG either directly or through affiliated companies, provided certain administrative subaccounting, and recordkeeping services to AIM V.I. Global Real Estate Fund under a prior administrative service agreement.
APPENDIX J
BROKERAGE COMMISSIONS
Set forth below are brokerage commissions(1) paid by each of the Funds listed below during the last three fiscal years or period ended December 31. Unless otherwise indicated, the amount of brokerage commissions paid by a Fund may change from year to year because of, among other things, changing asset levels, shareholder activity, and/or portfolio turnover:
FUND 2007 2006 2005
----------------------------------- -------------- -------------- -----------
AIM V.I. Basic Balanced Fund $ 36,481.95 $ 32,225.66 $ 21,203
AIM V.I. Basic Value Fund 472,207.56 374,179.34 294,952
AIM V.I. Capital Appreciation Fund 2,296,347.93 3,474,201.60 2,068,125
AIM V.I. Capital Development Fund 711,539.73 615,385.29 525,615
AIM V.I. Core Equity Fund 3,179,214.17 2,023,109.37 1,662,414
AIM V.I. Diversified Income Fund 25.00 -0- -0-
AIM V.I. Dynamics Fund 296,945.29 387,058.18 299,712
AIM V.I. Financial Services Fund 34,713.54 31,895.23 48,974
AIM V.I. Global Health Care Fund 485,870.06 526,067.31 614,742
AIM V.I. Global Real Estate Fund 286,105.00 343,505.00 129,032
AIM V.I. Government Securities Fund N/A N/A N/A
AIM V.I. High Yield Fund 279.93 220.52 150
AIM V.I. International Growth Fund 1,761,222.03 951,596.93 672,128
AIM V.I. Large Cap Growth Fund 72,775.67 119,740.71 6,368
AIM V.I. Leisure Fund 21,309.84 28,333.52 33,323
AIM V.I. Mid Cap Core Equity Fund 1,039,900.00 1,144,457.35 881,607
AIM V.I. Money Market Fund N/A N/A N/A
AIM V.I. Small Cap Equity Fund 203,970.35 104,484.66 62,530
AIM V.I. Technology Fund 325,343.61 744,727.86 760,447
AIM V.I. Utilities Fund 95,228.54 93,988.33 150,751
|
APPENDIX K
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF
SECURITIES OF REGULAR BROKERS OR DEALERS
During the last fiscal year ended December 31, 2007, each Fund allocated the following amount of transactions to broker-dealers that provided Invesco Aim with certain research, statistics and other information:
Related
Fund Transactions Brokerage Commissions
----------------------------------- ------------------- ---------------------
AIM V.I. Basic Balanced Fund $ 38,072,723.23 $ 33,983.17
AIM V.I. Basic Value Fund 444,644,456.26 437,616.11
AIM V.I. Capital Appreciation Fund 1,995,453,955.68 2,409,716.52
AIM V.I. Capital Development Fund 609,700,811.40 1,575,996.93
AIM V.I. Core Equity Fund 2,389,914,103.99 3,174,461.33
AIM V.I. Diversified Income Fund 20,633.98 25.00
AIM V.I. Dynamics Fund 262,455,506.58 617,845.70
AIM V.I. Financial Services Fund 36,438,594.95 83,301.69
AIM V.I. Global Health Care Fund 379,422,454.03 879,572.18
AIM V.I. Global Real Estate Fund 151,125,989.26 237,451.78
AIM V.I. Government Securities Fund N/A N/A
AIM V.I. High Yield Fund 279.93 306,539.23
AIM V.I. International Growth Fund 866,456,389.18 1,684,491.93
AIM V.I. Large Cap Growth Fund 141,778,063.17 68,986.73
AIM V.I. Leisure Fund 21,372,125.72 33,375.54
AIM V.I. Mid Cap Core Equity Fund 643,252,088.59 958,413.93
AIM V.I. Money Market Fund - -
AIM V.I. Small Cap Equity Fund 153,944,523.63 307,870.34
AIM V.I. Technology Fund 204,449,840.86 401,987.84
AIMI V.I. Utilities Fund 78,210,055.32 123,764.33
|
Information concerning the Funds' acquisition of securities of their regular brokers or dealers during the last fiscal year ended December 31, 2007 were as follows:
MARKET VALUE
(AS OF
DECEMBER 31,
FUND / ISSUER SECURITY 2007)
----------------------------- -------- ------------
|
APPENDIX L
CERTAIN FINANCIAL ADVISORS THAT RECEIVE ONE OR MORE TYPES OF PAYMENTS
1st Global Capital Corporation
A G Edwards & Sons, Inc.
ADP Broker Dealer, Inc.
Advantage Capital Corporation
American General Securities, Inc.
American Skandia Life Assurance Corporation
American United Life Insurance Company
Ameriprise Financial Services, Inc.
APS Financial
Associated Securities Corporation
AXA Advisors, LLC
Bank of New York
Bank of Oklahoma N.A.
BBVA Investments
Bear Stearns Securities Co
Brown Brothers Harriman
Cadaret Grant & Company, Inc.
Cambridge Investment Research, Inc.
Cantella
Cantor Fitzgerald
Centennial Bank
Charles Schwab & Company, Inc.
Chase Investment Services Corporation
Chicago Mercantile Exchange
Citigroup
CitiCorp Investment Services
Citigroup Global Markets, Inc.
Citistreet Equities LLC
Comerica Bank
Commonwealth Financial Network
Compass Brokerage, Inc.
Contemporary Financial Solutions, Inc.
Credit Suisse
CUNA Brokerage Services, Inc.
CUSO Financial Services, Inc.
Equity Services, Inc.
Fidelity Brokerage Services, LLC
Fidelity Institutional Operations Company, Inc.
Fifth Third Bank
Financial Network Investment Corporation
Fiserv
Frost Brokerage Services, Inc.
Frost National Bank
FSC Securities Corporation
Fund Services Advisors
Goldman Sachs
Great West Life & Annuity Company
Guaranty Bank & Trust
Guardian Insurance & Annuity Company, Inc.
GunnAllen Finanical
Harris Nesbitt Burns
H. D. Vest Investment Securities, Inc.
Hilliard Lyons, Inc.
Hornor Townsend & Kent, Inc.
Huntington
ING Financial Partners, Inc.
ING USA Annuity and Life Insurance Company
Intersecurities, Inc.
INVEST Financial Corporation, Inc.
Investment Centers of America, Inc.
Jefferson Pilot Securities Corporation
JM Lummis Securities
JP Morgan Chase
LaSalle
Lincoln Financial Advisors Corporation
Lincoln Investment Planning, Inc.
Linsco/Private Ledger Corporation
M & I Trust
M & T Securities, Inc.
M M L Investors Services, Inc.
Matrix
McDonald Investments, Inc.
Mellon Financial
Merrill Lynch & Company, Inc.
Merrill Lynch Life Insurance Company
Metlife Securities, Inc.
Meyer Financial Group
Money Concepts Capital Corporation
Morgan Keegan & Company, Inc.
Morgan Stanley
Morgan Stanley DW Inc.
Multi-Financial Securities Corporation
Mutual Service Corporation
N F P Securities, Inc.
NatCity Investments, Inc.
National Planning Corporation
Nationwide Investment Services Corporation
New England Securities Corporation
Next Financial Group, Inc.
Northwestern Mutual Investment Services
NYLIFE Distributors, LLC
Oppenheimer & Company, Inc.
Pershing LLC
PFS Investments, Inc.
Piper Jaffray & Company
PNC Capital Markets
Primevest Financial Services, Inc.
Proequities, Inc.
R B C Centura Securities, Inc.
R B C Dain Rauscher, Inc.
Raymond James & Associates, Inc.
Raymond James Financial Services, Inc.
Ross Sinclair and Associates
Royal Alliance Associates, Inc.
SCF Securities
S I I Investments, Inc.
Securities America, Inc.
Sentra Securities Corporation
Signator Investors, Inc.
Simmons 1st Investment Group
Spelman & Company, Inc.
State Farm VP Management Corp
State Street Bank & Trust Company
SunAmerica Securities, Inc.
SunGard Institutional Brokerage, Inc.
Sungard Investment Products, Inc.
SunTrust Bank, Central Florida, N.A.
SunTrust Robinson Humphrey
SWS Financial Services
The (Wilson) William Financial
Tower Square Securities, Inc.
Transamerica Financial Advisors, Inc.
Transamerica Life Insurance & Annuity Company
Trust Management Network
U.S. Bancorp Investments, Inc.
UBS Financial Services Inc.
Union Bank of California
United Planner Financial Service
USAllianz Securities, Inc.
US Bank
UVEST Financial Services, Inc.
V S R Financial Services, Inc.
VALIC Financial Advisors, Inc.
vFinance Investments
Wachovia Capital Markets LLC
Wachovia Securities, LLC
Walnut Street Securities, Inc.
Waterstone Financial Group, Inc.
Wells Fargo Investments, LLC
Woodbury Financial Services, Inc.
X C U Capital Corporation, Inc.
Zions Bank
APPENDIX M
AMOUNTS PAID TO INVESCO AIM DISTRIBUTORS, INC. PURSUANT TO DISTRIBUTION PLAN
A list of amounts paid by each class of shares toInvesco Aim Distributors pursuant to the Plan for the fiscal year or period ended December 31, 2007 are as follows:
SERIES I SERIES II
FUND SHARES SHARES
----------------------------------- -------- ---------
AIM V.I. Basic Balanced Fund N/A $
AIM V.I. Basic Value Fund N/A
AIM V.I. Capital Appreciation Fund N/A
AIM V.I. Capital Development Fund N/A
AIM V.I. Core Equity Fund N/A
AIM V.I. Diversified Income Fund N/A
AIM V.I. Dynamics Fund N/A
AIM V.I. Financial Services Fund N/A
AIM V.I. Global Health Care Fund N/A
AIM V.I. Global Real Estate Fund N/A
AIM V.I. Government Securities Fund N/A
AIM V.I. High Yield Fund N/A
AIM V.I. International Growth Fund N/A
AIM V.I. Large Cap Growth Fund N/A
AIM V.I. Leisure Fund N/A
AIM V.I. Mid Cap Core Equity Fund N/A
AIM V.I. Money Market Fund N/A
AIM V.I. Small Cap Equity Fund N/A
AIM V.I. Technology Fund N/A
AIM V.I. Utilities Fund N/A
|
APPENDIX N
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, 2007 follows:
PRINTING COMPENSATION COMPENSATION ANNUAL
& TO TO SALES REPORT
ADVERTISING MAILING SEMINARS DEALER* PERSONNEL TOTAL
----------- -------- -------- ------------ ------------ ------
AIM V.I. Basic Balanced
Fund - - - $ - $
AIM V.I. Basic Value Fund - - - -
AIM V.I. Capital
Appreciation Fund - - - -
AIM V.I. Capital
Development Fund - - - -
AIM V.I. Core Equity Fund - - - -
AIM V.I. Diversified
Income Fund - - - -
AIM V.I. Dynamics Fund - - - -
AIM V.I. Financial
Services Fund - - - -
AIM V.I. Global Health
Care Fund - - - -
AIM V.I. Global Real
Estate Fund - - - -
AIM V.I. Government
Securities Fund - - - -
AIM V.I. High Yield Fund - - - -
AIM V.I. International
Growth Fund - - - -
AIM V.I. Large Cap
Growth Fund - - - -
AIM V.I. Leisure Fund - - - -
AIM V.I. Mid Cap Core
Equity Fund - - - -
AIM V.I. Money Market
Fund - - - -
AIM V.I. Small Cap
Equity Fund - - - -
AIM V.I. Technology Fund - - - -
AIM V.I. Utilities Fund - - - -
|
APPENDIX O-1
PENDING LITIGATION ALLEGING MARKET TIMING
The following civil lawsuits, including purported class action and shareholder derivative suits, involve, depending on the lawsuit, one or more AIM Funds, IFG, Invesco Aim, Invesco Aim Management and Invesco, certain related entities, certain of their current and former officers and/or certain unrelated third parties and are based on allegations of improper market timing and related activity in the AIM Funds. These lawsuits either have been served or have had service of process waived (with the exception of the Sayegh lawsuit discussed below).
RICHARD LEPERA, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, v.
INVESCO FUNDS GROUP, INC., INVESCO STOCK FUNDS, INC., INVESCO BOND FUNDS,
INC., INVESCO SECTOR FUNDS, INC. AND DOE DEFENDANTS 1-100, in the District
Court, City and County of Denver, Colorado, (Civil Action No. 03-CV-7600),
filed on October 2, 2003. This claim alleges: common law breach of
fiduciary duty; common law breach of contract; and common law tortious
interference with contract. The plaintiff in this case is seeking:
compensatory and punitive damages; injunctive relief; disgorgement of
revenues and profits; and costs and expenses, including counsel fees and
expert fees.
MIKE SAYEGH, ON BEHALF OF THE GENERAL PUBLIC, v. JANUS CAPITAL CORPORATION, JANUS CAPITAL MANAGEMENT LLC, JANUS INVESTMENT FUND, EDWARD J. STERN, CANARY CAPITAL PARTNERS LLC, CANARY INVESTMENT MANAGEMENT LLC, CANARY CAPITAL PARTNERS LTD., KAPLAN & CO. SECURITIES INC., BANK ONE
CORPORATION, BANC ONE INVESTMENT ADVISORS, THE ONE GROUP MUTUAL FUNDS,
BANK OF AMERICA CORPORATION, BANC OF AMERICA CAPITAL MANAGEMENT LLC, BANC
OF AMERICA ADVISORS LLC, NATIONS FUND INC., ROBERT H. GORDON, THEODORE H.
SIHPOL III, CHARLES D. BRYCELAND, SECURITY TRUST COMPANY, STRONG CAPITAL
MANAGEMENT INC., JB OXFORD & COMPANY, ALLIANCE CAPITAL MANAGEMENT HOLDING
L.P., ALLIANCE CAPITAL MANAGEMENT L.P., ALLIANCE CAPITAL MANAGEMENT
CORPORATION, AXA FINANCIAL INC., ALLIANCEBERNSTEIN REGISTRANTS, GERALD
MALONE, CHARLES SCHAFFRAN, MARSH & MCLENNAN COMPANIES, INC., PUTNAM
INVESTMENTS TRUST, PUTNAM INVESTMENT MANAGEMENT LLC, PUTNAM INVESTMENT
FUNDS, AND DOES 1-500, in the Superior Court of the State of California,
County of Los Angeles (Case No. BC304655), filed on October 22, 2003 and
amended on December 17, 2003 to substitute INVESCO Funds Group, Inc. and
Raymond R. Cunningham for unnamed Doe defendants. This claim alleges
unfair business practices and violations of Sections 17200 and 17203 of
the California Business and Professions Code. The plaintiff in this case
is seeking: injunctive relief; restitution, including pre-judgment
interest; an accounting to determine the amount to be returned by the
defendants and the amount to be refunded to the public; the creation of an
administrative process whereby injured customers of the defendants receive
their losses; and counsel fees.
RAJ SANYAL, DERIVATIVELY ON BEHALF OF NATIONS INTERNATIONAL EQUITY FUND,
v. WILLIAM P. CARMICHAEL, WILLIAM H. GRIGG, THOMAS F. KELLER, CARL E.
MUNDY, JR., CORNELIUS J. PINGS, A. MAX WALKER, CHARLES B. WALKER, EDMUND
L. BENSON, III, ROBERT H. GORDON, JAMES B. SOMMERS, THOMAS S. WORD, JR.,
EDWARD D. BEDARD, GERALD MURPHY, ROBERT B. CARROLL, INVESCO GLOBAL ASSET
MANAGEMENT, PUTNAM INVESTMENT MANAGEMENT, BANK OF AMERICA CORPORATION,
MARSICO CAPITAL MANAGEMENT, LLC, BANC OF AMERICA ADVISORS, LLC, BANC OF
AMERICA CAPITAL
MANAGEMENT, LLC, AND NATIONS FUNDS TRUST, in the Superior Court Division, State of North Carolina (Civil Action No. 03-CVS-19622), filed on November 14, 2003. This claim alleges common law breach of fiduciary duty; abuse of control; gross mismanagement; waste of fund assets; and unjust enrichment. The plaintiff in this case is seeking: injunctive relief, including imposition of a constructive trust; damages; restitution and disgorgement; and costs and expenses, including counsel fees and expert fees.
L. SCOTT KARLIN, DERIVATIVELY ON BEHALF OF INVESCO FUNDS GROUP, INC. v.
AMVESCAP, PLC, INVESCO, INC., CANARY CAPITAL PARTNERS, LLC, CANARY
INVESTMENT MANAGEMENT, LLC, AND CANARY CAPITAL PARTNERS, LTD., in the
United States District Court, District of Colorado (Civil Action No.
03-MK-2406), filed on November 28, 2003. This claim alleges violations of
Section 36(b) of the Investment Company Act of 1940 ("Investment Company
Act"), and common law breach of fiduciary duty. The plaintiff in this case
is seeking damages and costs and expenses, including counsel fees and
expert fees.
RICHARD RAVER, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED, v. INVESCO FUNDS GROUP, INC., INVESCO STOCK FUNDS, INC, AIM
MANAGEMENT GROUP, INC., AIM STOCK FUNDS, AIM STOCK FUNDS, INC., AMVESCAP
PLC, INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND,
INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES
FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND,
INVESCO INTERNATIONAL CORE EQUITY FUND, INVESCO LEISURE FUND, INVESCO
MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, INVESCO S&P 500 INDEX
FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO
TOTAL RETURN FUND, INVESCO UTILITIES FUND, INVESCO ADVANTAGE FUND, INVESCO
BALANCED FUND, INVESCO EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO HIGH
YIELD FUND, INVESCO GROWTH & INCOME FUND, INVESCO INTERNATIONAL BLUE CHIP
VALUE FUND, INVESCO REAL ESTATE OPPORTUNITY FUND, INVESCO SELECT FUND,
INVESCO TAX-FREE BOND FUND, INVESCO TELECOMMUNICATIONS FUND, INVESCO U.S.
GOVERNMENT SECURITIES FUND, INVESCO VALUE FUND, EDWARD J. STERN, CANARY
INVESTMENT MANAGEMENT, LLC, CANARY CAPITAL PARTNERS, LTD., CANARY CAPITAL
PARTNERS, LLC, AND DOES 1-100, in the United States District Court,
District of Colorado (Civil Action No. 03-F-2441), filed on December 2,
2003. This claim alleges violations of: Sections 11 and 15 of the
Securities Act of 1933 (the "Securities Act"); Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 (the "Exchange Act"); Rule 10b-5 under
the Exchange Act; and Sections 34(b), 36(a) and 36(b) of the Investment
Company Act. The claim also alleges common law breach of fiduciary duty.
The plaintiffs in this case are seeking: damages; pre-judgment and
post-judgment interest; counsel fees and expert fees; and other relief.
JERRY FATTAH, CUSTODIAN FOR BASIM FATTAH, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, v. INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND (FORMERLY KNOWN AS INTERNATIONAL BLUE CHIP VALUE FUND), INVESCO LEISURE FUND, INVESCO MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, AIM INVESCO S&P 500 INDEX FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND, INVESCO UTILITIES FUND, AIM MONEY MARKET FUND, AIM INVESCO TAX-FREE MONEY FUND, AIM INVESCO TREASURER'S MONEY MARKET RESERVE FUND, AIM INVESCO TREASURER'S TAX-EXEMPT RESERVE
FUND, AIM INVESCO U.S. GOVERNMENT MONEY FUND, INVESCO ADVANTAGE FUND,
INVESCO BALANCED FUND, INVESCO EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO
HIGH YIELD FUND, INVESCO GROWTH & INCOME FUND, INVESCO REAL ESTATE
OPPORTUNITY FUND, INVESCO SELECT INCOME FUND, INVESCO TAX-FREE BOND FUND,
INVESCO TELECOMMUNICATIONS FUND, INVESCO U.S. GOVERNMENT SECURITIES FUND,
INVESCO VALUE FUND, INVESCO, INVESCO LATIN AMERICAN GROWTH FUND
(COLLECTIVELY KNOWN AS THE "INVESCO FUNDS"), AIM STOCK FUNDS, AIM
COUNSELOR SERIES TRUST, AIM SECTOR FUNDS INC., AIM BOND FUNDS INC., AIM
COMBINATION STOCK AND BOND FUNDS INC., AIM MONEY MARKET FUNDS INC., AIM
INTERNATIONAL FUNDS INC. (COLLECTIVELY KNOWN AS THE "INVESCO FUNDS
REGISTRANTS"), AMVESCAP PLC, INVESCO FUNDS GROUP INC., TIMOTHY MILLER,
RAYMOND CUNNINGHAM, THOMAS KOLBE, EDWARD STERN, AMERICAN SKANDIA INC.,
BREAN MURRAY & CO., INC., CANARY CAPITAL PARTNERS, LLC, CANARY INVESTMENT
MANAGEMENT, LLC, CANARY CAPITAL PARTNERS, LTD., AND JOHN DOES 1-100, in
the United States District Court, District of Colorado (Civil Action No.
03-F-2456), filed on December 4, 2003. This claim alleges violations of:
Sections 11 and 15 of Securities Act; Sections 10(b) and 20(a) of the
Exchange Act; Rule 10b-5 under the Exchange Act; and Section 206 of the
Investment Advisers Act of 1940, as amended (the "Advisers Act"). The
plaintiffs in this case are seeking: compensatory damages; rescission;
return of fees paid; accounting for wrongfully gotten gains, profits and
compensation; restitution and disgorgement; and other costs and expenses,
including counsel fees and expert fees.
EDWARD LOWINGER AND SHARON LOWINGER, INDIVIDUALLY AND ON BEHALF OF ALL
OTHERS SIMILARLY SITUATED, v. INVESCO ADVANTAGE HEALTH SCIENCES FUND,
INVESCO CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND,
INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND,
INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND
(FORMERLY KNOWN AS INTERNATIONAL BLUE CHIP VALUE FUND), INVESCO LEISURE
FUND, INVESCO MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, AIM INVESCO
S&P 500 INDEX FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY
FUND, INVESCO TOTAL RETURN FUND, INVESCO UTILITIES FUND, AIM MONEY MARKET
FUND, AIM INVESCO TAX-FREE MONEY FUND, AIM INVESCO TREASURER'S MONEY
MARKET RESERVE FUND, AIM INVESCO TREASURER'S TAX-EXEMPT RESERVE FUND, AIM
INVESCO U.S. GOVERNMENT MONEY FUND, INVESCO ADVANTAGE FUND, INVESCO
BALANCED FUND, INVESCO EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO
HIGH-YIELD FUND, INVESCO GROWTH & INCOME FUND, INVESCO REAL ESTATE
OPPORTUNITY FUND, INVESCO SELECT INCOME FUND, INVESCO TAX-FREE BOND FUND,
INVESCO TELECOMMUNICATIONS FUND, INVESCO U.S. GOVERNMENT SECURITIES FUND,
INVESCO VALUE FUND, INVESCO; INVESCO LATIN AMERICAN GROWTH FUND
(COLLECTIVELY KNOWN AS THE "INVESCO FUNDS"), AIM STOCK FUNDS, AIM
COUNSELOR SERIES TRUST, AIM SECTOR FUNDS INC., AIM BOND FUNDS INC., AIM
COMBINATION STOCK AND BOND FUNDS INC., AIM MONEY MARKET FUNDS INC., AIM
INTERNATIONAL FUNDS INC. (COLLECTIVELY KNOWN AS THE "INVESCO FUNDS
REGISTRANTS"), AMVESCAP PLC, INVESCO FUNDS GROUP, INC., TIMOTHY MILLER,
RAYMOND CUNNINGHAM, THOMAS KOLBE, EDWARD J. STERN, AMERICAN SKANDIA INC.,
BREAN MURRAY & CO., INC., CANARY CAPITAL PARTNERS, LLC, CANARY INVESTMENT
MANAGEMENT, LLC, CANARY CAPITAL PARTNERS, LTD., AND JOHN DOES 1-100, in
the United States District Court, Southern District of New York (Civil
Action No. 03-CV-9634), filed on December 4, 2003. This claim alleges
violations of: Sections 11 and 15 of the Securities Act; Sections 10(b)
and 20(a) of the Exchange Act; Rule 10b-5 under the Exchange Act; and
Section 206 of the Advisers Act. The plaintiffs in this case are seeking:
compensatory damages; rescission; return of fees
paid; accounting for wrongfully gotten gains, profits and compensation; restitution and disgorgement; and other costs and expenses, including counsel fees and expert fees.
JOEL GOODMAN, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
v. INVESCO FUNDS GROUP, INC. AND RAYMOND R. CUNNINGHAM, in the District
Court, City and County of Denver, Colorado (Case Number 03CV9268), filed
on December 5, 2003. This claim alleges common law breach of fiduciary
duty and aiding and abetting breach of fiduciary duty. The plaintiffs in
this case are seeking: injunctive relief; accounting for all damages and
for all profits and any special benefits obtained; disgorgement;
restitution and damages; costs and disbursements, including counsel fees
and expert fees; and equitable relief.
STEVEN B. EHRLICH, CUSTODIAN FOR ALEXA P. EHRLICH, UGTMA/FLORIDA, AND
DENNY P. JACOBSON, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED, v. INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY
FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL
SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH
SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND (FORMERLY KNOWN AS
INTERNATIONAL BLUE CHIP VALUE FUND), INVESCO LEISURE FUND, INVESCO MID-CAP
GROWTH FUND, INVESCO MULTI-SECTOR FUND, AIM INVESCO S&P 500 INDEX FUND,
INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL
RETURN FUND, INVESCO UTILITIES FUND, AIM MONEY MARKET FUND, AIM INVESCO
TAX-FREE MONEY FUND, AIM INVESCO TREASURERS MONEY MARKET RESERVE FUND, AIM
INVESCO TREASURERS TAX-EXEMPT RESERVE FUND, AIM INVESCO US GOVERNMENT
MONEY FUND, INVESCO ADVANTAGE FUND, INVESCO BALANCED FUND, INVESCO
EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO HIGH-YIELD FUND, INVESCO
GROWTH & INCOME FUND, INVESCO REAL ESTATE OPPORTUNITY FUND, INVESCO SELECT
INCOME FUND, INVESCO TAX-FREE BOND FUND, INVESCO TELECOMMUNICATIONS FUND,
INVESCO U.S. GOVERNMENT SECURITIES FUND, INVESCO VALUE FUND, INVESCO LATIN
AMERICAN GROWTH FUND (COLLECTIVELY KNOWN AS THE "INVESCO FUNDS"), AIM
STOCK FUNDS, AIM COUNSELOR SERIES TRUST, AIM SECTOR FUNDS INC., AIM BOND
FUNDS INC., AIM COMBINATION STOCK AND BOND FUNDS INC., AIM MONEY MARKET
FUNDS INC., AIM INTERNATIONAL FUNDS INC. (COLLECTIVELY KNOWN AS THE
"INVESCO FUNDS REGISTRANTS"), AMVESCAP PLC, INVESCO FUNDS GROUP, INC.,
TIMOTHY MILLER, RAYMOND CUNNINGHAM, THOMAS KOLBE, EDWARD J. STERN,
AMERICAN SKANDIA INC., BREAN MURRAY & CO., INC., CANARY CAPITAL PARTNERS,
LLC, CANARY INVESTMENT MANAGEMENT, LLC, CANARY CAPITAL PARTNERS, LTD., AND
JOHN DOES 1-100, in the United States District Court, District of Colorado
(Civil Action No. 03-N-2559), filed on December 17, 2003. This claim
alleges violations of: Sections 11 and 15 of the Securities Act; Sections
10(b) and 20(a) of the Exchange Act; Rule 10b-5 under the Exchange Act;
and Section 206 of the Advisers Act. The plaintiffs in this case are
seeking: compensatory damages; rescission; return of fees paid; accounting
for wrongfully gotten gains, profits and compensation; restitution and
disgorgement; and other costs and expenses, including counsel fees and
expert fees.
JOSEPH R. RUSSO, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, v. INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND (FORMERLY KNOWN AS INTERNATIONAL BLUE CHIP VALUE FUND), INVESCO LEISURE FUND, INVESCO MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, AIM INVESCO S&P 500 INDEX FUND, INVESCO SMALL COMPANY
GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND, INVESCO
UTILITIES FUND, AIM MONEY MARKET FUND, AIM INVESCO TAX-FREE MONEY FUND,
AIM INVESCO TREASURERS MONEY MARKET RESERVE FUND, AIM INVESCO TREASURERS
TAX-EXEMPT RESERVE FUND, AIM INVESCO US GOVERNMENT MONEY FUND, INVESCO
ADVANTAGE FUND, INVESCO BALANCED FUND, INVESCO EUROPEAN FUND, INVESCO
GROWTH FUND, INVESCO HIGH-YIELD FUND, INVESCO GROWTH & INCOME FUND,
INVESCO REAL ESTATE OPPORTUNITY FUND, INVESCO SELECT INCOME FUND, INVESCO
TAX-FREE BOND FUND, INVESCO TELECOMMUNICATIONS FUND, INVESCO U.S.
GOVERNMENT SECURITIES FUND, INVESCO VALUE FUND, INVESCO LATIN AMERICAN
GROWTH FUND (COLLECTIVELY KNOWN AS THE "INVESCO FUNDS"), AIM STOCK FUNDS,
AIM COUNSELOR SERIES TRUST, AIM SECTOR FUNDS INC., AIM BOND FUNDS INC.,
AIM COMBINATION STOCK AND BOND FUNDS INC., AIM MONEY MARKET FUNDS INC.,
AIM INTERNATIONAL FUNDS INC. (COLLECTIVELY KNOWN AS THE "INVESCO FUNDS
REGISTRANTS"), AMVESCAP PLC, INVESCO FUNDS GROUP, INC., TIMOTHY MILLER,
RAYMOND CUNNINGHAM, THOMAS KOLBE, EDWARD J. STERN, AMERICAN SKANDIA INC.,
BREAN MURRAY & CO., INC., CANARY CAPITAL PARTNERS, LLC, CANARY INVESTMENT
MANAGEMENT, LLC, CANARY CAPITAL PARTNERS, LTD., AND JOHN DOES 1-100, in
the United States District Court, Southern District of New York (Civil
Action No. 03-CV-10045), filed on December 18, 2003. This claim alleges
violations of: Sections 11 and 15 of the Securities Act; Sections 10(b)
and 20(a) of the Exchange Act; Rule 10b-5 under the Exchange Act; and
Section 206 of the Advisers Act. The plaintiffs in this case are seeking:
compensatory damages; rescission; return of fees paid; accounting for
wrongfully gotten gains, profits and compensation; restitution and
disgorgement; and other costs and expenses, including counsel fees and
expert fees.
MIRIAM CALDERON, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED, V. AMVESCAP PLC, AVZ, INC., AMVESCAP RETIREMENT, INC., AMVESCAP
NATIONAL TRUST COMPANY, ROBERT F. MCCULLOUGH, GORDON NEBEKER, JEFFREY G.
CALLAHAN, INVESCO FUNDS GROUP, INC., RAYMOND R. CUNNINGHAM, AND DOES
1-100, in the United States District Court, District of Colorado (Civil
Action No. 03-M-2604), filed on December 24, 2003. This claim alleges
violations of Sections 404, 405 and 406B of the Employee Retirement Income
Security Act ("ERISA"). The plaintiffs in this case are seeking:
declarations that the defendants breached their ERISA fiduciary duties and
that they are not entitled to the protection of Section 404(c)(1)(B) of
ERISA; an order compelling the defendants to make good all losses to a
particular retirement plan described in this case (the "Retirement Plan")
resulting from the defendants' breaches of their fiduciary duties,
including losses to the Retirement Plan resulting from imprudent
investment of the Retirement Plan's assets, and to restore to the
Retirement Plan all profits the defendants made through use of the
Retirement Plan's assets, and to restore to the Retirement Plan all
profits which the participants would have made if the defendants had
fulfilled their fiduciary obligations; damages on behalf of the Retirement
Plan; imposition of a constructive trust, injunctive relief, damages
suffered by the Retirement Plan, to be allocated proportionately to the
participants in the Retirement Plan; restitution and other costs and
expenses, including counsel fees and expert fees.
PAT B. GORSUCH AND GEORGE L. GORSUCH v. INVESCO FUNDS GROUP, INC. AND AIM
ADVISER, INC., in the United States District Court, District of Colorado
(Civil Action No. 03-MK-2612), filed on December 24, 2003. This claim
alleges violations of Sections 15(a), 20(a) and 36(b) of the Investment
Company Act. The plaintiffs in this case are seeking: rescission and/or
voiding of the investment advisory agreements; return of fees paid;
damages; and other costs and expenses, including counsel fees and expert
fees.
LORI WEINRIB, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
V. INVESCO FUNDS GROUP, INC., AIM STOCK FUNDS, AIM COUNSELOR SERIES TRUST,
AIM SECTOR FUNDS INC., AIM BOND FUNDS INC., AIM COMBINATION STOCK AND BOND
FUNDS INC., AIM MONEY MARKET FUNDS INC., AIM INTERNATIONAL FUNDS INC.,
AMVESCAP PLC, TIMOTHY MILLER, RAYMOND CUNNINGHAM, THOMAS KOLBE, EDWARD J.
STERN, AMERICAN SKANDIA INC., BREAN MURRAY & CO., INC., CANARY CAPITAL
PARTNERS, LLC, CANARY INVESTMENT MANAGEMENT, LLC, CANARY CAPITAL PARTNERS,
LTD., AND JOHN DOES 1-100, in the United States District Court, Southern
District of New York (Civil Action No. 04-CV-00492), filed on January 21,
2004. This claim alleges violations of: Sections 11 and 15 of the 1933
Act; Sections 10(b) and 20(a) of the Exchange Act; Rule 10b-5 under the
Exchange Act; and Section 206 of the Advisers Act. The plaintiffs in this
case are seeking: compensatory damages; rescission; return of fees paid;
accounting for wrongfully gotten gains, profits and compensation;
restitution and disgorgement; and other costs and expenses, including
counsel fees and expert fees.
ROBERT S. BALLAGH, JR., INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED, v. INVESCO FUNDS GROUP, INC., INVESCO STOCK FUNDS, INC., AIM
MANAGEMENT GROUP, INC., AIM STOCK FUNDS, AIM STOCK FUNDS, INC., AMVESCAP
PLC, INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND,
INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES
FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND,
INVESCO INTERNATIONAL CORE EQUITY FUND, INVESCO LEISURE FUND, INVESCO
MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, INVESCO S&P 500 INDEX
FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO
TOTAL RETURN FUND, INVESCO UTILITIES FUND, INVESCO ADVANTAGE FUND, INVESCO
BALANCED FUND, INVESCO EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO HIGH
YIELD FUND, INVESCO GROWTH & INCOME FUND, INVESCO INTERNATIONAL BLUE CHIP
VALUE FUND, INVESCO REAL ESTATE OPPORTUNITY FUND, INVESCO SELECT FUND,
INVESCO TAX-FREE BOND FUND, INVESCO TELECOMMUNICATIONS FUND, INVESCO U.S.
GOVERNMENT SECURITIES FUND, INVESCO VALUE FUND, EDWARD J. STERN, CANARY
INVESTMENT MANAGEMENT, LLC, CANARY CAPITAL PARTNERS, LTD., CANARY CAPITAL
PARTNERS, LLC, AND DOES 1-100, in the United States District Court,
District of Colorado (Civil Action No. 04-MK-0152), filed on January 28,
2004. This claim alleges violations of: Sections 11 and 15 of the
Securities Act; Sections 10(b) and 20(a) of the Exchange Act; Rule 10b-5
under the Exchange Act; and Sections 34(b), 36(a) and 36(b) of the
Investment Company Act. The claim also alleges common law breach of
fiduciary duty. The plaintiffs in this case are seeking: damages;
pre-judgment and post-judgment interest; counsel fees and expert fees; and
other relief.
JONATHAN GALLO, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, v. INVESCO FUNDS GROUP, INC., INVESCO STOCK FUNDS, INC., AIM MANAGEMENT GROUP, INC., AIM STOCK FUNDS, AIM STOCK FUNDS, INC., AMVESCAP PLC, INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND, INVESCO LEISURE FUND, INVESCO MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, INVESCO S&P 500 INDEX FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND, INVESCO UTILITIES FUND, INVESCO ADVANTAGE FUND, INVESCO BALANCED FUND, INVESCO EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO HIGH YIELD FUND, INVESCO GROWTH & INCOME FUND, INVESCO INTERNATIONAL BLUE CHIP VALUE FUND, INVESCO REAL ESTATE
OPPORTUNITY FUND, INVESCO SELECT FUND, INVESCO TAX-FREE BOND FUND, INVESCO
TELECOMMUNICATIONS FUND, INVESCO U.S. GOVERNMENT SECURITIES FUND, INVESCO
VALUE FUND, EDWARD J. STERN, CANARY INVESTMENT MANAGEMENT, LLC, CANARY
CAPITAL PARTNERS, LTD., CANARY CAPITAL PARTNERS, LLC, AND DOES 1-100, in
the United States District Court, District of Colorado (Civil Action No.
04-MK-0151), filed on January 28, 2004. This claim alleges violations of:
Sections 11 and 15 of the Securities Act; Sections 10(b) and 20(a) of the
Exchange Act; Rule 10b-5 under the Exchange Act; and Sections 34(b), 36(a)
and 36(b) of the Investment Company Act. The claim also alleges common law
breach of fiduciary duty. The plaintiffs in this case are seeking:
damages; pre-judgment and post-judgment interest; counsel fees and expert
fees; and other relief.
EILEEN CLANCY, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED, v. INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY
FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL
SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH
SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND (FORMERLY KNOWN AS
INTERNATIONAL BLUE CHIP VALUE FUND), INVESCO LEISURE FUND, INVESCO MID-CAP
GROWTH FUND, INVESCO MULTI-SECTOR FUND, AIM INVESCO S&P 500 INDEX FUND,
INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL
RETURN FUND, INVESCO UTILITIES FUND, AIM MONEY MARKET FUND, AIM INVESCO
TAX-FREE MONEY FUND, AIM INVESCO TREASURER'S MONEY MARKET RESERVE FUND,
AIM INVESCO TREASURER'S TAX-EXEMPT RESERVE FUND, AIM INVESCO US GOVERNMENT
MONEY FUND, INVESCO ADVANTAGE FUND, INVESCO BALANCED FUND, INVESCO
EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO HIGH-YIELD FUND, INVESCO
GROWTH & INCOME FUND, INVESCO REAL ESTATE OPPORTUNITY FUND, INVESCO SELECT
INCOME FUND, INVESCO TAX-FREE BOND FUND, INVESCO TELECOMMUNICATIONS FUND,
INVESCO U.S. GOVERNMENT SECURITIES FUND, INVESCO VALUE FUND, INVESCO,
INVESCO LATIN AMERICAN GROWTH FUND (COLLECTIVELY KNOWN AS THE "INVESCO
FUNDS"), AIM STOCK FUNDS, AIM COUNSELOR SERIES TRUST, AIM SECTOR FUNDS
INC., AIM BOND FUNDS INC., AIM COMBINATION STOCK AND BOND FUNDS INC., AIM
MONEY MARKET FUNDS INC., AIM INTERNATIONAL FUNDS INC. (COLLECTIVELY KNOWN
AS THE "INVESCO FUNDS REGISTRANTS"), AMVESCAP PLC, INVESCO FUNDS GROUP,
INC., TIMOTHY MILLER, RAYMOND CUNNINGHAM AND THOMAS KOLBE, in the United
States District Court, Southern District of New York (Civil Action No.
04-CV-0713), filed on January 30, 2004. This claim alleges violations of
Sections 11 and 15 of the Securities Act. The plaintiffs in this case are
seeking: compensatory damages, rescission; return of fees paid; and other
costs and expenses, including counsel fees and expert fees.
SCOTT WALDMAN, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, v.
INVESCO FUNDS GROUP, INC., INVESCO DYNAMICS FUND, INVESCO EUROPEAN FUND,
INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, AIM STOCK
FUNDS, AIM COUNSELOR SERIES TRUST, AIM SECTOR FUNDS INC., AIM BOND FUNDS
INC., AIM COMBINATION STOCK AND BOND FUNDS INC., AIM MONEY MARKET FUNDS
INC., AIM INTERNATIONAL FUNDS INC., AMVESCAP PLC, AND RAYMOND CUNNINGHAM,
in the United States District Court, Southern District of New York (Civil
Action No. 04-CV-00915), filed on February 3, 2004. This claim alleges
violations of Sections 11 and 15 of the Securities Act and common law
breach of fiduciary duty. The plaintiffs in this case are seeking
compensatory damages; injunctive relief; and costs and expenses, including
counsel fees and expert fees.
CARL E. VONDER HAAR AND MARILYN P. MARTIN, ON BEHALF OF THEMSELVES AND ALL
OTHERS SIMILARLY SITUATED, v. INVESCO FUNDS GROUP, INC., INVESCO STOCK
FUNDS, INC. AND DOE DEFENDANTS 1-100, in the United States District Court,
District of Colorado (Civil Action No. 04-CV-812), filed on February 5,
2004. This claim alleges: common law breach of fiduciary duty; breach of
contract; and tortious interference with contract. The plaintiffs in this
case are seeking: injunctive relief; damages; disgorgement; and costs and
expenses, including counsel fees and expert fees.
HENRY KRAMER, DERIVATIVELY ON BEHALF OF INVESCO ENERGY FUND, INVESCO STOCK
FUNDS, INC., AND INVESCO MUTUAL FUNDS v. AMVESCAP, PLC, INVESCO FUNDS
GROUP, INC., CANARY CAPITAL PARTNERS, LLC, CANARY INVESTMENT MANAGEMENT,
LLC, AND CANARY CAPITAL PARTNERS, LTD., DEFENDANTS, AND INVESCO ENERGY
FUND, INVESCO STOCK FUNDS, INC., AND INVESCO MUTUAL FUNDS, NOMINAL
DEFENDANTS, in the United States District Court, District of Colorado
(Civil Action No. 04-MK-0397), filed on March 4, 2004. This claim alleges
violations of Section 36(b) of the Investment Company Act and common law
breach of fiduciary duty. The plaintiff in this case is seeking damages
and costs and expenses, including counsel fees and expert fees.
CYNTHIA L. ESSENMACHER, DERIVATIVELY ON BEHALF OF THE INVESCO DYNAMICS FUND AND THE REMAINING "INVESCO FUNDS" v. INVESCO FUNDS GROUPS, INC., AMVESCAP PLC, AIM MANAGEMENT GROUP, INC., RAYMOND CUNNINGHAM, TIMOTHY MILLER, THOMAS KOLBE AND MICHAEL LEGOSKI, DEFENDANTS, AND INVESCO DYNAMICS FUND AND THE "INVESCO FUNDS", NOMINAL DEFENDANTS, in the United States District Court, District of Delaware (Civil Action No. 04-CV-188), filed on March 29, 2004. This claim alleges: violations of Section 36(b) of the Investment Company Act; violations of Section 206 of the Advisers Act; common law breach of fiduciary duty; and civil conspiracy. The plaintiff in this case is seeking: damages; injunctive relief; and costs and expenses, including counsel fees and expert fees.
ANNE G. PERENTESIS (WIDOW) v. AIM INVESTMENTS, ET AL (INVESCO FUNDS GROUP,
INC.), in the District Court of Maryland for Baltimore County (Case No.
080400228152005), filed on July 21, 2005. This claim alleges financial
losses, mental anguish and emotional distress as a result of unlawful
market timing and related activity by the defendants. The plaintiff in
this case is seeking damages and costs and expenses.
Pursuant to an Order of the MDL Court, plaintiffs in the above lawsuits (with the exception of Carl E. Vonder Haar, et al. v. INVESCO Funds Group, Inc. et al. and Mike Sayegh v. Janus Capital Corporation, et al.) consolidated their claims for pre-trial purposes into three amended complaints against various AIM- and IFG-related parties: (i) a Consolidated Amended Class Action Complaint purportedly brought on behalf of shareholders of the AIM Funds (the Lepera lawsuit discussed below); (ii) a Consolidated Amended Fund Derivative Complaint purportedly brought on behalf of the AIM Funds and fund registrants (the Essenmacher lawsuit discussed below); and (iii) an Amended Class Action Complaint for Violations of the Employee Retirement Income Securities Act ("ERISA") purportedly brought on behalf of participants in INVESCO's 401(k) plan (the Calderon lawsuit discussed below). The plaintiffs in the Vonder Haar and Sayegh lawsuits continue to seek remand of their lawsuits to state court. Set forth below is detailed information about these three amended complaints.
RICHARD LEPERA, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED (LEAD PLAINTIFF: CITY OF CHICAGO DEFERRED COMPENSATION PLAN), v.
INVESCO FUNDS GROUP, INC., AMVESCAP, PLC, AIM INVESTMENTS, AIM ADVISORS, INC., INVESCO INSTITUTIONAL (N.A.), INC., INVESCO ASSETS MANAGEMENT
LIMITED, INVESCO GLOBAL ASSETS MANAGEMENT (N.A.), AIM
STOCK FUNDS, AIM MUTUAL FUNDS, AIM COMBINATION STOCK & BOND FUNDS, AIM
SECTOR FUNDS, AIM TREASURER'S SERIES TRUST, INVESCO DISTRIBUTORS, INC.,
AIM DISTRIBUTORS, INC., RAYMOND R. CUNNINGHAM, TIMOTHY J. MILLER, THOMAS
A. KOLBE, MICHAEL D. LEGOSKI, MICHAEL K. BRUGMAN, MARK WILLIAMSON, EDWARD
J. STERN, CANARY CAPITAL PARTNERS, LLC, CANARY INVESTMENT MANAGEMENT, LLC,
CANARY CAPITAL PARTNERS, LTD., RYAN GOLDBERG, MICHAEL GRADY, CITIGROUP,
INC., CITIGROUP GLOBAL MARKETS HOLDINGS, INC., SALOMON SMITH BARNEY, INC.,
MORGAN STANLEY DW, ANNA BRUGMAN, ANB CONSULTING, LLC, KAPLAN & CO.
SECURITIES INC., SECURITY TRUST COMPANY, N.A., GRANT D. SEEGER, JB OXFORD
HOLDINGS, INC., NATIONAL CLEARING CORPORATION, JAMES G. LEWIS, KRAIG L.
KIBBLE, JAMES Y. LIN, BANK OF AMERICA CORPORATION, BANC OF AMERICA
SECURITIES LLC, THEODORE C. SIHPOL, III, BEAR STEARNS & CO., INC., BEAR
STEARNS SECURITIES CORP., CHARLES SCHWAB & CO., CREDIT SUISSE FIRST BOSTON
(USA) INC., PRUDENTIAL FINANCIAL, INC., PRUDENTIAL SECURITIES, INC.,
CANADIAN IMPERIAL BANK OF COMMERCE, JP MORGAN CHASE AND CO., AND JOHN DOE
DEFENDANTS 1-100, in the MDL Court (Case No. 04-MD-15864; No.
04-CV-00814-JFM) (originally in the United States District Court for the
District of Colorado), filed on September 29, 2004. This lawsuit alleges
violations of Sections 11, 12(a) (2), and 15 of the Securities Act;
Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder;
Section 20(a) of the Exchange Act; Sections 34(b), 36(a), 36(b) and 48(a)
of the Investment Company Act; breach of fiduciary duty/constructive
fraud; aiding and abetting breach of fiduciary duty; and unjust
enrichment. The plaintiffs in this lawsuit are seeking: compensatory
damages, including interest; and other costs and expenses, including
counsel and expert fees.
CYNTHIA ESSENMACHER, SILVANA G. DELLA CAMERA, FELICIA BERNSTEIN AS CUSTODIAN FOR DANIELLE BROOKE BERNSTEIN, EDWARD CASEY, TINA CASEY, SIMON DENENBERG, GEORGE L. GORSUCH, PAT B. GORSUCH, L. SCOTT KARLIN, HENRY KRAMER, JOHN E. MORRISEY, HARRY SCHIPPER, BERTY KREISLER, GERSON SMITH, CYNTHIA PULEO, ZACHARY ALAN STARR, JOSHUA GUTTMAN, AND AMY SUGIN, DERIVATIVELY ON BEHALF OF THE MUTUAL FUNDS, TRUSTS AND CORPORATIONS COMPRISING THE INVESCO AND AIM FAMILY OF MUTUAL FUNDS v. AMVESCAP, PLC, INVESCO FUNDS GROUP, INC., INVESCO DISTRIBUTORS, INC., INVESCO INSTITUTIONAL (N.A.), INC., INVESCO ASSETS MANAGEMENT LIMITED, INVESCO GLOBAL ASSETS MANAGEMENT (N.A.), AIM MANAGEMENT GROUP, INC., AIM ADVISERS, INC., AIM INVESTMENT SERVICES, INC., AIM DISTRIBUTORS, INC., FUND
MANAGEMENT COMPANY, MARK H. WILLIAMSON, RAYMOND R. CUNNINGHAM, TIMOTHY MILLER, THOMAS KOLBE, MICHAEL LEGOSKI, MICHAEL BRUGMAN, FRED A. DEERING, VICTOR L. ANDREWS, BOB R. BAKER, LAWRENCE H. BUDNER, JAMES T. BUNCH, GERALD J. LEWIS, JOHN W. MCINTYRE, LARRY SOLL, RONALD L. GROOMS, WILLIAM J. GALVIN, JR., ROBERT H. GRAHAM, FRANK S. BAYLEY, BRUCE L. CROCKETT, ALBERT R. DOWDEN, EDWARD K. DUNN, JACK M. FIELDS, CARL FRISCHILING, PREMA MATHAI-DAVIS, LEWIS F. PENNOCK, RUTH H. QUIGLEY, LOUIS S. SKLAR, OWEN DALY II, AURUM SECURITIES CORP., AURUM CAPITAL MANAGEMENT CORP., GOLDEN GATE FINANCIAL GROUP, LLC, BANK OF AMERICA CORP., BANC OF AMERICA SECURITIES LLC, BANK OF AMERICA, N.A., BEAR STEARNS & CO., INC., CANARY CAPITAL PARTNERS, LLC, CANARY CAPITAL PARTNERS, LTD., CANARY INVESTMENT MANAGEMENT, LLC, EDWARD J. STERN, CANADIAN IMPERIAL BANK OF COMMERCE, CIRCLE TRUST COMPANY, RYAN GOLDBERG, MICHAEL GRADY, KAPLAN & CO. SECURITIES, INC., JP MORGAN CHASE & CO., OPPENHEIMER & CO., INC., PRITCHARD CAPITAL PARTNERS LLC, TIJA MANAGEMENT, TRAUTMAN WASSERMAN & COMPANY, INC., DEFENDANTS, AND THE INVESCO FUNDS AND THE AIM FUNDS AND ALL TRUSTS AND
CORPORATIONS THAT COMPRISE THE INVESCO FUNDS AND AIM FUNDS THAT WERE MANAGED BY INVESCO AND AIM, NOMINAL DEFENDANTS, in the MDL Court (Case No. 04-MD-15864-FPS; No. 04-819), filed on September 29, 2004. This lawsuit alleges violations of Sections 206 and 215 of the Investment Advisers Act; Sections 36(a), 36(b) and 47 of the Investment Company Act; control person liability under Section 48 of the Investment Company Act; breach of fiduciary duty; aiding and abetting breach of fiduciary duty; breach of contract; unjust enrichment; interference with contract; and civil conspiracy. The plaintiffs in this lawsuit are seeking: removal of director defendants; removal of adviser, sub-adviser and distributor defendants; rescission of management and other contracts between the Funds and defendants; rescission of 12b-1 plans; disgorgement of management fees and other compensation/profits paid to adviser defendants; compensatory and punitive damages; and fees and expenses, including attorney and expert fees.
MIRIAM CALDERON, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, v. AVZ, INC., AMVESCAP RETIREMENT, INC., AMVESCAP NATIONAL TRUST COMPANY, INVESCO FUNDS GROUP, INC., AMVESCAP, ROBERT F. MCCULLOUGH, GORDON NEBEKER, JEFFREY G. CALLAHAN, AND RAYMOND R. CUNNINGHAM, in the MDL Court (Case No. 1:04-MD-15864-FPS), filed on September 29, 2004. This lawsuit alleges violations of ERISA Sections 404, 405 and 406. The plaintiffs in this lawsuit are seeking: declaratory judgment; restoration of losses suffered by the plan; disgorgement of profits; imposition of a constructive trust; injunctive relief; compensatory damages; costs and attorneys' fees; and equitable restitution.
On March 1, 2006, the MDL Court entered orders on Defendants' Motions to dismiss in the derivative (Essenmacher) and class action (Lepera) lawsuits. The MDL Court dismissed all derivative causes of action in the Essenmacher lawsuit but two: (i) the excessive fee claim under Section 36(b) of the Investment Company Act of 1940 (the "1940 Act"); and (ii) the "control person liability" claim under Section 48 of the 1940 Act. The MDL Court dismissed all claims asserted in the Lepera class action lawsuit but three: (i) the securities fraud claims under Section 10(b) of the Securities Exchange Act of 1934; (ii) the excessive fee claim under Section 36(b) of the 1940 Act (which survived only insofar as plaintiffs seek recovery of fees associated with the assets involved in market timing); and (iii) the "control person liability" claim under Section 48 of the 1940 Act. On June 14, 2006, the MDL Court entered an order dismissing the Section 48 claim in the derivative (Essenmacher) lawsuit. Based on the MDL Court's March 1, 2006 and June 14, 2006 orders, all claims asserted against the Funds that have been transferred to the MDL Court have been dismissed, although certain Funds remain nominal defendants in the derivative (Essenmacher) lawsuit. Defendants filed their Original Answer in the class action (Lepera) lawsuit on March 31, 2006. The MDL Court has indefinitely deferred Defendants' obligation to answer the derivative (Essenmacher) lawsuit. The Plaintiffs in the class action (Lepera) lawsuit stipulated that their claims against Invesco Aim, Invesco Aim Distributors and Invesco Aim Investment Services, Inc. Invesco Aim Investment Services are based solely on successor liability for alleged timing in the AIM Funds formerly advised by IFG and that they are not making any claims based on alleged timing in the other AIM Funds. Based upon this stipulation, AIM withdrew its pending Motion to Dismiss the claims against Invesco Aim, Invesco Aim Distributors and Invesco Aim Investment Services. On July 3, 2007, the Defendants filed an Omnibus Motion to Dismiss in both the class action (Lepera) and derivative (Essenmacher) lawsuits based on Plaintiffs' lack of standing to sue for injuries to funds the Plaintiffs do not own. On October 19, 2007, Judge Motz for the MDL Court denied the Defendants' Motion to Dismiss.
On September 15, 2006, Judge Motz for the MDL Court granted the INVESCO Defendants' motion to dismiss the ERISA (Calderon) lawsuit and dismissed such lawsuit. The Plaintiff has commenced an appeal from Judge Motz's decision.
APPENDIX O-2
PENDING LITIGATION ALLEGING INADEQUATELY EMPLOYED FAIR VALUE PRICING
The following civil class action lawsuits involve, depending on the lawsuit, one or more AIM Funds, IFG and/or Invesco Aim and allege that the defendants inadequately employed fair value pricing. These lawsuits either have been served or have had service of process waived.
T.K. PARTHASARATHY, EDMUND WOODBURY, STUART ALLEN SMITH AND SHARON SMITH, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, v. T. ROWE PRICE INTERNATIONAL FUNDS, INC., T. ROWE PRICE INTERNATIONAL, INC., ARTISAN FUNDS, INC., ARTISAN PARTNERS LIMITED PARTNERSHIP, AIM INTERNATIONAL FUNDS, INC., AND AIM ADVISORS, INC., in the Third Judicial Circuit Court for Madison County, Illinois (Case No. 2003-L-001253), filed on September 23, 2003. This claim alleges: common law breach of duty and common law negligence and gross negligence. The plaintiffs in these cases are seeking: compensatory and punitive damages; interest; and attorneys' fees and costs. The Third Judicial Circuit Court for Madison County, Illinois has issued an order severing the claims of plaintiff Parthasarathy from the claims of the other plaintiffs against AIM and other defendants. As a result, AIM is a defendant in the following severed action: EDMUND WOODBURY, STUART ALLEN SMITH and SHARON SMITH, Individually and On Behalf of All Others Similarly Situated, v. AIM INTERNATIONAL FUNDS, INC., ET AL., in the Third Judicial Circuit Court for Madison County, Illinois (Case No. 03-L-1253A). The claims made by Plaintiffs and the relief sought in the Woodbury lawsuit are identical to those in the Parthasarathy lawsuit. Based on a recent Federal appellate court decision (the "Kircher" case), AIM and the other defendants in the Woodbury lawsuit removed the action to Federal District Court (U.S. District Court, Southern District of Illinois, Cause No. 05-CV-302-DRH) on April 22, 2005. On June 10, 2005, the Court dismissed the Woodbury lawsuit based upon the Kircher ruling and ordered the court clerk to close this case. On August 27, 2005, Plaintiffs filed their Notice of Appeal. On September 2, 2005, the Federal Appellate Court consolidated the nine cases on this subject matter, including the case against AIM. AIM has submitted a statement to the Federal Appellate Court asserting that the U.S. Supreme Court's holding in the Dabit case mandates the dismissal of the Plaintiffs' appeals. The appeals were vacated and the suit remanded back to Illinois state court. The Defendants removed the suit to Federal District Court and the parties are contesting whether the proper venue for this action is the Federal District Court or the Illinois state court. On July 17, 2007, the Court lifted the Stay and ordered this case remanded back to Illinois State Court. On August 10, 2007, the Defendants filed their Motion to Dismiss this suit in the Illinois State Court.
JOHN BILSKI, Individually And On Behalf Of All Others Similarly
Situated, v. AIM INTERNATIONAL FUNDS, INC., AIM ADVISORS, INC., INVESCO
INTERNATIONAL FUNDS, INC., INVESCO FUNDS GROUP, INC., T. ROWE PRICE
INTERNATIONAL FUNDS, INC. AND T. ROWE PRICE INTERNATIONAL, INC., in the
United States District Court, Southern District of Illinois (East St.
Louis) (Case No. 03-772), filed on November 19, 2003. This claim alleges:
violations of Sections 36(a) and 36(b) of the Investment Company Act of
1940; common law breach of duty; and common law negligence and gross
negligence. The plaintiff in these cases are seeking: compensatory and
punitive damages; interest; and attorneys' fees and costs. This lawsuit
has been transferred to the MDL Court by order of the United States
District Court, Southern District of Illinois (East St. Louis).
PART C
OTHER INFORMATION
Item 23. Exhibits
a (1) - (a) Amended and Restated Agreement and Declaration of Trust of
Registrant, dated September 14, 2005.(26)
- (b) Amendment No. 1, dated December 21, 2005, effective as of
December 21, 2005, to Amended and Restated Agreement and
Declaration of Trust of Registrant.(26)
- (c) Amendment No. 2, dated December 7, 2005, effective as of
July 3, 2006, to Amended and Restated Agreement and
Declaration of Trust of Registrant.(27)
- (d) Amendment No. 3, dated January 9, 2006, effective as of
January 9, 2006, to Amended and Restated Agreement and
Declaration of Trust of Registrant.(27)
- (e) Amendment No. 4, dated February 2, 2006, effective as of
July 3, 2006, to Amended and Restated Agreement and
Declaration of Trust of Registrant.(27)
- (f) Amendment No. 5, dated May 1, 2006, effective as of May 1,
2006, to Amended and Restated Agreement and Declaration of
Trust of Registrant.(28)
- (g) Amendment No. 6, dated May 24, 2006, effective as of May
24, 2006, to Amended and Restated Agreement and Declaration of
Trust of Registrant.(28)
- (h) Amendment No. 7, dated June 12, 2006, effective as of June
12, 2006, to Amended and Restated Agreement and Declaration of
Trust of Registrant.(28)
- (i) Amendment No. 8, dated July 5, 2006, effective as of July
5, 2006, to Amended and Restated Agreement and Declaration of
Trust of Registrant.(28)
- (j) Amendment No. 9, dated November 6, 2006, effective as of
November 6, 2006, to Amended and Restated Agreement and
Declaration of Trust of Registrant.(28)
- (k) Amendment No. 10, dated December 21, 2006, effective as of
December 21, 2006, to Amended and Restated Agreement and
Declaration of Trust of Registrant.(28)
- (l) Amendment No. 11, dated May 1, 2007, effective as of May
1, 2007, to Amended and Restated Agreement and Declaration of
Trust of Registrant.(29)
|
- (m) Form of Amendment No. 12, dated May 1, 2008, effective as of May 1, 2008, to Amended and Restated Agreement and Declaration of Trust of Registrant.(29)
b (1) - (a) Amended and Restated By-Laws of Registrant, dated
effective September 14, 2005.(26)
- (b) Amendment, adopted effective August 1, 2006, to Amended
and Restated By-Laws of Registrant, dated effective September
14, 2005.(28)
|
- (c) Amendment No. 2, adopted effective March 23, 2007, to Amended and Restated By-Laws of Registrant, dated effective September 14, 2005.(28)
- (d) Amendment No. 3, adopted effective January 1, 2008, to Amended and Restated By-Laws of Registrant, dated effective September 14, 2005.(29)
c - Instruments Defining Rights of Security Holders -- All rights
of security holders are contained in the Registrant's Amended
and Restated 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 between Registrant and A I M Advisors,
Inc.(15)
- (c) Amendment No. 2, dated September 7, 2001, to Master
Investment Advisory Agreement of Registrant, between
Registrant and A I M Advisors, Inc.(18)
- (d) Amendment No. 3, dated May 1, 2002, to Master Investment
Advisory Agreement of Registrant, between Registrant and A I M
Advisors, Inc.(20)
- (e) Amendment No. 4, dated August 29, 2003, to Master
Investment Advisory Agreement between Registrant and A I M
Advisors, Inc.(22)
- (f) Amendment No. 5, dated April 30, 2004 to Master Investment
Advisory Agreement between Registrant and A I M Advisors,
Inc.(24)
- (g) Amendment No. 6, dated July 1, 2004, to Master Investment
Advisory Agreement between Registrant and A I M Advisors,
Inc.(24)
- (h) Amendment No. 7, dated October 15, 2004, to Master
Investment Advisory Agreement between Registrant and A I M
Advisors, Inc.(24)
- (i) Amendment No. 8, dated July 1, 2005, to Master Investment
Advisory Agreement between Registrant and A I M Advisors,
Inc.(26)
- (j) Amendment No. 9, dated December 21, 2005, to Master
Investment Advisory Agreement between Registrant and A I M
Advisors, Inc.(26)
- (k) Amendment No. 10, dated May 1, 2006, to Master Investment
Advisory Agreement between Registrant and A I M Advisors,
Inc.(28)
- (l) Amendment No. 11, dated June 12, 2006, to Master
Investment Advisory Agreement between Registrant and A I M
Advisors, Inc.(28)
- (m) Amendment No. 12, dated July 3, 2006, to Master Investment
Advisory Agreement between Registrant and A I M Advisors,
Inc.(28)
- (n) Amendment No. 13, dated November 6, 2006, to Master
Investment Advisory Agreement between Registrant and A I M
Advisors, Inc.(28)
- (o) Amendment No. 14, dated December 21, 2006, to Master
Investment Advisory Agreement between Registrant and A I M
Advisors, Inc.(28)
|
- (p) Amendment No. 15, dated May 1, 2007, to Master Investment Advisory Agreement between Registrant and A I M Advisors, Inc.(29)
- (q) Amendment No. 16, dated July 1, 2007, to Master Investment Advisory Agreement between Registrant and A I M Advisors, Inc.(29)
(2) - (a) Master Intergroup Sub-Advisory Contract for Mutual Funds,
dated April 30, 2004, between A I M Advisors, Inc. and INVESCO
Institutional (N.A.), Inc.(24)
- (b) Amendment No. 1, dated July 16, 2004, to Master Intergroup
Sub-Advisory Contract for Mutual Funds between A I M Advisors,
Inc. and INVESCO Institutional (N.A.), Inc.(24)
- (c) Amendment No. 2, dated September 30, 2004, to Master
Intergroup Sub-Advisory Contract for Mutual Funds between
A I M Advisors, Inc. and INVESCO Institutional (N.A.),
Inc.(24)
- (d) Amendment No. 3, dated October 15, 2004, to Master
Intergroup Sub-Advisory Contract for Mutual Funds between
A I M Advisors, Inc. and INVESCO Institutional (N.A.),
Inc.(24)
- (e) Amendment No. 4, dated June 1, 2005, to Master Intergroup
Sub-Advisory Contract for Mutual Funds between A I M Advisors,
Inc. and INVESCO Institutional (N.A.), Inc.(26)
- (f) Amendment No. 5, dated July 3, 2006, to Master Intergroup
Sub-Advisory Contract for Mutual Funds between A I M Advisors,
Inc. and INVESCO Institutional (N.A.), Inc.(28)
(3) - Form of Master Intergroup Sub-Advisory Contract for Mutual
Funds, dated [May 1, 2008] between Invesco Aim Advisors, Inc.,
on behalf of Registrant, and each of Invesco Asset Management
Deutschland GmbH, Invesco Asset Management Ltd., Invesco Asset
Management (Japan) Limited, Invesco Australia Limited, Invesco
Global Asset Management (N.A.), Inc., Invesco Hong Kong
Limited, Invesco Institutional (N.A.), Inc., Invesco Senior
Secured Management, Inc. and Invesco Trimark Investment
Management Inc.(29)
(4) - (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 Distributors Inc., dated July 16, 2001.(20)
- (d) Amendment No. 3, dated August 29, 2003, to First Amended and Restated Master Distribution Agreement, between Registrant and A I M Distributors, Inc., dated July 16, 2001.(22)
- (e) Amendment No. 4, dated April 30, 2004, to First Amended and Restated Master Distribution Agreement between Registrant and A I M Distributors, Inc.(24)
- (f) Amendment No. 5, dated October 15, 2004, to First Amended and Restated Master Distribution Agreement between Registrant and A I M Distributors, Inc.(24)
- (g) Amendment No. 6, dated July 1, 2005, to First Amended and Restated Master Distribution Agreement between Registrant and A I M Distributors, Inc.(26)
- (h) Amendment No. 7, dated December 21, 2005, to First Amended and Restated Master Distribution Agreement between Registrant and A I M Distributors, Inc.(26)
- (i) Amendment No. 8, dated May 1, 2006, to First Amended and Restated Master Distribution Agreement between Registrant and A I M Distributors, Inc.(28)
- (j) Amendment No. 9, dated June 12, 2006, to First Amended and Restated Master Distribution Agreement between Registrant and A I M Distributors, Inc.(28)
- (k) Amendment No. 10, dated July 3, 2006, to First Amended and Restated Master Distribution Agreement between Registrant and A I M Distributors, Inc.(28)
- (l) Amendment No. 11, dated November 6, 2006, to First Amended and Restated Master Distribution Agreement between Registrant and A I M Distributors, Inc.(28)
- (m) Amendment No. 12, dated December 21, 2006, to First Amended and Restated Master Distribution Agreement between Registrant and A I M Distributors, Inc.(28)
- (n) Amendment No. 13, dated May 1, 2007, to First Amended and Restated Master Distribution Agreement between Registrant and A I M Distributors, Inc.(29)
f (1) - Retirement Plan of Registrant's Non-Affiliated Directors,
effective March 8, 1994, as restated September 18, 1995.(4)
(2) - Retirement Plan for Eligible Directors/Trustees effective as
of March 8, 1994, as Restated January 1, 2005.(28)
(3) - Form of Director Deferred Compensation Agreement effective as
Amended March 7, 2000, September 28, 2001 and September 26,
2002.(22)
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)
- (e) Amendment, dated September 8, 2004, to Master Custodian
Contract dated May 1, 2000, between Registrant and State
Street Bank and Trust Company.(24)
- (f) Amendment, dated February 6, 2006, to Master Custodian
Contract dated May 1, 2000, between Registrant and State
Street Bank and Trust Company.(28)
- (g) Amendment, dated January 31, 2007, to Master Custodian
Contract dated May 1, 2000, between Registrant and State
Street Bank and Trust Company.(28)
(2) - (a) Custody Agreement, dated September 19, 2000, between
Registrant and The Bank of New York.(15)
- (b) Amendment No. 1, dated May 31, 2005, to Custody Agreement
dated September 19, 2000, between Registrant and The Bank of
New York.(28)
(3) - Foreign Assets Delegation Agreement, dated November 6, 2006,
between Registrant and A I M Advisors, Inc.(29)
h (1) - (a) Third Amended and Restated Master Administrative Services
Agreement, dated July 1, 2006, between Registrant and A I M
Advisors, Inc.(28)
|
- (b) Amendment No. 1, dated July 3, 2006, to Third Amended and Restated Master Administrative Services Agreement, dated July 1, 2006, between Registrant and A I M Advisors, Inc.(28)
- (c) Amendment No. 2, dated November 6, 2006, to Third Amended and Restated Master Administrative Services Agreement, dated July 1, 2006, between Registrant and A I M Advisors, Inc.(28)
- (d) Amendment No. 3, dated December 21, 2006, to Third Amended and Restated Master Administrative Services Agreement, dated July 1, 2006, between Registrant and A I M Advisors, Inc.(28)
- (e) Amendment No. 4, dated May 1, 2007, to Third Amended and Restated Master Administrative Services Agreement, dated July 1, 2006, between Registrant and A I M Advisors, Inc.(29)
(2) - (a) Amended and Restated Transfer Agency and Service
Agreement, dated July 1, 2006, between Registrant and AIM
Investment Services, Inc.(28)
|
- (b) Amendment No. 1, dated July 1, 2007, to the Amended and Restated Transfer Agency and Service Agreement, dated July 1, 2006, between Registrant and AIM Investment Services, Inc.(29)
(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)
- (h) Amendment No. 7, dated May 1, 2004, to the Participation
Agreement, dated December 19, 1995, between Registrant and
Glenbrook Life and Annuity Insurance Company.(27)
(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)
- (c) Amendment No. 2, dated August 13, 2001, to the
Participation Agreement, dated October 7, 1996, between
Registrant and IDS Life Insurance Company.(27)
- (d) Amendment No. 3, dated May 1, 2002, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS
Life Insurance Company.(27)
- (e) Amendment, dated January 1, 2003, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS
Life Insurance Company.(27)
- (f) Amendment, dated September 30, 2003, to the Participation
Agreement, dated October - 7, 1996, between Registrant and IDS
Life Insurance Company.(27)
- (g) Amendment, dated April 30, 2004, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS
Life Insurance Company.(27)
(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)
- (c) Amendment No. 2, dated August 13, 2001, to the
Participation Agreement, dated October 7, 1996, between
Registrant and IDS Life Insurance Company of New York.(27)
- (d) Amendment No. 3, dated May 1, 2002, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS
Life Insurance Company of New York.(27)
- (e) Amendment, dated January 1, 2003, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS
Life Insurance Company of New York.(27)
- (f) Amendment, dated August 18, 2003, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS
Life Insurance Company of New York.(27)
- (g) Amendment, dated April 30, 2004, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS
Life Insurance Company of New York.(27)
(10) - (a) Participation Agreement, dated April 8, 1996, between
Registrant and Connecticut General Life Insurance Company.(4)
- (b) Amendment No. 1, dated April 30, 2004, to the
Participation Agreement, dated April 8, 1996, between
Registrant and Connecticut General Life Insurance Company.(27)
|
(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)
- (f) Amendment, dated November 1, 2007, to the Participation
Agreement dated September 21, 1996, between Registrant and
Pruco Life Insurance Company.(29)
(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)
- (c) Amendment No. 2, dated December 18, 2002, to the
Participation Agreement, dated October 1, 1996, between
Registrant and Allstate Life Insurance Company of New
York.(27)
- (d) Amendment No. 3, dated May 1, 2003, to the Participation
Agreement, dated October 1, 1996, between Registrant and
Allstate Life Insurance Company of New York.(27)
(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)
- (h) Amendment No. 7, dated March 1, 2005, to the Participation
Agreement, dated December 18, 1996, between Registrant and
Merrill Lynch Life Insurance Company.(27)
- (i) Amendment No. 8, dated May 1, 2006, to the Participation
Agreement, dated December 18, 1996, between Registrant and
Merrill Lynch Life Insurance Company.(27)
(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)
- (h) Amendment No. 7, dated March 1, 2005, to the Participation
Agreement, dated December 18, 1996, between Registrant and ML
Life Insurance Company of New York.(27)
|
- (i) Amendment No. 8, dated May 1, 2006, to the Participation
Agreement, dated December 18, 1996, between Registrant and ML
Life Insurance Company of New York.(27)
(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)
- (d) Amendment, dated April 30, 2004, to the Participation
Agreement, dated February 14, 1997, between Registrant and
Pruco Life Insurance Company of New Jersey.(27)
- (e) Amendment, dated November 1, 2007, to the Participation
Agreement, dated February 14, 1997, between Registrant and
Pruco Life Insurance Company of New Jersey.(29)
(16) - Participation Agreement, dated April 30, 1997, between
Registrant and Prudential Insurance Company of America.(6)
(17) - Amended and Restated Participation Agreement, dated April 17,
2006, between Registrant and American Centurion Life Assurance
Company.(28)
(18) - Amended and Restated Participation Agreement, dated April 17,
2006, between Registrant and American Enterprise Life
Insurance Company.(28)
(19) - (a) Participation Agreement, dated November 20, 1997, between
Registrant and AIG Life Insurance Company.(6)
- (b) Amendment No. 1, dated October 11, 1999, to the
Participation Agreement, dated November 20, 1997, between
Registrant and AIG Life Insurance Company.(27)
(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)
- (f) Amendment, dated January 1, 2003, to the Participation
Agreement, dated February 2, 1998, between Registrant and The
Guardian Insurance and Annuity Company, Inc.(27)
- (g) Amendment No. 5, dated May 1, 2004, to the Participation
Agreement, dated February 2, 1998, between Registrant and The
Guardian Insurance and Annuity Company, Inc.(27)
(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, dated 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)
|
- (j) Amendment No. 9, dated August 20, 2003, to the Participation Agreement, dated February 17, 1998, between Registrant and Sun Life Assurance Company of Canada.(27)
- (k) Amendment No. 10, dated December 31, 2003, to the
Participation Agreement, dated February 17, 1998, between
Registrant and Sun Life Assurance Company of Canada
(U.S.).(27)
- (l) Amendment No. 11, dated April 30, 2004, to the
Participation Agreement, dated February 17, 1998, between
Registrant and Sun Life Assurance Company of Canada
(U.S.).(27)
- (m) Amendment No. 12, dated January 29, 2007, to the
Participation Agreement, dated February 17, 1998, between
Registrant and Sun Life Assurance Company of Canada
(U.S.).(28)
- (n) Amendment No. 13, dated May 1, 2007, to the Participation Agreement, dated February 17, 1998, between Registrant and Sun Life Assurance Company of Canada (U.S.).(29)
- (o) Amendment No. 14, dated August 1, 2007, to the
Participation Agreement, dated February 17, 1998, between
Registrant and Sun Life Assurance Company of Canada
(U.S.).(29)
(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)
- (k) Amendment No. 10, dated May 1, 2003, to the Participation Agreement, dated May 1, 1998, between Registrant and Transamerica Life Insurance Company (formerly PFL Life Insurance Company).(27)
- (l) Amendment No. 11, dated December 1, 2003, to the Participation Agreement, dated May 1, 1998, between Registrant and Transamerica Life Insurance Company (formerly PFL Life Insurance Company).(27)
- (m) Amendment No. 12, dated May 1, 2004, to the Participation Agreement, dated May 1, 1998, between Registrant and Transamerica Life Insurance Company (formerly PFL Life Insurance Company).(27)
- (n) Amendment No. 13, dated September 1, 2005, to the Participation Agreement, dated May 1, 1998, between Registrant and Transamerica Life Insurance Company (formerly PFL Life Insurance Company).(27)
- (o) Amendment No. 14, dated May 1, 2006, to the Participation Agreement, dated May 1, 1998, between Registrant and Transamerica Life Insurance Company (formerly PFL Life Insurance Company).(27)
- (p) Amendment and Novation, dated May 1, 2007, to the Participation Agreement, dated May 1, 1998, between Registrant and Transamerica Life Insurance Company (formerly PFL Life Insurance Company).(29)
- (q) Amendment dated July 30, 2007, to the Participation Agreement, dated May 1, 1998, between Registrant and Transamerica Life Insurance Company (formerly PFL Life Insurance Company).(29)
(30) - (a) Participation Agreement, dated May 1, 1998, between
Registrant and Fortis Benefits Insurance Company.(7)
- (b) Amendment No. 1, dated April 30, 2004, to the
Participation Agreement, dated May 1, 1998, between Registrant
and Fortis Benefits Insurance Company (n/k/a Union Security
Insurance Company).(28)
|
(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)
- (g) Amendment No. 6, dated October 1, 2002, to the
Participation Agreement, dated June 1, 1998, between
Registrant and American General Life Insurance Company.(27)
- (h) Amendment No. 7, dated January 15, 2004, to the
Participation Agreement, dated June 1, 1998, between
Registrant and American General Life Insurance Company.(27)
- (i) Amendment No. 8, dated January 1, 2005, to the
Participation Agreement, dated June 1, 1998, between
Registrant and American General Life Insurance Company.(27)
- (j) Amendment No. 9, dated May 1, 2006, to the Participation
Agreement, dated June 1, 1998, between Registrant and American
General Life Insurance Company.(28)
- (k) Amendment No. 10, dated August 31, 2007, to the
Participation Agreement, dated June 1, 1998, between
Registrant and American General Life Insurance Company.(29)
(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)
- (h) Amendment No. 7, dated May 1, 2003, to the Participation
Agreement, dated June 16, 1998, between Registrant and Lincoln
National Life Insurance Company.(27)
- (i) Amendment No. 8, dated April 30, 2004, to the
Participation Agreement, dated June 16, 1998, between
Registrant and Lincoln National Life Insurance Company.(27)
- (j) Amendment No. 9, dated May 1, 2006, to the Participation
Agreement, dated June 16, 1998, between Registrant and Lincoln
National Life Insurance Company.(28)
(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 30, 1998, between
Registrant and AETNA Life Insurance and Annuity Company.(18)
- (c) Amendment, dated July 12, 2002, to the Participation
Agreement, dated June 30, 1998, between Registrant and AETNA
Life Insurance and Annuity Company (n/k/a ING Life Insurance
and Annuity Company).(27)
(34) - (a) Participation Agreement, dated July 1, 1998, between
Registrant and The Union Central Life Insurance Company.(8)
- (b) Amendment 2, dated July 1, 2001, to the Participation
Agreement, dated July 1, 1998, between Registrant and The
Union Central Life Insurance Company.(28)
- (c) Amendment, dated January 1, 2003, to the Participation
Agreement, dated July 1, 1998, between Registrant and The
Union Central Life Insurance Company.(20)
- (d) Amendment, dated April 30, 2004, to the Participation
Agreement, dated July 1, 1998, between Registrant and The
Union Central Life Insurance Company (ING Life Insurance and
Annuity Company).(27)
- (e) Amendment 4, dated June 30, 2006, to the Participation
Agreement, dated July 1, 1998, between Registrant and The
Union Central Life Insurance Company.(28)
|
- (f) Amendment, dated November 5, 2007, to the Participation Agreement, dated July 1, 1998, between Registrant and The Union Central Life Insurance Company.(29)
(35) - (a) Participation Agreement, dated July 1, 1998, between
Registrant and United Investors Life Insurance Company.(8)
- (b) Amendment No. 1, dated July 1, 2002, to the Participation
Agreement, dated July 1, 1998, between Registrant and United
Investors Life Insurance Company.(27)
(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)
- (d) Amendment No. 3, dated June 1, 2003, to the Participation
Agreement, dated July 2, 1998, between Registrant and Hartford
Life Insurance Company.(27)
- (e) Amendment No. 4, dated November 1, 2003, to the
Participation Agreement, dated July 2, 1998, between
Registrant and Hartford Life Insurance Company.(27)
- (f) Amendment No. 5, dated May 1, 2004, to the Participation
Agreement, dated July 2, 1998, between Registrant and Hartford
Life Insurance Company.(27)
(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)
- (c) Amendment No. 2, dated March 12, 2001, to the
Participation Agreement, dated July 13, 1998, between
Registrant and Keyport Benefit Life Insurance Company.(27)
(38) - Amended and Restated Participation Agreement, dated July 31,
2007, to the Participation Agreement, dated July 27, 1998,
between Registrant, A I M Distributors, Inc., and Commonwealth
Annuity and Life Insurance Company (formerly Allmerica
Financial Life Insurance and Annuity Company).(29)
(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)
- (i) Amendment dated January 1, 2003 to the Participation
Agreement, dated July 27, 1998, between Registrant and First
Allmerica Financial Life Insurance Company.(27)
(40) - (a) Participation Agreement, dated October 15, 1998, between
Registrant and Lincoln Life & Annuity Insurance Company of New
York.(9)
- (b) Amendment No. 1, dated February 15, 2000, to the
Participation Agreement, dated October 15, 1998, between
Registrant and Lincoln Life & Annuity Insurance Company of New
York.(27)
- (c) Amendment No. 2, dated May 1, 2000, to the Participation
Agreement, dated October 15, 1998, between Registrant and
Lincoln Life & Annuity Insurance Company of New York.(27)
- (d) Amendment No. 3, dated July 15, 2000, to the Participation
Agreement, dated October 15, 1998, between Registrant and
Lincoln Life & Annuity Insurance Company of New York.(27)
- (e) Amendment, dated January 1, 2003, to the Participation
Agreement, dated October 15, 1998, between Registrant and
Lincoln Life & Annuity Insurance Company of New York.(27)
- (f) Amendment No. 5, dated April 30, 2004, to the
Participation Agreement, dated October 15, 1998, between
Registrant and Lincoln Life & Annuity Insurance Company of New
York.(27)
- (g) Amendment No. 6, dated October 1, 2006, to the
Participation Agreement, dated October 15, 1998, between
Registrant and Lincoln Life & Annuity Insurance Company of New
York.(28)
|
- (h) Amendment No. 7, dated April 2, 2007, to the Participation Agreement, dated October 15, 1998, between Registrant and Lincoln Life & Annuity Insurance Company of New York.(29)
(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) - (a) Participation Agreement, dated December 1, 1998, between
Registrant and the Prudential Insurance Company of America.(8)
- (b) Amendment No. 1, dated March 8, 2000, to the Participation
Agreement, dated April 30, 1997, between Registrant and
Prudential Insurance Company of America.(27)
- (c) Amendment, dated April 30, 2004, to the Participation
Agreement, dated April 30, 1997, between Registrant and
Prudential Insurance Company of America.(27)
- (d) Amendment, dated May 1, 2006, to the Participation
Agreement, dated April 30, 1997, between Registrant and
Prudential Insurance Company of America.(29)
(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)
- (c) Amendment No. 2, dated February 1, 2002, to the
Participation Agreement, dated February 1, 1999, between
Registrant and Sage Life Assurance of America, Inc.(27)
- (d) Amendment No. 3, dated May 1, 2003, to the Participation
Agreement, dated February 1, 1999, between Registrant and Sage
Life Assurance of America, Inc.(27)
(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)
- (c) Amendment No. 2, dated April 30, 2004, to the
Participation Agreement, dated April 1, 1999, between
Registrant and Liberty Life Assurance Company of Boston.(27)
|
- (d) Amendment No. 2, dated April 30, 2004, to the Participation Agreement, dated April 1, 1999, between Registrant and Liberty Life Assurance Company of Boston.(29)
(45) - Participation Agreement, dated April 13, 1999, between
Registrant and Western-Southern Life Insurance Company.(10)
(46) - (a) Participation Agreement, dated May 1, 1999, between
Registrant and Columbus Life Insurance Company.(10)
- (b) Amendment, dated April 25, 2003, to the Participation
Agreement, dated May 1, 1999, between Registrant and Columbus
Life Insurance Company.(27)
- (c) Amendment No. 2, dated April 30, 2004, to the
Participation Agreement, dated May 1, 1999, between Registrant
and Columbus Life Insurance Company.(27)
(47) - (a) Participation Agreement, dated April 26, 1999, between
Registrant and First Variable Life Insurance Company.(10)
- (b) Amendment, dated April 30, 2004, to the Participation
Agreement, dated April 26, 1999, between Registrant and
Protective Life Insurance Company (formerly First Variable
Life Insurance Company).(27)
(48) - (a) Participation Agreement, dated August 21, 1999, between
Registrant and Life Investors Insurance Company of
America.(11)
- (b) Amendment, dated July 12, 2006, to the Participation
Agreement, dated August 21, 1999, between Registrant and
Life Investors Insurance Company of America.(28)
- (c) Amendment and Novation, dated May 1, 2007, to the
Participation Agreement, dated August 21, 1999, between
Registrant and Life Investors Insurance Company of
America.(29)
(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 April 1, 2001, to the Participation
Agreement, dated June 8, 1999, between Registrant and
Principal Life Insurance Company.(27)
- (c) Amendment, dated May 1, 2002, to the Participation
Agreement, dated June 8, 1999, between Registrant and
Principal Life Insurance Company.(20)
- (d) Amendment, dated August 15, 2002, to the Participation
Agreement, dated June 8, 1999, between Registrant and
Principal Life Insurance Company.(20)
- (e) Amendment. dated January 8, 2003, to the Participation
Agreement, dated June 8, 1999, between Registrant and
Principal Life Insurance Company.(27)
- (f) Amendment, dated February 14, 2003, to the Participation
Agreement, dated June 8, 1999, between Registrant and
Principal Life Insurance Company.(27)
|
- (g) Amendment, dated April 30, 2004, to the Participation Agreement, dated June 8, 1999, between Registrant and Principal Life Insurance Company.(27)
- (h) Amendment, dated April 29, 2005, to the Participation Agreement, dated June 8, 1999, between Registrant and Principal Life Insurance Company.(27)
- (i) Amendment No. 8, dated May 1, 2006, to the Participation Agreement, dated June 8, 1999, between Registrant and Principal Life Insurance Company.(29)
(51) - (a) Participation Agreement, dated June 14, 1999, between Registrant and Security First Life Insurance Company.(11)
- (b) Amendment No. 1, dated April 30, 2007, to the Participation Agreement, dated June 14 1999, between Registrant and Security First Life Insurance Company.(29)
(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)
- (c) Amendment No. 2, dated May 1, 2003, to the Participation
Agreement, dated July 1, 1999, between Registrant and Allstate
Life Insurance Company.(27)
(53) - (a) Participation Agreement, dated July 27, 1999, between
Registrant and Allianz Life Insurance Company of North
America.(11)
- (b) Amendment No. 1, dated May 1, 2005, to the Participation
Agreement, dated July 27, 1999, between Registrant and Allianz
Life Insurance Company of North America.(28)
- (c) Amendment No. 2, dated May 1, 2006, to the Participation
Agreement, dated July 27, 1999, between Registrant and Allianz
Life Insurance Company of North America.(28)
(54) - (a) Participation Agreement, dated July 27, 1999, between
Registrant and Preferred Life Insurance Company of New
York.(11)
- (b) Amendment No. 1, dated May 1, 2006, to the Participation
Agreement, dated July 27, 1999, between Registrant and Allianz
Life Insurance Company of New York (formerly preferred Life
Insurance Company of New York).(28)
(55) - Participation Agreement, dated August 31, 1999, between
Registrant and John Hancock Mutual Life Insurance Company.(11)
(56) - (a) Participation Agreement, dated August 31, 1999, between
Registrant and The United States Life Insurance Company in the
City of New York.(11)
- (b) Amendment No. 1, dated October 1, 2001, to the
Participation Agreement, dated August 31, 1999, between
Registrant and The United States Life Insurance Company in the
City of New York.(27)
|
- (c) Amendment No. 2, dated December 31, 2002, to the
Participation Agreement, dated August 31, 1999, between
Registrant and The United States Life Insurance Company in the
City of New York.(27)
- (d) Amendment No. 3, dated September 5, 2003, to the
Participation Agreement, dated August 31, 1999, between
Registrant and The United States Life Insurance Company in the
City of New York.(27)
(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)
- (c) Amendment, dated July 12, 2002, to the Participation
Agreement, dated November 1, 1999, between Registrant and
AETNA Insurance Company of America.(27)
(58) - Participation Agreement, dated January 28, 2000, between
Registrant and Northbrook Life Insurance Company.(13)
(59) - (a) Participation Agreement, dated March 2, 2000, between
Registrant and GE Life and Annuity Assurance Company.(14)
- (b) Amendment No. 1, dated January 12, 2005, to the
Participation Agreement, dated March 2, 2000, between
Registrant and GE Life and Annuity Assurance Company.(27)
- (c) Amendment No. 2, dated April 29, 2005, to the
Participation Agreement, dated March 2, 2000, between
Registrant and GE Life and Annuity Assurance Company.(27)
- (d) Amendment No. 3, dated February 27, 2007, to the
Participation Agreement, dated March 2, 2000, between
Registrant and Genworth Life and Annuity Insurance Company
(formerly, GE Life and Annuity Assurance Company).(29)
(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) - (a) Participation Agreement, dated April 14, 2000, between
Registrant and United Investors Life Insurance Company.(14)
|
- (b) Amendment, dated April 30, 2004, to the Participation
Agreement, dated April 14, 2000, between Registrant and
United Investors Life Insurance Company.(27)
(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)
- (f) Amendment No. 5, dated August 20, 2003, to the
Participation Agreement, dated April 17, 2000, between
Registrant and Sun Life Insurance and Annuity Company of New
York.(27)
- (g) Amendment No. 6, dated April 30, 2004, to the
Participation Agreement, dated April 17, 2000, between
Registrant and Sun Life Insurance and Annuity Company of New
York.(27)
- (h) Amendment No. 7, dated October 1, 2006, to the
Participation Agreement, dated April 17, 2000, between
Registrant and Sun Life Insurance and Annuity Company of New
York.(28)
- (i) Amendment No. 8, dated January 29, 2007, to the
Participation Agreement, dated April 17, 2000, between
Registrant and Sun Life Insurance and Annuity Company of New
York.(29)
|
- (j) Amendment No. 9, dated May 1, 2007, to the Participation Agreement, dated April 17, 2000, between Registrant and Sun Life Insurance and Annuity Company of New York.(29)
- (k) Amendment No. 10, dated August 1, 2007, to the Participation Agreement, dated April 17, 2000, between Registrant and Sun Life Insurance and Annuity Company of New York.(29)
(66) - (a) Participation Agreement, dated August 1, 2000, between
Registrant and Kansas City Life Insurance Company.(14)
- (b) Amendment, dated October 31, 2002, to the Participation
Agreement, dated August 1, 2000, between Registrant and Kansas
City Life Insurance Company.(27)
|
(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)
- (c) Amendment No. 2, dated October 1, 2002, to the
Participation Agreement, dated February 26, 1999, between
Registrant and American General Life Insurance Company.(27)
(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 MetLife Investors Insurance Company
(formerly, First Cova Life Insurance Company).(18)
- (c) Amendment No. 2, dated April 30, 2007, to the
Participation Agreement dated December 31, 1997, between
Registrant and First MetLife Investors Insurance Company
(formerly, First Cova Life Insurance Company).(29)
(70) - (a) Participation Agreement, dated February 1, 2001, between
Registrant and Peoples Benefit Life Insurance Company.(18)
- (b) Amendment, dated April 6, 2004, to the Participation
Agreement between Registrant and Peoples Benefit Life
Insurance Company.(27)
- (c) Amendment and Novation, dated May 1, 2007, to the
Participation Agreement, dated February 1, 2001, between
Registrant and People's Benefit Life Insurance Company.(29)
(71) - (a) Participation Agreement, dated March 28, 2001, between
Registrant and Security Benefit Life Insurance Company.(18)
- (b) Amendment No. 1, dated May 1, 2003, to the Participation
Agreement, dated March 28, 2001, between Registrant and
Security Benefit Life Insurance Company.(27)
- (c) Amendment No. 2, dated September 29, 2005, to the
Participation Agreement, dated March 28, 2001, between
Registrant and Security Benefit Life Insurance Company.(27)
- (d) Amendment No. 3, dated November 15, 2006, to the
Participation Agreement, dated March 28, 2001, between
Registrant and Security Benefit Life Insurance Company.(28)
|
(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) - (a) Participation Agreement, dated April 4, 2001, between
Registrant and Annuity Investors Life Insurance Company.(18)
- (b) Amendment No. 1, dated July 1, 2002, to the Participation
Agreement, dated April 4, 2001, between Registrant and Annuity
Investors Life Insurance Company.(27)
- (c) Amended, dated April 30, 2004, to the Participation
Agreement, dated April 4, 2001, between Registrant and
Annuity Investors Life Insurance Company.(27)
(76) - Participation Agreement, dated April 17, 2001, between
Registrant and Sun Life Insurance and Annuity Company of New
York.(18)
(77) - (a) Participation Agreement, dated April 30, 2001, between
Registrant and Western Reserve Life Assurance Co. of Ohio.(18)
- (b) Amendment, dated April 30, 2001, to the Participation
Agreement, dated April 30, 2001, between Registrant and
Western Reserve Life Assurance Co. of Ohio.(27)
- (c) Amendment, dated July 12, 2006, to the Participation
Agreement, dated April 30, 2001, between Registrant and
Western Reserve Life Assurance Co. of Ohio.(28)
- (d) Amendment and Novation dated May 1, 2007, to the
Participation Agreement, dated April 30, 2001, between
Registrant and Western Reserve Life Assurance Co. of Ohio.(29)
(78) - (a) Participation Agreement, dated July 13, 2001, between
Registrant and Golden American Life Insurance Company.(18)
- (b) Amendment, dated April 30, 2004, to the Participation
Agreement, dated July 13, 2001, between Registrant and
Golden American Life Insurance Company.(27)
(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) - (a) Participation Agreement, dated October 1, 2000, between
Registrant and The Travelers Life and Annuity Company.(18)
|
- (b) Amendment, dated May 1, 2003, to the Participation Agreement, dated October 1, 2000, between Registrant and The Travelers Life and Annuity Company.(27)
- (c) Amendment, dated March 31, 2005, to the Participation Agreement, dated October 1, 2000, between Registrant and The Travelers Life and Annuity Company.(27)
(81) - Participation Agreement, dated November 1, 2001, between
Registrant and The American Life Insurance Company of New
York.(18)
(82) - (a) Participation Agreement, dated May 1, 2002, between the
Registrant and Hartford Life and Annuity Insurance
Company.(27)
- (b) Amendment No. 1, dated April 30, 2004, to the
Participation Agreement, dated May 1, 2002, to the
Participation Agreement dated May 1, 2002, between the
Registrant and Hartford Life and Annuity Insurance
Company.(27)
(83) - (a) Participation Agreement, dated March 4, 2002, between
Registrant and Minnesota Life Insurance Company.(19)
- (b) Amendment No. 1, dated April 30, 2004, to the
Participation Agreement, dated March 4, 2002, between
Registrant and Minnesota Life Insurance Company, Inc.(27)
- (c) Amendment No. 2, dated April 1, 2005, to the Participation
Agreement, dated March 4, 2002, between Registrant and
Minnesota Life Insurance Company, Inc.(27)
- (d) Amendment No. 3, dated October 1, 2006, to the
Participation Agreement, dated March 4, 2002, between
Registrant and Minnesota Life Insurance Company, Inc.(28)
(84) - (a) Participation Agreement, dated May 1, 2002, between
Registrant and AUSA Life Insurance Company, Inc.(20)
- (b) Amendment No. 1, dated May 1, 2004, to the Participation
Agreement, dated May 1, 2002, between Registrant and AUSA Life
Insurance Company, Inc.(27)
- (c) Amendment, dated July 12, 2006, to the Participation
Agreement, dated May 1, 2002, between Registrant and
Transamerica Financial Life Insurance Company (formerly, AUSA
Life Insurance Company, Inc.).(28)
- (d) Amendment and Novation, dated May 1, 2007, to the
Participation Agreement, dated May 1, 2002, between Registrant
and Transamerica Financial Life Insurance Company (formerly,
AUSA Life Insurance Company, Inc.).(29)
|
- (e) Amendment, dated July 30, 2007, to the Participation Agreement, dated May 1, 2002, between Registrant and Transamerica Financial Life Insurance Company (formerly, AUSA Life Insurance Company, Inc.).(29)
(85) - Participation Agreement, dated October 1, 2002, between Registrant and CUNA Mutual Life Insurance Company.(20)
(86) - (a) Participation Agreement, dated May 1, 2000, between
Registrant and SAFECO Life Insurance Company.(27)
- (b) Amendment, dated May 1, 2003, to the Participation
Agreement, dated May 1, 2000, between Registrant and SAFECO
Life Insurance Company.(27)
- (c) Amendment, dated April 30, 2004, to the Participation
Agreement, dated May 1, 2000, between Registrant and SAFECO
Life Insurance Company.(27)
- (d) Amendment, dated July 15, 2005, to the Participation
Agreement, dated May 1, 2000, between Registrant and SAFECO
Life Insurance Company (n/k/a Symetra Life Insurance
Company.(27)
(87) - (a) Participation Agreement, dated May 22, 2002, between
Registrant and The Penn Mutual Life Insurance Company.(27)
- (b) Amendment No. 1, dated May 1, 2004, to the Participation
Agreement, dated May 22, 2002, between Registrant and the Penn
Mutual Life Insurance Company.(27)
(88) - (a) Participation Agreement, dated June 21, 2002, between
Registrant and First Security Benefit Life Insurance and
Annuity Company.(27)
- (b) Amendment No. 1, dated May 1, 2003, to the Participation
Agreement, dated June 21, 2002, between Registrant and First
Security Benefit Life Insurance and Annuity Company.(27)
- (c) Amendment No. 2, dated September 29, 2005, to the
Participation Agreement, dated June 21, 2002, between
Registrant and First Security Benefit Life Insurance and
Annuity Company.(27)
- (d) Amendment No. 3, dated November 15, 2006, to the
Participation Agreement, dated June 21, 2002, between
Registrant and First Security Benefit Life Insurance and
Annuity Company.(28)
(89) - Participation Agreement, dated April 30, 2003, between
Registrant and MONY Life Insurance Company.(27)
(90) - Participation Agreement, dated April 30, 2003, between
Registrant and MONY Life Insurance Company of America.(27)
(91) - (a) Participation Agreement, dated September 1, 2005, between
Registrant and American National Insurance Company.(27)
|
- (b) Amendment, dated March 2, 2007, to the Participation Agreement, dated September 1, 2005, between Registrant and American National Insurance Company.(29)
(92) - (a) Participation Agreement, dated October 12, 1999, between
Registrant and Security Equity Life Insurance Company.(27)
- (b) Amendment No. 1, dated October 31, 2003, to the
Participation Agreement, dated October 12, 1999, between
Registrant and Security Equity Life Insurance Company.(27)
|
(93) - (a) Participation Agreement, dated October 12, 1999, between
Registrant and General American Life Insurance Company.(27)
- (b) Amendment, dated September 2, 2002, to the Participation
Agreement, dated October 12, 1999, between Registrant and
General American Life Insurance Company.(27)
(94) - (a) Participation Agreement, dated May 1, 2003, between
Registrant and Jefferson National Life Insurance Company.(27)
- (b) Amendment, dated April 30, 2004, to the Participation
Agreement, dated May 1, 2003, between Registrant and
Jefferson National Life Insurance Company.(27)
|
- (c) Amendment, dated May 1, 2006, to the Participation Agreement, dated May 1, 2003, between Registrant and Jefferson National Life Insurance Company.(27)
(95) - Participation Agreement, dated April 30, 2004, between
Registrant and Midland National Life Insurance Company.(27)
(96) - Participation Agreement, dated April 30, 2004, between
Registrant and National Life Insurance Company.(27)
(97) - Participation Agreement, dated April 30, 2004, between
Registrant and Metropolitan Life Insurance Company.(27)
(98) - (a) Participation Agreement, dated April 30, 2004, between
Registrant and Ameritas Life Insurance Corporation (formerly
Ameritas Variable Life Insurance Company).(27)
|
- (b) Amendment No. 1, dated July 31, 2006, to the Participation Agreement, dated April 30, 2004, between Registrant and Ameritas Life Insurance Corporation (formerly Ameritas Variable Life Insurance Company).(28)
- (c) Amendment No. 2, dated November 5, 2007, to the Participation Agreement, dated April 30, 2004, between Registrant and Ameritas Life Insurance Corporation (formerly Ameritas Variable Life Insurance Company).(29)
(99) - (a) Participation Agreement, dated April 30, 2004, between
Registrant and Ameritas Life Insurance Company.(27)
- (b) Novation to Participation Agreement, dated February 26,
2007, to the Participation Agreement, dated April 30, 2004,
between Registrant and Ameritas Life Insurance Company.(28)
- (c) Amendment No. 1, effective November 5, 2007, to the
Participation Agreement, dated April 30, 2004, between
Registrant and Ameritas Life Insurance Corp.(29)
(100) - Participation Agreement, dated April 30, 2004, between
Registrant and Business Men's Assurance Company of
America.(27)
(101) - Participation Agreement, dated April 30, 2004, between
Registrant and American Skandia Life Assurance Corp.(27)
|
(102) - Participation Agreement, dated April 30, 2004, between
Registrant and Great- West Life Annuity Insurance Company.(27)
(103) - Participation Agreement, dated April 30, 2004, between
Registrant and American United Life Insurance Company.(27)
(104) - (a) Participation Agreement, dated March 2, 2003, between
Registrant and GE Capital Life Assurance Company of New
York.(27)
- (b) Amendment No. 1, dated April 29, 2005, to the
Participation Agreement, dated March 2, 2003, between
Registrant and GE Capital Life Assurance Company of New
York.(27)
- (c) Amendment No. 2, dated February 27, 2007, to the
Participation Agreement, dated March 2, 2003, between
Registrant and Genworth Life Insurance Company of New York
(formerly, GE Capital Life Assurance Company of New York).(29)
(105) - Participation Agreement, dated April 30, 2004, between
Registrant and American Partners Life Insurance Company.(27)
(106) - Participation Agreement, dated April 30, 2004, between
Registrant and Massachusetts Mutual Life Insurance
Company.(27)
(107) - Participation Agreement, dated April 30, 2004, between
Registrant and C.M. Life Insurance Company.(27)
(108) - Participation Agreement, dated July 1, 2005, between
Registrant and AXA Equitable Life Insurance Company.(27)
(109) - (a) Participation Agreement, dated September 14, 2005, between
Registrant and New York Life Insurance and Annuity Corp.(27)
- (b) Addendum, dated March 17, 2006, to the Participation
Agreement, dated September 14, 2005, between Registrant and
New York Life Insurance and Annuity Corp.(27)
(110) - Participation Agreement, dated April 30, 2004, between
Registrant and Chase Insurance Life and Annuity Company.(27)
(111) - Participation Agreement, dated April 30, 2004, between
Registrant and Kemper Investors Life Insurance Company.(27)
(112) - (a) Participation Agreement, dated January 6, 2003, between
Registrant and Nationwide Life Insurance Company.(27)
- (b) Amendment No. 1, dated April 30, 2004, to the
Participation Agreement, dated January 6, 2003, between
Registrant and Nationwide Life Insurance Company.(27)
- (c) Amendment No. 2, dated July 1, 2005, to the Participation
Agreement, dated January 6, 2003, between Registrant and
Nationwide Life Insurance Company.(27)
|
(113) - (a) Participation Agreement, dated April 30, 2004, between
Registrant, A I M Distributors, Inc. and First Great-West Life
& Annuity Insurance Company.(28)
- (b) Amendment No. 1, dated November 15, 2007, to the
Participation Agreement dated April 30, 2004, between
Registrant, A I M Distributors, Inc., and First Great-West
Life & Annuity Insurance Company.(29)
(114) - (a) Participation Agreement, dated April 30, 2004, between
Registrant, A I M Distributors, Inc., and Great-West Life &
Annuity Insurance Company.(29)
|
- (b) Amendment No. 1, dated April 30, 2004, to the Participation Agreement, dated April 30, 2004, between Registrant, A I M Distributors, Inc. and Great-West Life & Annuity Insurance Company.(28)
- (c) Amendment No. 2, dated August 1, 2006, to the Participation Agreement, dated April 30, 2004, between Registrant, A I M Distributors, Inc. and Great-West Life & Annuity Insurance Company.(28)
- (d) Amendment No. 3, dated November 15, 2007, to the Participation Agreement, dated April 30, 2004, between Registrant, A I M Distributors, Inc. and Great-West Life & Annuity Insurance Company.(29)
(115) - Participation Agreement, dated April 30, 2004, between
Registrant and The Manufacturers Life Insurance Company of New
York (effective January 1, 2005, John Hancock Life Insurance
Company of New York).(28)
(116) - Participation Agreement, dated April 30, 2004, between
Registrant and The Manufacturers Life Insurance Company
(U.S.A.) (effective January 1, 2005, John Hancock Life
Insurance Company (U.S.A.).(28)
|
(117) - Accounting Services Agreement, dated March 31, 1993, between the Registrant and State Street Bank and Trust Company.(4)
(118) - Agreement and Plan of Reorganization, dated December 7, 1999, between Registrant and AIM Variable Insurance Funds.(12)
(119) - Third Amended and Restated Interfund Loan Agreement, dated
December 30, 2005, between Registrant and A I M Advisors,
Inc.(28)
(120) - Third Amended and Restated Memorandum of Agreement, dated as
of July 1, 2007, between Registrant, on behalf of all funds,
and A I M Advisors, Inc., regarding securities lending.(29)
(121) - Memorandum of Agreement, dated as of July 1, 2007, between
Registrant, on behalf of certain funds, and A I M Advisors,
Inc., regarding advisory fee waivers.(29)
(122) - Memorandum of Agreement, dated as of July 1, 2007, between
Registrant, on behalf of all funds, and A I M Advisors, Inc.,
regarding expense limitations.(29)
(123) - Memorandum of Agreement, dated as of July 1, 2007, between
Registrant, on behalf of all funds, and A I M Advisors, Inc.,
regarding Affiliated Money Market Fund Waiver.(29)
|
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) Opinion and Consent of Messrs. Foley & Lardner regarding the addition of AIM V.I. Large Cap Growth Fund and AIM V.I.
Small Cap Equity Fund.(21)
- (l) Opinion and Consent of Messrs. Foley & Lardner, LLP regarding the addition of AIM V.I. Real Estate Fund, INVESCO VIF -- Core Equity Fund, INVESCO VIF -- Dynamics Fund, INVESCO VIF -- Financial Services Fund, INVESCO VIF -- Health Sciences Fund, INVESCO VIF -- Leisure Fund, INVESCO VIF -- Small Company Growth Fund, INVESCO VIF -- Technology Fund, INVESCO VIF -- Total Return Fund and INVESCO VIF -- Utilities Fund.(23)
- (m) Tax Opinion of Messrs. Foley & Lardner, LLP regarding the merger of Phoenix AIM Mid-Cap Equity Series into AIM V.I. Mid Cap Core Equity Fund.(24)
j (1) - Consent of Ballard, Spahr, Andrews & Ingersoll, LLP.(29)
k - Financial Statements for the period ended December 31, 2007
are incorporated by reference to the Funds' annual reports to
shareholders contained in the Registrant's Form N-CSR filed on
February ___, 2008.
|
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 (1) - (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)
- (d) Amendment No. 3 to the Registrant's Master Distribution
Plan, dated August 29, 2003.(22)
- (e) Amendment No. 4 to the Registrant's Master Distribution
Plan, dated April 30, 2004.(24)
- (f) Amendment No. 5 to the Registrant's Master Distribution
Plan, dated October 15, 2004.(24)
- (g) Amendment No. 6 to the Registrant's Master Distribution
Plan, dated July 1, 2005.(26)
- (h) Amendment No. 7 to the Registrant's Master Distribution
Plan, dated December 21, 2005.(26)
- (i) Amendment No. 8 to the Registrant's Master Distribution
Plan, dated May 1, 2006.(28)
- (j) Amendment No. 9, to the Registrant's Master Distribution
Plan, dated June 12, 2006.(28)
- (k) Amendment No. 10, to the Registrant's Master Distribution
Plan, July 3, 2006.(28)
|
- (l) Amendment No. 11, to the Registrant's Master Distribution Plan, dated November 6, 2006.(28)
- (m) Amendment No. 12, to the Registrant's Master Distribution Plan, dated December 21, 2006.(28)
- (n) Amendment 13, to the Registrant's Master Distribution Plan, dated May 1, 2007.(29)
n - Registrant's Amended and Restated Multiple Class Plan,
effective July 16, 2001, as amended and restated August 18,
2003.(22)
o - Reserved
p (1) - AIM Funds and A I M Management Group, Inc. Code of Ethics,
originally adopted May 1, 1981, amended effective as of
February 16, 2006. (28)
(2) - Invesco Institutional (N.A.), Inc., Code of Ethics adopted May
19, 2006.(28)
|
(3) - Code of Ethics relating to INVESCO Asset Management (Japan) Limited.(29)
(4) - INVESCO Code of Ethics, dated February 2008, relating to
Invesco Global Asset Management (N.A.), Inc., Invesco
Institutional (N.A.), Inc. and Invesco Senior Secured
Management, Inc.(30)
|
(5) - Invesco Staff Ethics and Personal Share Dealing, dated April 2007, relating to Invesco Hong Kong Limited.(29)
(6) - INVESCO PLC Code of Conduct, revised July 2006, AIM Trimark
Investments Addendum to the AMVESCAP Code of Conduct, revised
April 2, 2007, Policy No. D-6 Gifts and Entertainment, revised
April 2007, and Policy No. D-7 AIM Trimark Personal Trading
Policy, revised March 2007, together the Code of Ethics
relating to Invesco Trimark Investment Management Inc.(29)
|
(7) - Code of Ethics relating to Invesco Asset Management Deutschland GmbH.(29)
(8) - Code of Ethics relating to Invesco Asset Management Limited.(29)
(9) - INVESCO PLC Code of Conduct, revised July 2006, relating to Invesco Australia Limited.(29)
q - Powers of Attorney for Baker, Bayley, Bunch, Crockett, Dowden,
Fields, Flanagan, Frischling, Graham, Mathai-Davis, Pennock,
Quigley, Soll, Stickel and Taylor.(28)
|
(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) - Incorporated herein by reference to Post Effective Amendment No. 25, filed electronically on April 29, 2003.
(21) - Incorporated herein by reference to Post Effective Amendment No. 26, filed electronically on June 18, 2003.
(22) - Incorporated herein by reference to Post Effective Amendment No. 27, filed electronically on February 13, 2004.
(23) - Incorporated herein by reference to Post Effective Amendment No. 28, filed electronically on April 13, 2004.
(24) - Incorporated herein by reference to Post Effective Amendment No. 29, filed electronically on February 28, 2005.
(25) - Incorporated herein by reference to Post Effective Amendment No. 30, filed electronically on April 29, 2005.
(26) - Incorporated herein by reference to Post Effective Amendment No. 31, filed electronically on February 14, 2006.
(27) - Incorporated herein by reference to Post Effective Amendment No. 32, filed electronically on April 27, 2006.
(28) - Incorporated herein by reference to Post Effective Amendment No. 33, filed electronically on April 27, 2007.
(29) - Filed herewith electronically.
(30) - To be filed by amendment.
Item 24. Persons Controlled by or Under Common Control with Registrant
None.
Item 25. Indemnification
Indemnification provisions for officers, trustees, and
employees of the Registrant are set forth in Article VIII of
the Registrant's Amended and Restated Agreement and
Declaration of Trust and Article VIII of its Amended and
Restated Bylaws, and are hereby incorporated by reference. See
Items 23(a) and (b) above. Under the Amended and Restated
Agreement and Declaration of Trust, effective as of September
14, 2005, as amended (i) Trustees or officers, when acting in
such capacity, shall not be personally liable for any act,
omission or obligation of the Registrant or any Trustee or
officer except 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; (ii) every
Trustee, officer, employee or agent of the Registrant shall be
indemnified to the fullest extent permitted under the Delaware
Statutory Trust act, the Registrant's Bylaws and other
applicable law; (iii) in case any shareholder or former
shareholder of the Registrant shall be held to be personally
liable solely by reason of his being or having been a
shareholder of the Registrant 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 Registrant,
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).
|
The Registrant and other investment companies and their respective officers and trustees are insured under a joint Mutual Fund Directors & Officers Liability Policy, issued by ICI Mutual Insurance Company and certain other domestic insurers, with limits up to a $60,000,000 (plus an additional $20,000,000 limit that applies to independent directors/trustees only).
Section 16 of the Master Investment Advisory Agreement between the Registrant and AIM provides that in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of AIM or any of its officers, directors or employees, that AIM shall not be subject to liability to the Registrant or to any series of the Registrant, or to any shareholder of any series of the Registrant for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security. Any liability of AIM to any series of the Registrant shall not automatically impart liability on the part of AIM to any other series of the Registrant. No series of the Registrant shall be liable for the obligations of any other series of the Registrant.
Section 7 of the Master Intergroup Sub-Advisory Contract for Mutual Funds between AIM and Invesco Institutional (N.A.), Inc. (the "Sub-Advisory Contract") provides that the sub-advisor shall not be liable for any costs or liabilities arising from any error of judgment or mistake of law or any loss suffered by any series of the Registrant or the Registrant in connection with the matters to which the Sub-Advisory Contract relates except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the sub-advisor in the performance by the sub-advisor of its duties or from reckless disregard by the sub-advisor of its obligations and duties under the Sub-Advisory Contract.
Effective May 1, 2008, Section 9 of the Master Intergroup Sub-Advisory Contract for Mutual Funds (the "Sub-Advisory Contract") between Invesco Aim Advisors, Inc., on behalf of Registrant, and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Ltd., Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco Hong Kong Limited, Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc. and Invesco Trimark Investment Management Inc. (each a "Sub-Advisor", collectively the "Sub-Advisors") provides that the Sub-Advisor shall not be liable for any costs or liabilities arising from any error of judgment or mistake of law or any loss suffered by any series of the Registrant or the Registrant in connection with the matters to which the Sub-Advisory Contract relates except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Sub-Advisor in the performance by the Sub-advisor of its duties or from reckless disregard by the Sub-Advisor of its obligations and duties under the Sub-Advisory Contract.
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.
Item 26. Business and Other Connections of Investment Advisor
The only employment of a substantial nature of AIM's directors and officers is with AIM and its affiliated companies. For information as to the business, profession, vocation or employment of a substantial nature of each of the officers and directors of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Ltd., Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco Hong Kong Limited, Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc. and Invesco Trimark Investment Management Inc. (each a "Sub-Advisor", collectively the "Sub-Advisors") reference is made to Form ADV filed under the Investment Advisers Act of 1940 by each Sub-Advisor herein incorporated by reference. Reference is also made to the caption "Fund Management--The Advisor" of the Prospectuses which comprises Part A of this Registration Statement, and to the discussion under the caption "Management of the Trust" of the Statement of Additional Information which comprises Part B of this Registration Statement, and to Item 27(b) of this Part C.
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 Core Allocation Portfolio Series AIM Sector Funds
AIM Counselor Series Trust AIM Stock Funds
AIM Equity Funds AIM Summit Fund
AIM Funds Group AIM Tax-Exempt Funds
AIM Growth Series AIM Treasurer's Series Trust
AIM International Mutual Funds PowerShares Exchange-Traded Fund Trust
AIM Investment Funds PowerShares Exchange-Traded Fund Trust II
AIM Investment Securities Funds Short-Term Investments Trust
Tax-Free Investments Trust
|
(b) The following table sets forth information with respect to each director, officer or partner of A I M Distributors, Inc.
Name and Principal Position and Offices with Positions and Offices
Business Address* Underwriter with Registrant
------------------ ------------------------- ---------------------
Philip A. Taylor Director Trustee, President & Principal Executive Officer
John S. Cooper President None
William Hoppe, Jr. Executive Vice President None
Karen Dunn Kelley Executive Vice President Vice President
Brian Lee Executive Vice President None
Benn Utt Executive Vice President None
Patrick R. Bray Senior Vice President None
Michael A. Bredlau Senior Vice President None
LuAnn S. Katz Senior Vice President None
|
Name and Principal Position and Offices with Positions and Offices
Business Address* Underwriter with Registrant
------------------ ------------------------- ---------------------
Ivy B. McLemore Senior Vice President None
Lyman Missimer III Senior Vice President Assistant Vice President
David J. Nardecchia Senior Vice President None
Margaret A. Vinson Senior Vice President None
Gary K. Wendler Director &Senior Vice President None
Scott B. Widder Senior Vice President None
John M. Zerr Director, Senior Vice President & Senior Vice President, Secretary & Chief
Secretary Legal Officer
David A. Hartley Treasurer & Chief Financial Officer None
Rebecca Starling-Klatt Chief Compliance Officer & Assistant None
Vice President
Lance A. Rejsek Anti-Money Laundering Compliance Anti-Money Laundering Compliance Officer
Officer
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* 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 at the offices of Invesco Institutional (N.A.), Inc., 400 West Market Street, Suite 300, Louisville, Kentucky 40202, and except for those relating to certain transactions in portfolio securities that are maintained by the Registrant's Custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, and the Registrant's Transfer Agent and Dividend Paying Agent, AIM Investment Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739.
Effective May 1, 2008, records may also be maintained at the offices of:
Invesco Asset Management Deutschland GmbH
Bleichstrasse 60-62
Frankfurt, Germany 60313
Invesco Asset Management Limited
30 Finsbury Square
London, United Kingdom
EC2A 1AG
Invesco Asset Management (Japan) Limited 25th Floor, Shiroyama Trust Tower 3-1, Toranoman 4-chome, Minato-Ku Tokyo, Japan 105-6025
Invesco Australia Limited 333 Collins Street, Level 26 Melbourne Vic 3000, Australia
Invesco Global Asset Management (N.A.), Inc.
One Midtown Plaza
1360 Peachtree Street, N.E.
Atlanta, Georgia 30309
Invesco Hong Kong Limited
32nd Floor
Three Pacific Place
1 Queen's Road East
Hong Kong
Invesco Institutional (N.A.), Inc.
One Midtown Plaza
1360 Peachtree Street, N.E.
Atlanta, Georgia 30309
Invesco Senior Secured Management, Inc. 1166 Avenue of the Americas New York, NY 10036
Invesco Trimark Investment Management Inc.
5140 Yonge Street
Suite 900
Toronto, Ontario
Canada M2N 6X7
Item 29. Management Services
None.
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 has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Houston, Texas on the 11th of February, 2008.
REGISTRANT: AIM VARIABLE INSURANCE FUNDS
By: /s/ Philip A. Taylor
------------------------------------
Philip A. Taylor, 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/ Philip A. Taylor Trustee & President February 11, 2008
-------------------------- (Principal Executive Office
(Philip A. Taylor)
/s/ Bob R. Baker* Trustee February 11, 2008
--------------------------
(Bob R. Baker)
/s/ Frank S. Bayley* Trustee February 11, 2008
--------------------------
(Frank S. Bayley)
/s/ James T. Bunch* Trustee February 11, 2008
--------------------------
(James T. Bunch)
/s/ Bruce L. Crockett* Chair & Trustee February 11, 2008
--------------------------
(Bruce L. Crockett)
/s/ Albert R. Dowden* Trustee February 11, 2008
--------------------------
(Albert R. Dowden)
/s/ Martin L. Flanagan Trustee February 11, 2008
--------------------------
(Martin L. Flanagan)
/s/ Jack M. Fields* Trustee February 11, 2008
--------------------------
(Jack M. Fields)
/s/ Carl Frischling* Trustee February 11, 2008
--------------------------
(Carl Frischling)
/s/ Prema Mathai-Davis* Trustee February 11, 2008
--------------------------
(Prema Mathai-Davis)
/s/ Lewis F. Pennock* Trustee February 11, 2008
--------------------------
(Lewis F. Pennock)
/s/ Larry Soll* Trustee February 11, 2008
--------------------------
(Larry Soll)
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/s/ Raymond Stickel, Jr.* Trustee February 11, 2008
--------------------------
(Raymond Stickel, Jr.)
Vice President & Treasurer February 11, 2008
/s/ Sidney M. Dilgren (Principal Financial and
-------------------------- Accounting Officer)
(Sidney M. Dilgren)
|
*By /s/ Philip A. Taylor
---------------------------------
Philip A. Taylor
Attorney-in-Fact
|
* Philip A. Taylor, pursuant to powers of attorney filed in Registrant's Post-Effective Amendment No. 33 on April 27, 2007.
INDEX
Exhibit
Number Description
------- -----------
a(1)(l) Amendment No. 11, dated May 1, 2007, effective as of May 1,
2007, to Amended and Restated Agreement and Declaration of
Trust of Registrant
a(1)(m) Form of Amendment No. 12, dated May 1, 2008, effective as of
May 1, 2008, to Amended and Restated Agreement and
Declaration of Trust of Registrant
b(1)(d) Amendment No. 3, adopted effective January 1, 2008, to
Amended and Restated By-Laws of Registrant, dated effective
September 14, 2005
d(1)(p) Amendment No. 15, dated May 1, 2007, to Master Investment
Advisory Agreement between Registrant and A I M Advisors,
Inc.
d(1)(q) Amendment No. 16, dated July 1, 2007, to Master Investment
Advisory Agreement between Registrant and A I M Advisors,
Inc.
d(3) Form of Master Intergroup Sub-Advisory Contract for Mutual
Funds, dated [May 1, 2008] between Invesco Aim Advisors,
Inc., on behalf of Registrant, and each of Invesco Asset
Management Deutschland GmbH, Invesco Asset Management Ltd.,
Invesco Asset Management (Japan) Limited, Invesco Australia
Limited, Invesco Global Asset Management (N.A.), Inc.,
Invesco Hong Kong Limited, Invesco Institutional (N.A.),
Inc., Invesco Senior Secured Management, Inc. and Invesco
Trimark Investment Management Inc.
e(1)(n) Amendment No. 13, dated May 1, 2007, to First Amended and
Restated Master Distribution Agreement between Registrant
and A I M Distributors, Inc.
g(3) Foreign Assets Delegation Agreement, dated November 6, 2006,
between Registrant and A I M Advisors, Inc.
h(1)(e) Amendment No. 4, dated May 1, 2007, to Third Amended and
Restated Master Administrative Services Agreement, dated
July 1, 2006, between Registrant and A I M Advisors, Inc.
h(2)(b) Amendment No. 1, dated July 1, 2007, to the Amended and
Restated Transfer Agency and Service Agreement, dated July
1, 2006, between Registrant and AIM Investment Services,
Inc.
h(11)(f) Amendment, dated November 1, 2007, to the Participation
Agreement dated September 21, 1996, between Registrant and
Pruco Life Insurance Company
h(15)(e) Amendment, dated November 1, 2007, to the Participation
Agreement, dated February 14, 1997, between Registrant and
Pruco Life Insurance Company of New Jersey
h(26)(n) Amendment No. 13, dated May 1, 2007, to the Participation
Agreement, dated February 17, 1998, between Registrant and
Sun Life Assurance Company of Canada (U.S.)
h(26)(o) Amendment No. 14, dated August 1, 2007, to the Participation
Agreement, dated February 17, 1998, between Registrant and
Sun Life Assurance Company of Canada (U.S.)
|
h(29)(p) - Amendment and Novation, dated May 1, 2007, to the
Participation Agreement, dated May 1, 1998, between
Registrant and Transamerica Life Insurance Company (formerly
PFL Life Insurance Company)
h(29)(q) Amendment dated July 30, 2007, to the Participation
Agreement, dated May 1, 1998, between Registrant and
Transamerica Life Insurance Company (formerly PFL Life
Insurance Company)
h(31)(k) Amendment No. 10, dated August 31, 2007, to the
Participation Agreement, dated June 1, 1998, between
Registrant and American General Life Insurance Company
h(34)(f) Amendment, dated November 5, 2007, to the Participation
Agreement, dated July 1, 1998, between Registrant and The
Union Central Life Insurance Company
h(38) Amended and Restated Participation Agreement, dated July 31,
2007, to the Participation Agreement, dated July 27, 1998,
between Registrant, A I M Distributors, Inc., and
Commonwealth Annuity and Life Insurance Company (formerly
Allmerica Financial Life Insurance and Annuity Company)
h(40)(h) Amendment No. 7, dated April 2, 2007, to the Participation
Agreement, dated October 15, 1998, between Registrant and
Lincoln Life & Annuity Insurance Company of New York
h(42)(d) Amendment, dated May 1, 2006, to the Participation
Agreement, dated April 30, 1997, between Registrant and
Prudential Insurance Company of America
h(44)(d) Amendment, dated January 1, 2008, to the Participation
Agreement, dated April 1, 1999, between Registrant and
Liberty Life Assurance Company of Boston
h(48)(c) Amendment and Novation, dated May 1, 2007, to the
Participation Agreement, dated August 21, 1999, between
Registrant and Life Investors Insurance Company of America
h(50)(i) Amendment No. 8, dated May 1, 2006 to the Participation
Agreement, dated June 8, 1999, between Registrant and
Principal Life Insurance Company
h(51)(b) Amendment No. 1, dated April 30, 2007, to the Participation
Agreement, dated June 14, 1999, between Registrant and
Security First Life Insurance Company
h(59)(d) Amendment No. 3, dated February 27, 2007, to the
Participation Agreement, dated March 2, 2000, between
Registrant and Genworth Life and Annuity Insurance Company
(formerly, GE Life and Annuity Assurance Company)
h(65)(i) Amendment No. 8, dated January 29, 2007, to the
Participation Agreement, dated April 17, 2000, between
Registrant and Sun Life Insurance and Annuity Company of New
York
h(65)(j) Amendment No. 9, dated May 1, 2007, to the Participation
Agreement, dated April 17, 2000, between Registrant and Sun
Life Insurance and Annuity Company of New York
h(65)(k) Amendment No. 10, dated August 1, 2007, to the Participation
Agreement, dated April 17, 2000, between Registrant and Sun
Life Insurance and Annuity Company of New York
h(69)(c) Amendment No. 2, dated April 30, 2007, to the Participation
Agreement dated December 31, 1997, between Registrant and
First MetLife Investors Insurance Company (formerly, First
Cova Life Insurance Company)
|
h(70)(c) Amendment and Novation dated May 1, 2007, to the
Participation Agreement, dated February 1, 2001, between
Registrant and People's Benefit Life Insurance Company
h(77)(d) Amendment and Novation dated May 1, 2007, to the
Participation Agreement, dated April 30, 2001, between
Registrant and Western Reserve Life Assurance Co. of Ohio
h(84)(d) Amendment and Novation, dated May 1, 2007, to the
Participation Agreement, dated May 1, 2002, between
Registrant and Transamerica Financial Life Insurance Company
(formerly, AUSA Life Insurance Company, Inc.)
h(84)(e) Amendment, dated July 30, 2007, to the Participation
Agreement, dated May 1, 2002, between Registrant and
Transamerica Financial Life Insurance Company (formerly,
AUSA Life Insurance Company, Inc.)
h(91)(b) Amendment, dated March 2, 2007, to the Participation
Agreement, dated September 1, 2005, between Registrant and
American National Insurance Company
h(98)(c) Amendment No. 2, dated November 5, 2007, to the
Participation Agreement, dated April 30, 2004, between
Registrant and Ameritas Life Insurance Corporation
(formerly, Ameritas Variable life Insurance Company)
h(99)(c) Amendment No. 1, effective November 5, 2007, to the
Participation Agreement, dated April 30, 2004, between
Registrant and Ameritas Life Insurance Corp.
h(104)(c) Amendment No. 2, dated February 27, 2007, to the
Participation Agreement, dated March 2, 2003, between
Registrant and Genworth Life Insurance Company of New York
(formerly, GE Capital Life Assurance Company of New York)
h(113)(b) Amendment No. 1, dated November 15, 2007, to the
Participation Agreement, dated April 30, 2004, between
Registrant, A I M Distributors, Inc., and First Great-West
Life & Annuity Insurance Company
h(114)(a) Participation Agreement, dated April 30, 2004, between
Registrant, A I M Distributors, Inc., and Great-West Life &
Annuity Insurance Company
h(114)(d) Amendment No. 3, dated November 15, 2007, to the
Participation Agreement, dated April 30, 2004, between
Registrant, A I M Distributors, Inc. and Great-West Life &
Annuity Insurance Company
h(120) Third Amended and Restated Memorandum of Agreement, dated as
of July 1, 2007, between Registrant, on behalf of all funds,
and A I M Advisors, Inc., regarding securities lending
h(121) Memorandum of Agreement, dated as of July 1, 2007, between
Registrant, on behalf of certain funds, and A I M Advisors,
Inc., regarding advisory fee waivers
h(122) Memorandum of Agreement, dated as of July 1, 2007, between
Registrant, on behalf of all funds, and A I M Advisors,
Inc., regarding expense limitations
h(123) Memorandum of Agreement, dated as of July 1, 2007, between
Registrant, on behalf of all funds, and A I M Advisors,
Inc., regarding Affiliated Money Market Fund waiver
j(1) Consent of Ballard, Spahr, Andrews & Ingersoll, LLP
m(1)(n) Amendment No. 13, to the Registrant's Master Distribution
Plan, dated May 1, 2007
p(3) Code of Ethics relating to INVESCO Asset Management (Japan)
Limited
|
p(5) Invesco Staff Ethics and Personal Share Dealing, dated April
2007, relating to Invesco Hong Kong Limited
p(6) INVESCO PLC Code of Conduct, revised July 2006, AIM Trimark
Investments Addendum to the AMVESCAP Code of Conduct,
revised April 2, 2007, Policy No. D-6 Gifts and
Entertainment, revised April 2007, and Policy No. D-7 AIM
Trimark Personal Trading Policy, revised March 2007,
together the Code of Ethics relating to Invesco Trimark
Investment Management Inc.
p(7) Code of Ethics relating to Invesco Asset Management
Deutschland
p(8) Code of Ethics relating to Invesco Asset Management Limited
p(9) INVESCO PLC Code of Conduct, revised July 2006, relating to
Invesco Australia Limited
|
AMENDMENT NO. 11
TO
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
OF
AIM VARIABLE INSURANCE FUNDS
This Amendment No. 11 to the Amended and Restated Agreement and Declaration of Trust of AIM Variable Insurance Funds (this "Amendment") amends, effective as of May 1, 2007, the Amended and Restated Agreement and Declaration of Trust of AIM Variable Insurance Funds dated as of September 14, 2005, as amended (the "Agreement").
Under Section 9.7 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.
WHEREAS, the parties desire to amend the Agreement to remove AIM V.I. Small Cap Growth Fund; and
NOW, THEREFORE, the Agreement is hereby amended as follows:
1. Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
AIM VARIABLE INSURANCE FUNDS
PORTFOLIOS AND CLASSES THEREOF
PORTFOLIO CLASSES OF EACH PORTFOLIO
--------- -------------------------
AIM V.I. Basic Balanced Fund Series I shares
Series II shares
AIM V.I. Basic Value 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. Diversified Income Fund Series I shares
Series II shares
AIM V.I. Dynamics Fund Series I shares
Series II shares
AIM V.I. Financial Services Fund Series I shares
Series II shares
AIM V.I. Global Health Care Fund Series I shares
Series II shares
|
AIM V.I. Global Real Estate Fund Series I shares
Series II shares
AIM V.I. Government Securities 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
AIM V.I. Large Cap Growth Fund Series I shares
Series II shares
AIM V.I. Leisure Fund Series I shares
Series II shares
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. Small Cap Equity Fund Series I shares
Series II shares
AIM V.I. Technology Fund Series I shares
Series II shares
AIM V.I. Utilities Fund Series I shares
Series II shares"
|
2. All references in the Agreement to "this Agreement" shall mean the Agreement as amended by this Amendment.
3. Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of May 1, 2007.
By: /s/ John M. Zerr
------------------------------------
Name: John M. Zerr
Title: Senior Vice President
|
AMENDMENT NO. 12 TO
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST OF
AIM VARIABLE INSURANCE FUNDS
This Amendment No. 12 (the "Amendment") to the Amended and Restated Agreement and Declaration of Trust of AIM Variable Insurance Funds (the "Trust") amends, effective as of May 1, 2008, the Amended and Restated Agreement and Declaration of Trust of the Trust dated as of September 14, 2005, as amended (the "Agreement").
Under Section 9.7 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.
WHEREAS, the Shareholders of the Trust approved this amendment to eliminate the requirement that shareholders approve the termination of the Trust, the Fund or a share class if there are 100 or more holders of record of the Trust, Fund or share class;
NOW, THEREFORE, the Agreement is hereby amended as follows:
1. The first paragraph of Section 6.1 of the Agreement is amended and restated to read as follows:
"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 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 statutory trust; (iv) 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 statutory 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; (v) approve any amendment to this Article VI, Section 6.1; and (vi) approve such additional matters as may be required by law or as the Trustees, in their sole discretion, shall determine."
2. All references in the Agreement to "this Agreement" shall mean the Agreement as amended by this Amendment.
3. Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of May 1, 2008.
Title: President
AMENDMENT NO. 3 TO
AMENDED AND RESTATED BYLAWS
OF AIM VARIABLE INSURANCE FUNDS
Adopted effective January 1, 2008
The Amended and Restated Bylaws of AIM Variable Insurance Funds (the "Trust"), adopted effective September 14, 2005, (the "Bylaws"), are hereby amended as follows:
1. Article II, Section 5(a) is hereby amended and restated to read in its entirety as follows:
"Section 5. Designation, Powers, and Names of Committees; Sub-Committees; Committee Charters.
(a) The Board of Trustees shall have at a minimum the following five committees: (1) an Audit Committee; (2) a Governance Committee; (3) an Investments Committee; (4) a Valuation, Distribution and Proxy Oversight Committee; and (5) a Compliance Committee. Each such Committee shall have a written Charter governing its membership, duties and operations, and the Board shall designate the powers of each such Committee in its Charter. The Board of Trustees may terminate any such Committee by an amendment to these Bylaws. The Board of Trustees may, by resolution passed by a majority of the whole Board, establish one or more sub-committees of each such Committee, and the membership, duties and operations of each such sub-committee shall be set forth in the written Charter of the applicable Committee."
AMENDMENT NO. 15
TO
MASTER INVESTMENT ADVISORY AGREEMENT
This amendment dated as of May 1, 2007, amends the Master Investment Advisory Agreement (the "Agreement"), dated May 1, 2000, between AIM Variable Insurance Funds, a Delaware statutory trust, and A I M Advisors, Inc., a Delaware corporation.
WITNESSETH:
WHEREAS, the parties desire to amend the Agreement to remove AIM V.I. Small Cap Growth Fund; and
NOW, THEREFORE, the parties agree as follows:
1. Appendix A and Appendix B to the Agreement is hereby deleted in its entirety and replaced with the following:
"APPENDIX A
FUNDS AND EFFECTIVE DATES
EFFECTIVE DATE OF
NAME OF FUND ADVISORY AGREEMENT
------------ ------------------
AIM V.I. Basic Balanced Fund May 1, 2000
AIM V.I. Basic Value Fund September 10, 2001
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. Diversified Income Fund May 1, 2000
AIM V.I. Dynamics Fund April 30, 2004
AIM V.I. Financial Services Fund April 30, 2004
AIM V.I. Global Health Care Fund April 30, 2004
AIM V.I. Global Real Estate Fund April 30, 2004
AIM V.I. Government Securities 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. Large Cap Growth Fund September 1, 2003
AIM V.I. Leisure Fund April 30, 2004
AIM V.I. Mid Cap Core Equity Fund September 10, 2001
AIM V.I. Money Market Fund May 1, 2000
AIM V.I. Small Cap Equity Fund September 1, 2003
AIM V.I. Technology Fund April 30, 2004
AIM V.I. Utilities Fund April 30, 2004
|
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. BASIC 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% Over $1.5 billion................................................. 0.65% |
AIM V.I. CAPITAL DEVELOPMENT FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $350 million................................................ 0.75% Over $350 million................................................. 0.625% |
AIM V.I. CAPITAL APPRECIATION FUND
AIM V.I. CORE EQUITY FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $250 million................................................ 0.65% Over $250 million................................................. 0.60% |
AIM V.I. DYNAMICS FUND
AIM V.I. FINANCIAL SERVICES FUND
AIM V.I. GLOBAL HEALTH CARE FUND
AIM V.I. LEISURE FUND
AIM V.I. TECHNOLOGY FUND
ANNUAL RATE
-----------
All Assets........................................................ 0.75%
|
AIM V.I. DIVERSIFIED INCOME FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $250 million................................................ 0.60% Over $250 million................................................. 0.55% |
AIM V.I. GLOBAL REAL ESTATE FUND
NET ASSETS ANNUAL RATE ---------- ----------- All Assets........................................................ 0.90% |
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% 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. LARGE CAP GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $350 million................................................ 0.75% Over $350 million................................................. 0.625% |
AIM V.I. MONEY MARKET FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $250 million................................................ 0.40% Over $250 million................................................. 0.35% |
AIM V.I. SMALL CAP EQUITY FUND
NET ASSETS ANNUAL RATE ---------- ----------- All Assets........................................................ 0.85% |
AIM V.I. UTILITIES FUND
ANNUAL RATE
-----------
All Assets........................................................ 0.60%"
|
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, 2007
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ John M. Zerr
----------------------------- ------------------------------------
Assistant Secretary John M. Zerr
Senior Vice President
|
(SEAL)
A I M ADVISORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ John M. Zerr
----------------------------- ------------------------------------
Assistant Secretary John M. Zerr
Senior Vice President
|
(SEAL)
AMENDMENT NO. 16
TO
MASTER INVESTMENT ADVISORY AGREEMENT
This amendment dated as of July 1, 2007, amends the Master Investment Advisory Agreement (the "Agreement"), dated May 1, 2000, between AIM Variable Insurance Funds, a Delaware statutory trust, and A I M Advisors, Inc., a Delaware corporation.
WITNESSETH:
WHEREAS, the parties desire to amend the Agreement to permanently reduce the advisory payable by the AIM V.I. Basic Value Fund, AIM V.I. Dynamics Fund, AIM V.I. Financial Services Fund, AIM V.I. Global Health Care Fund, AIM V.I. Global Real Estate Fund, AIM V.I. Large Cap Growth Fund, AIM V.I. Leisure Fund, AIM V.I. Small Cap Equity Fund and AIM V.I. Technology Fund effective July 1, 2007;
NOW, THEREFORE, the parties agree as follows:
1. Appendix A and Appendix B to the Agreement is hereby deleted in its entirety and replaced with the following:
"APPENDIX A
FUNDS AND EFFECTIVE DATES
EFFECTIVE DATE OF
NAME OF FUND ADVISORY AGREEMENT
------------ ------------------
AIM V.I. Basic Balanced Fund May 1, 2000
AIM V.I. Basic Value Fund September 10, 2001
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. Diversified Income Fund May 1, 2000
AIM V.I. Dynamics Fund April 30, 2004
AIM V.I. Financial Services Fund April 30, 2004
AIM V.I. Global Health Care Fund April 30, 2004
AIM V.I. Global Real Estate Fund April 30, 2004
AIM V.I. Government Securities 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. Large Cap Growth Fund September 1, 2003
AIM V.I. Leisure Fund April 30, 2004
AIM V.I. Mid Cap Core Equity Fund September 10, 2001
AIM V.I. Money Market Fund May 1, 2000
AIM V.I. Small Cap Equity Fund September 1, 2003
AIM V.I. Technology Fund April 30, 2004
AIM V.I. Utilities Fund April 30, 2004
|
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. BASIC 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. LARGE CAP GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $250 million................................................ 0.695% Next $250 million................................................. 0.67% Next $500 million................................................. 0.645% Next $1.5 billion................................................. 0.62% Next $2.5 billion................................................. 0.595% Next $2.5 billion................................................. 0.57% Next $2.5 billion................................................. 0.545% Over $10 billion.................................................. 0.52% |
AIM V.I. CAPITAL APPRECIATION FUND
AIM V.I. CORE EQUITY FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $250 million................................................ 0.65% Over $250 million................................................. 0.60% |
AIM V.I. CAPITAL DEVELOPMENT FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $350 million................................................ 0.75% Over $350 million................................................. 0.625% |
AIM V.I. DIVERSIFIED INCOME FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $250 million................................................ 0.60% Over $250 million................................................. 0.55% |
AIM V.I. DYNAMICS FUND
AIM V.I. SMALL CAP EQUITY FUND
First $250 million................................................ 0.745% Next $250 million................................................. 0.73% Next $500 million................................................. 0.715% Next $1.5 billion................................................. 0.70% Next $2.5 billion................................................. 0.685% Next $2.5 billion................................................. 0.67% Next $2.5 billion................................................. 0.655% Over $10 billion.................................................. 0.64% |
AIM V.I. FINANCIAL SERVICES FUND
AIM V.I. GLOBAL HEALTH CARE FUND
AIM V.I. GLOBAL REAL ESTATE FUND
AIM V.I. LEISURE FUND
AIM V.I. TECHNOLOGY FUND
ANNUAL RATE
-----------
First $250 million................................................ 0.75%
Next $250 million................................................. 0.74%
Next $500 million................................................. 0.73%
Next $1.5 billion................................................. 0.72%
Next $2.5 billion................................................. 0.71%
Next $2.5 billion................................................. 0.70%
Next $2.5 billion................................................. 0.69%
Over $10 billion.................................................. 0.68%
|
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% 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. MID CAP CORE EQUITY FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $500 million................................................ 0.725% Next $500 million................................................. 0.700% Next $500 million................................................. 0.675% Over $1.5 billion................................................. 0.65% |
AIM V.I. MONEY MARKET FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $250 million................................................ 0.40% Over $250 million................................................. 0.35% |
AIM V.I. UTILITIES FUND
ANNUAL RATE
-----------
All Assets........................................................ 0.60%"
|
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.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Stephen R. Rimes By: /s/ John M. Zerr
----------------------------- ------------------------------------
Assistant Secretary John M. Zerr
Senior Vice President
|
(SEAL)
A I M ADVISORS, INC.
Attest: /s/ Stephen R. Rimes By: /s/ John M. Zerr
----------------------------- ------------------------------------
Assistant Secretary John M. Zerr
Senior Vice President
|
(SEAL)
MASTER INTERGROUP SUB-ADVISORY CONTRACT
FOR MUTUAL FUNDS
This contract is made as of May 1, 2008, by and among Invesco Aim Advisors, Inc. (the "Adviser") and each of Asset Management Deutschland GmbH Asset Management Ltd., Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco Hong Kong Limited, Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc. and Invesco Trimark Investment Management, Inc. (each a "Sub-Adviser" and, collectively, the "Sub-Advisers").
WHEREAS:
A) The Adviser has entered into an investment advisory agreement with
[NAME OF AIM REGISTRANT] (the "Trust"), an open-end management
investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), with respect to the funds set forth
in Exhibit A attached hereto (each a "Fund");
B) The Adviser is authorized to delegate certain, any or all of its rights, duties and obligations under investment advisory agreements to sub-advisers, including sub-advisers that are affiliated with the Adviser;
C) Each Sub-Adviser represents that it is registered with the U.S. Securities and Exchange Commission ("SEC") as an investment adviser under the Investment Advisers Act of 1940 ("Advisers Act") as an investment adviser, or will be so registered prior to providing any services to any of the Funds under this Contract, and engages in the business of acting as an investment adviser; and
D) The Sub-Advisers and their affiliates have personnel in various locations throughout the world and have been formed in part for the purpose of researching and compiling information and recommendations on the economies of various countries and securities of issuers located in such countries or on various types of investments and investment techniques, and providing investment advisory services in connection therewith.
NOW THEREFORE, in consideration of the promises and the mutual covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Adviser hereby appoints each Sub-Adviser as a sub-adviser of each Fund for the period and on the terms set forth herein. Each Sub-Adviser accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided.
2. Duties as Sub-Adviser. Subject to paragraph 7 below, the Adviser may, in its discretion, appoint each Sub-Advisor to perform one or more of the following services with respect to all or a portion of the investments of each Fund. The services and the portion of the investments of each Fund to be advised or managed by each Sub-Adviser shall be as agreed upon from time to
time by the Adviser and the Sub-Advisers. Each Sub-Adviser shall pay the salaries and fees of all personnel of such Sub-Adviser performing services for the Funds related to research, statistical and investment activities.
(a) Investment Advice. If and to the extent requested by the Adviser, each Sub-Adviser shall provide investment advice to one or more of the Funds and the Adviser with respect to all or a portion of the investments of such Fund(s) or with respect to various investment techniques, and in connection with such advice shall furnish such Fund(s) and the Adviser with such factual information, research reports and investment recommendations as the Adviser may reasonably require.
(b) Order Execution. If and to the extent requested by the Adviser, each Sub-Adviser shall place orders for the purchase and sale of portfolio securities or other investments for one or more of the Funds. In so doing, each Sub-Adviser agrees that it shall comply with paragraph 3 below.
(c) Discretionary Investment Management. If and to the extent requested by
the Adviser, each Sub-Adviser shall, subject to the supervision of the Trust's
Board of Trustees (the "Board") and the Adviser, manage all or a portion of the
investments of one or more of the Funds in accordance with the investment
objectives, policies and limitations provided in the Trust's Registration
Statement and such other limitations as the Trust or the Adviser may impose with
respect to such Fund(s) by notice to the applicable Sub-Adviser(s) and otherwise
in accordance with paragraph 5 below. With respect to the portion of the
investments of a Fund under its management, each Sub-Adviser is authorized to:
(i) make investment decisions on behalf of the Fund with regard to any stock,
bond, other security or investment instrument, including but not limited to
foreign currencies, futures, options and other derivatives, and with regard to
borrowing money; (ii) place orders for the purchase and sale of securities or
other investment instruments with such brokers and dealers as the Sub-Adviser
may select; and (iii) upon the request of the Adviser, provide additional
investment management services to the Fund, including but not limited to
managing the Fund's cash and cash equivalents and lending securities on behalf
of the Fund. In selecting brokers or dealers to execute trades for the Funds,
each Sub-Adviser will comply with its written policies and procedures regarding
brokerage and trading, which policies and procedures shall have been approved by
the Board. All discretionary investment management and any other activities of
each Sub-Adviser shall at all times be subject to the control and direction of
the Adviser and the Board.
3. Broker-Dealer Relationships. Each Sub-Adviser agrees that, in placing orders with brokers and dealers, it will attempt to obtain the best net result in terms of price and execution. Consistent with this obligation, each Sub-Adviser may, in its discretion, purchase and sell portfolio securities from and to brokers and dealers who sell shares of the Funds or provide the Funds, the Adviser's other clients, or a Sub-Adviser's other clients with research, analysis, advice and similar services. Each Sub-Adviser may pay to brokers and dealers, in return for such research and analysis, a higher commission or spread than may be charged by other brokers and dealers, subject to such Sub-Adviser determining in good faith that such commission or spread is reasonable in terms either of the particular transaction or of the overall responsibility of the Adviser and such Sub-Adviser to the Funds and their other clients and that the total commissions or spreads paid by each Fund will be reasonable in relation to the benefits to the Fund over the
long term. In no instance will portfolio securities be purchased from or sold to a Sub-Adviser, or any affiliated person thereof, except in accordance with the applicable securities laws and the rules and regulations thereunder and any exemptive orders currently in effect. Whenever a Sub-Adviser simultaneously places orders to purchase or sell the same security on behalf of a Fund and one or more other accounts advised by such Sub-Adviser, such orders will be allocated as to price and amount among all such accounts in a manner believed to be equitable to each account.
4. Books and Records. Each Sub-Adviser will maintain all required books and records with respect to the securities transactions of the Funds, and will furnish the Board and the Adviser with such periodic and special reports as the Board or the Adviser reasonably may request. Each Sub-Adviser hereby agrees that all records which it maintains for the Adviser are the property of the Adviser, and agrees to preserve for the periods prescribed by applicable law any records which it maintains for the Adviser and which are required to be maintained, and further agrees to surrender promptly to the Adviser any records which it maintains for the Adviser upon request by the Adviser.
5. Further Duties.
(a) In all matters relating to the performance of this Contract, each Sub-Adviser will act in conformity with the Agreement and Declaration of Trust, By-Laws and Registration Statement of the Trust and with the instructions and directions of the Adviser and the Board and will comply with the requirements of the 1940 Act, the rules, regulations, exemptive orders and no-action positions thereunder, and all other applicable laws and regulations.
(b) Each Sub-Adviser shall maintain compliance procedures for the Funds that it and the Adviser reasonably believe are adequate to ensure compliance with the federal securities laws (as defined in Rule 38a-1 of the 1940 Act) and the investment objective(s) and policies as stated in the Funds' prospectuses and statements of additional information. Each Sub-Adviser at its expense will provide the Adviser or the Trust's Chief Compliance Officer with such compliance reports relating to its duties under this Contract as may be requested from time to time. Notwithstanding the foregoing, each Sub-Adviser will promptly report to the Adviser any material violations of the federal securities laws (as defined in Rule 38a-1 of the 1940 Act) that it is or should be aware of or of any material violation of the Sub-Adviser's compliance policies and procedures that pertain to the Funds.
(c) Each Sub-Adviser at its expense will make available to the Board and the Adviser at reasonable times its portfolio managers and other appropriate personnel, either in person or, at the mutual convenience of the Adviser and the Sub-Adviser, by telephone, in order to review the investment policies, performance and other investment related information regarding the Funds and to consult with the Board and the Adviser regarding the Funds' investment affairs, including economic, statistical and investment matters related to the Sub-Adviser's duties hereunder, and will provide periodic reports to the Adviser relating to the investment strategies it employs. Each Sub-Adviser and its personnel shall also cooperate fully with counsel and auditors for, and the Chief Compliance Officer of, the Adviser and the Trust.
(d) Each Sub-Adviser will assist in the fair valuation of portfolio securities held by the Funds. The Sub-Adviser will use its reasonable efforts to provide, based upon its own
expertise, and to arrange with parties independent of the Sub-Adviser such as broker-dealers for the provision of, valuation information or prices for securities for which prices are deemed by the Adviser or the Trust's administrator not to be readily available in the ordinary course of business from an automated pricing service. In addition, each Sub-Adviser will assist the Funds and their agents in determining whether prices obtained for valuation purposes accurately reflect market price information relating to the assets of the Funds at such times as the Adviser shall reasonably request, including but not limited to, the hours after the close of a securities market and prior to the daily determination of a Fund's net asset value per share.
(e) Each Sub-Adviser represents and warrants that it has adopted a code of ethics meeting the requirements of Rule 17j-1 under the 1940 Act and the requirements of Rule 204A-1 under the Advisers Act and has provided the Adviser and the Board a copy of such code of ethics, together with evidence of its adoption, and will promptly provide copies of any changes thereto, together with evidence of their adoption. Upon request of the Adviser, but in any event no less frequently than annually, each Sub-Adviser will supply the Adviser a written report that (A) describes any issues arising under the code of ethics or procedures since the Sub-Adviser's last report, including but not limited to material violations of the code of ethics or procedures and sanctions imposed in response to the material violations; and (B) certifies that the procedures contained in the Sub-Adviser's code of ethics are reasonably designed to prevent "access persons" from violating the code of ethics.
(f) Upon request of the Adviser, each Sub-Adviser will review draft reports to shareholders and other documents provided or available to it and provide comments on a timely basis. In addition, each Sub-Adviser and each officer and portfolio manager thereof designated by the Adviser will provide on a timely basis such certifications or sub-certifications as the Adviser may reasonably request in order to support and facilitate certifications required to be provided by the Trust's Principal Executive Officer and Principal Financial Officer and will adopt such disclosure controls and procedures in support of the disclosure controls and procedures adopted by the Trust as the Adviser, on behalf of the Trust, deems are reasonably necessary.
(g) Unless otherwise directed by the Adviser or the Board, each Sub-Adviser will vote all proxies received in accordance with the Adviser's proxy voting policy or, if the Sub-Adviser has a proxy voting policy approved by the Board, the Sub-Adviser's proxy voting policy. Each Sub-Adviser shall maintain and shall forward to the Funds or their designated agent such proxy voting information as is necessary for the Funds to timely file proxy voting results in accordance with Rule 30b1-4 of the 1940 Act.
(h) Each Sub-Adviser shall provide the Funds' custodian on each business day with information relating to all transactions concerning the assets of the Funds and shall provide the Adviser with such information upon request of the Adviser.
6. Services Not Exclusive. The services furnished by each Sub-Adviser hereunder are not to be deemed exclusive and such Sub-Adviser shall be free to furnish similar services to others so long as its services under this Contract are not impaired thereby. Nothing in this Contract shall limit or restrict the right of any director, officer or employee of a Sub-Adviser, who may also be a Trustee, officer or employee of the Trust, to engage in any other business or to devote his or
her time and attention in part to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature.
7. Use of Subsidiaries and Affiliates. Each Sub-Adviser may perform any or all of the services contemplated hereunder, including but not limited to providing investment advice to the Funds pursuant to paragraph 2(a) above and placing orders for the purchase and sale of portfolio securities or other investments for the Funds pursuant to paragraph 2(b) above, directly or through such of its subsidiaries or other affiliates, including each of the other Sub-Advisers, as such Sub-Adviser shall determine; provided, however, that performance of such services through such subsidiaries or other affiliates shall have been approved, when required by the 1940 Act, by (i) a vote of a majority of the independent Trustees who are not parties to this Contract or "interested persons" (as defined in the 1940 Act) of a party to this Contract, other than as Board members ("Independent Trustees"), cast in person at a meeting called for the purpose of voting on such approval, and/or (ii) a vote of a majority of that Fund's outstanding voting securities.
8. Compensation.
(a) The only fees payable to the Sub-Advisers under this Contract are for providing discretionary investment management services pursuant to paragraph 2(c) above. For such services, the Adviser will pay each Sub-Adviser a fee, computed daily and paid monthly, equal to (i) 40% of the monthly compensation that the Adviser receives from the Trust pursuant to its advisory agreement with the Trust, multiplied by (ii) the fraction equal to the net assets of such Fund as to which the Sub-Adviser shall have provided discretionary investment management services pursuant to paragraph 2(c) above for that month divided by the net assets of such Fund for that month. This fee shall be payable on or before the last business day of the next succeeding calendar month. This fee shall be reduced to reflect contractual or voluntary fee waivers or expense limitations by the Adviser, if any, in effect from time to time as set forth in paragraph 9 below. In no event shall the aggregate monthly fees paid to the Sub-Advisers under this Contract exceed 40% of the monthly compensation that the Adviser receives from the Trust pursuant to its advisory agreement with the Trust, as reduced to reflect contractual or voluntary fee waivers or expense limitations by the Adviser, if any.
(b) If this Contract becomes effective or terminates before the end of any month, the fees for the period from the effective date to the end of the month or from the beginning of such month to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full month in which such effectiveness or termination occurs.
(c) If a Sub-Adviser provides the services under paragraph 2(c) above to a Fund for a period that is less than a full month, the fees for such period shall be prorated according to the proportion which such period bears to the applicable full month.
9. Fee Waivers and Expense Limitations. If, for any fiscal year of a Fund, the amount of the advisory fee which such Fund would otherwise be obligated to pay to the Adviser is reduced because of contractual or voluntary fee waivers or expense limitations by the Adviser, the fee payable to each Sub-Adviser pursuant to paragraph 8 above shall be reduced proportionately; and to the extent that the Adviser reimburses the Fund as a result of such expense limitations,
such Sub-Adviser shall reimburse the Adviser that proportion of such reimbursement payments which the fee payable to each Sub-Adviser pursuant to paragraph 8 above bears to the advisory fee under this Contract.
10. Limitation of Liability of Sub-Adviser and Indemnification. No Sub-Adviser shall be liable for any costs or liabilities arising from any error of judgment or mistake of law or any loss suffered by a Fund or the Trust in connection with the matters to which this Contract relates except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of such Sub-Adviser in the performance by such Sub-Adviser of its duties or from reckless disregard by such Sub-Adviser of its obligations and duties under this Contract. Any person, even though also an officer, partner, employee, or agent of a Sub-Adviser, who may be or become a Trustee, officer, employee or agent of the Trust, shall be deemed, when rendering services to a Fund or the Trust or acting with respect to any business of a Fund or the Trust, to be rendering such service to or acting solely for the Fund or the Trust and not as an officer, partner, employee, or agent or one under the control or direction of such Sub-Adviser even though paid by it.
11. Duration and Termination.
(a) This Contract shall become effective with respect to each Sub-Adviser upon the later of the date hereabove written and the date that such Sub-Adviser is registered with the SEC as an investment adviser under the Advisers Act, if a Sub-Adviser is not so registered as of the date hereabove written; provided, however, that this Contract shall not take effect with respect to any Fund unless it has first been approved (i) by a vote of a majority of the Independent Trustees, cast in person at a meeting called for the purpose of voting on such approval, and (ii) by vote of a majority of that Fund's outstanding voting securities, when required by the 1940 Act.
(b) Unless sooner terminated as provided herein, this Contract shall continue in force and effect until June 30, 2009. Thereafter, if not terminated, with respect to each Fund, this Contract shall continue automatically for successive periods not to exceed twelve months each, provided that such continuance is specifically approved at least annually (i) by a vote of a majority of the Independent Trustees, cast in person at a meeting called for the purpose of voting on such approval, and (ii) by the Board or by vote of a majority of the outstanding voting securities of that Fund.
(c) Notwithstanding the foregoing, with respect to any Fund(s) or any Sub-Adviser(s), this Contract may be terminated at any time, without the payment of any penalty, (i) by vote of the Board or by a vote of a majority of the outstanding voting securities of such Fund(s) on sixty days' written notice to such Sub-Adviser(s); or (ii) by the Adviser on sixty days' written notice to such Sub-Adviser(s); or (iii) by a Sub-Adviser on sixty days' written notice to the Trust. Should this Contract be terminated with respect to a Sub-Adviser, the Adviser shall assume the duties and responsibilities of such Sub-Adviser unless and until the Adviser appoints another Sub-Adviser to perform such duties and responsibilities. Termination of this Contract with respect to one or more Fund(s) or Sub-Adviser(s) shall not affect the continued effectiveness of this Contract with respect to any remaining Fund(s) or Sub-Adviser(s). This Contract will automatically terminate in the event of its assignment.
12. Amendment. No provision of this Contract may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and, when required by the 1940 Act, no amendment of this Contract shall be effective until approved by vote of a majority of the Fund's outstanding voting securities.
13. Notices. Any notices under this Contract shall be in writing, addressed and delivered, telecopied or mailed postage paid, to the other party entitled to receipt thereof at such address as such party may designate for the receipt of such notice. Until further notice to the other party, it is agreed that the address of the Trust and the Adviser shall be 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Until further notice to the other party, it is agreed that the address of each Sub-Adviser shall be set forth in Exhibit B attached hereto.
14. Governing Law. This Contract shall be construed in accordance with the laws of the State of Texas and the 1940 Act. To the extent that the applicable laws of the State of Texas conflict with the applicable provisions of the 1940 Act, the latter shall control.
15. Multiple Sub-Advisory Agreements. This Contract has been signed by multiple parties; namely the Adviser, on one hand, and each Sub-Adviser, on the other. The parties have signed one document for administrative convenience to avoid a multiplicity of documents. It is understood and agreed that this document shall constitute a separate sub-advisory agreement between the Adviser and each Sub-Adviser with respect to each Fund, as if the Adviser and such Sub-Adviser had executed a separate sub-advisory agreement naming such Sub-Adviser as a sub-adviser to each Fund. With respect to any one Sub-Adviser, (i) references in this Contract to "a Sub-Adviser" or to "each Sub-Adviser" shall be deemed to refer only to such Sub-Adviser, and (ii) the term "this Contract" shall be construed according to the foregoing provisions.
16. Miscellaneous. The captions in this Contract are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Contract shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Contract shall not be affected thereby. This Contract shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors. Any question of interpretation of any term or provision of this Contract having a counterpart in or otherwise derived from a term or provision of the 1940 Act or the Advisers Act shall be resolved by reference to such term or provision of the 1940 Act or the Advisers Act and to interpretations thereof, if any, by the United States Courts or in the absence of any controlling decision of any such court, by rules, regulations or orders of the SEC issued pursuant to said Acts. In addition, where the effect of a requirement of the 1940 Act or the Advisers Act reflected in any provision of the Contract is revised by rule, regulation or order of the SEC, such provision shall be deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be executed by their officers designated as of the day and year first above written.
INVESCO AIM ADVISORS, INC. INVESCO ASSET MANAGEMENT DEUTSCHLAND
GMBH
Adviser Sub-adviser
BY: BY:
--------------------------------- ------------------------------------
NAME: NAME:
------------------------------- ----------------------------------
TITLE: TITLE:
------------------------------ ---------------------------------
INVESCO ASSET MANAGEMENT LTD.
Sub-adviser
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
INVESCO ASSET MANAGEMENT (JAPAN) LIMITED
Sub-adviser
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
|
INVESCO AUSTRALIA LIMITED
Sub-adviser
INVESCO GLOBAL ASSET MANAGEMENT (N.A.),
INC.
Sub-adviser
INVESCO HONG KONG LIMITED
Sub-adviser
INVESCO INSTITUTIONAL (N.A.), INC.
Sub-adviser
INVESCO SENIOR SECURED MANAGEMENT, INC.
Sub-adviser
INVESCO TRIMARK INVESTMENT MANAGEMENT
INC.
Sub-adviser
EXHIBIT A
FUNDS
[List all series portfolios]
EXHIBIT B
ADDRESSES OF SUB-ADVISERS
InvescoAsset Management Deutschland GmbH
Bleichstrasse 60-62
Frankfurt, Germany 60313
Invesco Asset Management Ltd.
30 Finsbury Square
London, United Kingdom
EC2A 1AG
Invesco Asset Management (Japan) Limited
25th Floor, Shiroyama Trust Tower
3-1, Toranoman 4-chome, Minato-Ku
Tokyo, Japan 105-6025
Invesco Australia Limited
333 Collins Street, Level 26
Melbourne Vic 3000, Australia
Invesco Global Asset Management (N.A.), Inc.
One Midtown Plaza
1360 Peachtree Street, N.E.
Atlanta, Georgia 30309
Invesco Hong Kong Limited
32nd Floor
Three Pacific Place
1 Queen's Road East
Hong Kong
Invesco Institutional (N.A.), Inc.
One Midtown Plaza
1360 Peachtree Street, N.E.
Atlanta, Georgia 30309
Invesco Senior Secured Management, Inc.
1166 Avenue of the Americas
New York, NY 10036
Invesco Trimark Investment Management Inc.
5140 Yonge Street, Suite 900
Toronto, Ontario
Canada M2N 6X7
AMENDMENT NO. 13
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 statutory trust and A I M Distributors, Inc., a Delaware corporation, is hereby amended to remove AIM V.I. Small Cap Growth Fund;
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. Basic Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity Fund
AIM V.I. Diversified Income Fund
AIM V.I. Dynamics Fund
AIM V.I. Financial Services Fund
AIM V.I. Global Health Care Fund
AIM V.I. Global Real Estate Fund
AIM V.I. Government Securities Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Large Cap Growth Fund
AIM V.I. Leisure Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. Small Cap Equity Fund
AIM V.I. Technology Fund
AIM V.I. Utilities Fund
SERIES II SHARES
AIM V.I. Basic Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity Fund
AIM V.I. Diversified Income Fund
AIM V.I. Dynamics Fund
AIM V.I. Financial Services Fund
AIM V.I. Global Health Care Fund
AIM V.I. Global Real Estate Fund
AIM V.I. Government Securities Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Large Cap Growth Fund
AIM V.I. Leisure Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. Small Cap Equity Fund
AIM V.I. Technology Fund
AIM V.I. Utilities Fund"
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: May 1, 2007
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ John M. Zerr
----------------------------- ------------------------------------
Assistant Secretary John M. Zerr
Senior Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ Gene L. Needles
----------------------------- ------------------------------------
Assistant Secretary Gene L. Needles
President
|
FOREIGN ASSETS
DELEGATION AGREEMENT
This FOREIGN ASSETS DELEGATION AGREMEENT (the "Agreement") is made this 6th day of November, 2006 by and between A I M ADVISORS, INC., a Delaware corporation ("AIM") and each registered investment company (the "Investment Companies") and its respective portfolios as listed on Schedule A attached hereto (the "Funds"), as the same may be amended from time to time.
WITNESSETH:
WHEREAS, AIM has agreed to accept responsibility for the selection of foreign countries in which the Funds may invest; and
WHEREAS, AIM has agreed to accept responsibility for selecting eligible foreign securities depositories in such countries;
NOW THEREFORE, AIM hereby agrees as follows:
1. DEFINITIONS.
A. "ELIGIBLE FOREIGN SECURITIES DEPOSITORY" means a foreign Securities Depository that meets the eligibility requirements of Paragraph 5 hereof.
B. "FOREIGN ASSETS" means any of a Fund's investments (including foreign currencies) for which the primary market is outside the United States, currency contracts that are settled outside the United States, and such cash and cash equivalents as are reasonably necessary to effect the Fund's transactions in such investments.
C. "PREVAILING COUNTRY RISKS" 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 Foreign Securities Depositories operating in the country); prevailing or developing custody and settlement practices; laws and regulations applicable to the safekeeping and recovery of Foreign Assets held in custody in that country; and factors compromising "prevailing country risk", including the effects of foreign law on the safekeeping of Fund assets, the likelihood of expropriation, nationalization, freezing or confiscation of the Fund's assets and any reasonably foreseeable difficulties in repatriating the Fund's assets.
D. "PRIMARY CUSTODIAN" means State Street Bank and Trust Company.
E. "SECURITIES DEPOSITORY" means a system for the central handling of securities where all securities of any particular class or series of any issuer deposited within the system are treated as fungible and may be transferred or pledged by bookkeeping entry without physical delivery of the securities. A Securities Depository includes an Eligible Foreign Securities Depository.
FOREIGN COUNTRY SELECTION. AIM shall select the foreign countries in which a
Fund invests. AIM may determine that an issuer is located in a particular
country based on various factors, including the following; (i) the issuer is
organized under the laws of and maintains a principal office in that country;
(ii) the issuer derives 50% or more of its total revenues from business in that
country; (iii) the primary market for the issuer's securities is in that
country. In addition, in determining whether to maintain assets of Fund in a
foreign country, AIM shall consider Prevailing Country Risks. AIM may rely on
information provided by computerized information services, such as Bloomberg
terminals, in making the foregoing determinations. AIM may also rely on
information and opinions provided by the Foreign Custody Manager in making such
determinations. AIM may add or delete foreign countries to or from the list of
approved foreign countries from time to time, as determined by the AIM employees
who are portfolio managers of the Funds.
ELIGIBLE FOREIGN SECURITIES DEPOSITORIES SELECTION. AIM shall select Eligible Foreign Securities Depositories for the placement and maintenance of Foreign Assets. AIM shall not make any such selection unless and until is has determined that a Fund's custody arrangements provide reasonable safeguards against the custody risks associated with maintaining assets with the Eligible Foreign Securities Depository, including:
A. Risk Analysis and Monitoring.
(1) The Fund and AIM have received from the Primary Custodian (or its agent) an analysis of the custody risks associated with maintaining assets with the Eligible Foreign Securities Depository; and
(2) The contract between the Fund and the Primary Custodian requires the Primary Custodian (or its agent) to monitor the custody risks associated with maintaining assets with the Eligible Foreign Securities Depository on a continuing basis, and promptly notify the Fund and AIM of any material change in these risks.
B. Exercise of Care. The contract between the Fund and the Primary Custodian states that the Primary Custodian will agree to exercise reasonable care, prudence, and diligence in performing the requirements of Paragraphs 3(A)(1) and (2) above, or adhere to a higher standard of care.
WITHDRAWAL FROM FOREIGN SECURITIES DEPOSITORY. If a custody arrangement with a foreign Securities Depository no longer meets the eligibility requirements set forth Paragraph 5 below, AIM shall withdraw the Fund's Foreign Assets from the Securities Depository as soon as reasonably practicable.
DETERMINATION OF ELIGIBILITY. AIM shall determine a foreign Securities Depository to be an Eligible Foreign Securities Depository if it:
F. Acts as or operates a system for the central handling of securities or equivalent book-entries in the country where it is incorporated, or a transnational system for the central handling of securities or equivalent book-entries;
G. Is regulated by a foreign financial regulatory authority as defined under section 2(a)(50) of the Investment Company Act of 1940, as amended (the 1940 Act);
H. Holds assets for the custodian that participates in the system on behalf of the Fund under safekeeping conditions no less favorable than the conditions that apply to other participants;
I. Maintains records that identify the assets of each participant and segregates the system's own assets from the assets of participants;
J. Provides periodic reports to its participants with respect to its safekeeping of assets, including notices of transfers to or from any participant's account; and
K. Is subject to periodic examination by regulatory authorities or independent accountants.
REPORTS AND OTHER INFORMATION.
L. QUARTERLY REPORTS. AIM will submit to the Boards of Directors/Trustees a quarterly report listing all newly approved countries and all countries in which a Fund invested for the first time during the preceding quarter. Such report shall include a revised Appendix 1 to the Foreign Custody and Country Selection Procedures, if applicable, listing the approved countries. AIM will submit to the Boards of Directors/Trustees a quarterly report indicating changes to Eligible Foreign Securities Depositories to the extent such report is not provided by the Primary Custodian.
M. OTHER REPORTS. AIM will notify the Boards of Directors/Trustees in writing of any material change in the Eligible Foreign Securities Depositories for a Fund that has not been reported by the Primary Custodian promptly after the occurrence of the material change.
SUPERSEDES PRIOR AGREEMENT. This Agreement supersedes and replaces the Foreign Country Selection and Mandatory Securities Depository Responsibilities Delegation Agreement dated September 9, 1998, as amended.
LIABILITY OF AIM AND THE FUNDS. In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of AIM or any of its officers, directors or employees, AIM shall not be subject to liability to the Funds or to any shareholder of the Funds for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in connection with the responsibilities delegated hereunder. Any liability of AIM to one Fund shall not automatically impart liability on the part of AIM to any other Fund. No Fund shall be liable for the obligations of any other Fund.
DELEGATION TO SUB-ADVISORS. AIM may delegate its duties under this Agreement to the sub-advisors for certain Funds for which AIM serves as investment adviser. Such sub-advisors shall have the same obligations and shall be subject to the same standard of care as AIM is under this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers, as of the day and year first above written.
On behalf of itself and on behalf of its Funds listed on Schedule A hereto, as such Schedule may be amended from time to time:
AIM CORE ALLOCATION PORTFOLIO SERIES
AIM COUNSELOR SERIES TRUST
AIM EQUITY FUNDS
AIM FUNDS GROUP
AIM GROWTH SERIES
AIM INTERNATIONAL MUTUAL FUNDS
AIM INVESTMENT FUNDS
AIM INVESTMENT SECURITIES FUNDS
AIM SECTOR FUNDS
AIM SELECT REAL ESTATE INCOME FUND
AIM SPECIAL OPPORTUNITIES FUNDS
AIM STOCK FUNDS
AIM SUMMIT FUND
AIM VARIABLE INSURANCE FUNDS
Attest: \s\ Stephen R. Rimes By: \s\ Philip A. Taylor
----------------------------- ------------------------------------
Assistant Secretary Name: Philip A. Taylor
Title: President
A I M ADVISORS, INC.
Attest: \s\ Stephen R. Rimes By: \s\ John M. Zerr
----------------------------- ------------------------------------
Assistant Secretary Name: John M. Zerr
Title: Senior Vice President
|
SCHEDULE A
TO THE
FOREIGN ASSETS DELEGATION AGREEMENT
AIM CORE ALLOCATION PORTFOLIO SERIES
- Series C
- Series M
AIM COUNSELOR SERIES TRUST
- AIM Advantage Health Sciences Fund
- AIM Floating Rate Fund
- AIM Multi-Sector Fund
- AIM Structured Core Fund
- AIM Structured Growth Fund
- AIM Structured Value Fund
AIM EQUITY FUNDS
- AIM Capital Development Fund
- AIM Charter Fund
- AIM Constellation Fund
- AIM Diversified Dividend Fund
- AIM Large Cap Basic Value Fund
- AIM Large Cap Growth Fund
- AIM Select Basic Value Fund
AIM FUNDS GROUP
- AIM Basic Balanced Fund
- AIM European Small Company Fund
- AIM Global Value Fund
- AIM International Small Company Fund
- AIM Mid Cap Basic Value Fund
- AIM Select Equity Fund
- AIM Small Cap Equity Fund
AIM GROWTH SERIES
- AIM Basic Value Fund
- AIM Global Equity Fund
- AIM Mid Cap Core Equity Fund
- AIM Small Cap Growth Fund
AIM INTERNATIONAL MUTUAL FUNDS
- AIM Asia Pacific Growth Fund
- AIM European Growth Fund
- AIM Global Aggressive Growth Fund
- AIM Global Growth Fund
- AIM International Core Equity Fund
- AIM International Growth Fund
AIM INVESTMENT FUNDS
- AIM China Fund
- AIM Developing Markets Fund
- AIM Enhanced Short Bond Fund
- AIM Global Health Care Fund
- AIM International Bond Fund
- AIM Japan Fund
- AIM Trimark Endeavor Fund
- AIM Trimark Fund
- AIM Trimark Small Companies Fund
AIM INVESTMENT SECURITIES FUNDS
- AIM Global Real Estate Fund
- AIM High Yield Fund
- AIM Income Fund
- AIM Intermediate Government Fund
- AIM Real Estate Fund
- AIM Short Term Bond Fund
- AIM Total Return Bond Fund
AIM SECTOR FUNDS
- AIM Energy Fund
- AIM Financial Services Fund
- AIM Gold & Precious Metals Fund
- AIM Leisure Fund
- AIM Technology Fund
- AIM Utilities Fund
AIM SPECIAL OPPORTUNITIES FUNDS
- AIM Opportunities I Fund
- AIM Opportunities II Fund
- AIM Opportunities III Fund
AIM SELECT REAL ESTATE INCOME FUND
AIM STOCK FUNDS
- AIM Dynamics Fund
- AIM S&P 500 Index Fund
AIM SUMMIT FUND
AIM VARIABLE INSURANCE FUNDS
- AIM V.I. Basic Balanced Fund
- AIM V.I. Basic Value Fund
- AIM V.I. Capital Appreciation Fund
- AIM V.I. Capital Development Fund
- AIM V.I. Core Equity Fund
- AIM V.I. Diversified Dividend Fund
- AIM V.I. Diversified Income Fund
- AIM V.I. Dynamics Fund
- AIM V.I. Financial Services Fund
- AIM V.I. Global Equity Fund
- AIM V.I. Global Health Care Fund
- AIM V.I. Global Real Estate Fund
- AIM V.I. Government Securities Fund
- AIM V.I. High Yield Fund
- AIM V.I. International Core Equity Fund
- AIM V.I. International Growth Fund
- AIM V.I. Large Cap Growth Fund
- AIM V.I. Leisure Fund
- AIM V.I. Mid Cap Core Equity Fund
- AIM V.I. Small Cap Equity Fund
- AIM V.I. Small Cap Growth Fund
- AIM V.I. Technology Fund
- AIM V.I. Utilities Fund
AMENDMENT NO. 4
THIRD AMENDED AND RESTATED MASTER ADMINISTRATIVE SERVICES AGREEMENT
The Third Amended and Restated Master Administrative Services Agreement (the "Agreement"), dated July 1, 2006, by and between A I M ADVISORS, INC., a Delaware corporation, and AIM Variable Insurance Funds, a Delaware statutory trust, is hereby amended as follows:
WHEREAS, the parties desire to amend the Agreement to remove AIM V.I. Small Cap Growth Fund;
Appendix A of the Agreement is hereby deleted in its entirety and replaced with the following:
"APPENDIX A
TO
THIRD AMENDED AND RESTATED
MASTER ADMINISTRATIVE SERVICES AGREEMENT
OF
AIM VARIABLE INSURANCE FUNDS
PORTFOLIOS EFFECTIVE DATE OF AGREEMENT ---------- --------------------------- AIM V.I. Basic Balanced Fund July 1, 2006 AIM V.I. Basic Value Fund July 1, 2006 AIM V.I. Capital Appreciation Fund July 1, 2006 AIM V.I. Capital Development Fund July 1, 2006 AIM V.I. Core Equity Fund July 1, 2006 AIM V.I. Diversified Income Fund July 1, 2006 AIM V.I. Dynamics Fund July 1, 2006 AIM V.I. Financial Services Fund July 1, 2006 AIM V.I. Global Health Care Fund July 1, 2006 AIM V.I. Global Real Estate Fund July 1, 2006 AIM V.I. Government Securities Fund July 1, 2006 AIM V.I. High Yield Fund July 1, 2006 AIM V.I. International Growth Fund July 1, 2006 AIM V.I. Large Cap Growth Fund July 1, 2006 AIM V.I. Leisure Fund July 1, 2006 AIM V.I. Mid Cap Core Equity Fund July 1, 2006 AIM V.I. Money Market Fund July 1, 2006 AIM V.I. Small Cap Equity Fund July 1, 2006 AIM V.I. Technology Fund July 1, 2006 AIM V.I. Utilities Fund July 1, 2006 |
The Administrator may receive from each Portfolio reimbursement for costs or reasonable compensation for such services as follows:
Rate* Net Assets ----- ------------------ 0.023% First $1.5 billion 0.013% Next $1.5 billion 0.003% Over $3 billion |
* Annual minimum fee is $50,000. An additional $10,000 per class of shares is charged for each class other than the initial class. The $10,000 class fee is waived for any of the above Portfolios with insufficient assets to result in the payment of more than the minimum fee of $50,000."
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: May 1, 2007
A I M ADVISORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ John M. Zerr
----------------------------- ------------------------------------
Assistant Secretary John M. Zerr
Senior Vice President
|
(SEAL)
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ John M. Zerr
----------------------------- ------------------------------------
Assistant Secretary John M. Zerr
Senior Vice President
|
(SEAL)
AMENDMENT NUMBER 1 TO THE AMENDED AND RESTATED
TRANSFER AGENCY AND SERVICE AGREEMENT
This Amendment, dated as of July 1, 2007, is made to the Amended and Restated Transfer Agency and Service Agreement dated July 1, 2006, (the "Agreement") between AIM Variable Insurance Funds (the "Fund") and AIM Investment Services, Inc. ("AIS") pursuant to Article 11 of the Agreement.
WITNESSETH:
WHEREAS, the parties desire to amend Schedule A of the Agreement to include out-of-pocket expenses that may be associated with the administration of the Fund's Rule 22c-2 compliance program:
NOW, THEREFORE, the parties, intending to be legally bound, hereby agree as follows;
Item 2 of Schedule A of the Agreement is hereby amended to include the
following:
"(u) Fees and expenses assessed by third-party service providers in connection with the compilation and delivery of shareholder transaction data requested by the Transfer Agent in connection with its administration of the Fund's Rule 22c-2 compliance program."
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
AIM VARIABLE INSURANCE FUNDS
By: /s/ John M. Zerr
------------------------------------
Senior Vice President
ATTEST:
/s/ Stephen R. Rimes
-------------------------------------
Assistant Secretary
|
AIM INVESTMENT SERVICES, INC.
By: /s/ Illegible
------------------------------------
President
ATTEST:
/s/ Stephen R. Rimes
-------------------------------------
Assistant Secretary
|
AMENDMENT
WHEREAS, there is Participation agreement among AIM Variable Insurance Funds, Inc., AIM Distributors, Inc. Pruco Life Insurance Company, and Pruco Securities Corporation dated September 21, 1996 and another agreement between AIM Variable Insurance Funds, Inc., AIM Distributors, Inc. Pruco Life Insurance Company of New Jersey, and Pruco Securities Corporation dated February 14, 1997 (each, an "Agreement"); and
WHEREAS, Prudential Annuities, a business unit of Prudential Financial, Inc., has decided to replace the current principal underwriter of certain individual variable annuities with another affiliated principal underwriter called Prudential Annuities Distributors, Inc. ("PAD"); and
WHEREAS, the parties wish to amend each Agreement to substitute PAD as a party to the Agreement; and
NOW THEREFORE, for good and valuable consideration, the parties hereby amend each Agreement to substitute PAD as a party, but otherwise leave each Agreement unaffected.
/s/ Carolyn L. Gibbs ------------------------------------- AIM Variable Insurance Funds, Inc. /s/ John S. Cooper ------------------------------------- AIM Distributors, Inc. /s/ Daniel O. Kane ------------------------------------- Pruco Life Insurance Company Pruco Life Insurance Company of New Jersey /s/ Bruce W. Ferris ------------------------------------- Prudential Annuities Distributors, Inc. |
AMENDMENT
WHEREAS, there is Participation agreement among AIM Variable Insurance Funds, Inc., AIM Distributors, Inc. Pruco Life Insurance Company, and Pruco Securities Corporation dated September 21, 1996 and another agreement between AIM Variable Insurance Funds, Inc., AIM Distributors, Inc. Pruco Life Insurance Company of New Jersey, and Pruco Securities Corporation dated February 14, 1997 (each, an "Agreement"); and
WHEREAS, Prudential Annuities, a business unit of Prudential Financial, Inc., has decided to replace the current principal underwriter of certain individual variable annuities with another affiliated principal underwriter called Prudential Annuities Distributors, Inc. ("PAD"); and
WHEREAS, the parties wish to amend each Agreement to substitute PAD as a party to the Agreement; and
NOW THEREFORE, for good and valuable consideration, the parties hereby amend each Agreement to substitute PAD as a party, but otherwise leave each Agreement unaffected.
/s/ Carolyn L. Gibbs ------------------------------------- AIM Variable Insurance Funds, Inc. /s/ John S. Cooper ------------------------------------- AIM Distributors, Inc. /s/ Daniel O. Kane ------------------------------------- Pruco Life Insurance Company Pruco Life Insurance Company of New Jersey /s/ Bruce W. Ferris ------------------------------------- Prudential Annuities Distributors, Inc. |
AMENDMENT NO. 13
PARTICIPATION AGREEMENT
MAY 1, 2007
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, April 1, 2002, August 14, 2003, December 31, 2003, September 1, 2004 and January 29, 2007 (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:
1. Schedule A of the Agreement is deleted in its entirety and replaced with the following:
SCHEDULE A
SEPARATE ACCOUNTS UTILIZING
FUNDS AVAILABLE UNDER THE POLICIES THE FUNDS CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
---------------------------------- --------------------------- -----------------------------------------
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund - FUTURITY VARIABLE AND FIXED ANNUITY
AIM V.I. Growth Fund Sun Life of Canada (U.S.) CONTRACT
AIM V.I. Core Equity Fund Variable Account F - FUTURITY FOCUS VARIABLE AND FIXED
AIM V.I. International Growth Fund ANNUITY CONTRACT
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund - FUTURITY II VARIABLE AND FIXED
AIM V.I. Growth Fund Sun Life of Canada (U.S.) ANNUITY CONTRACT
AIM V.I. Core Equity Fund Variable Account F - FUTURITY III VARIABLE AND FIXED
AIM V.I. International Growth Fund ANNUITY CONTRACT
AIM V.I. Premier Equity Fund - 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 - FUTURITY VARIABLE UNIVERSAL LIFE
AIM V.I. Growth Fund Sun Life of Canada (U.S.) INSURANCE POLICIES
AIM V.I. Core Equity Fund Variable Account I - FUTURITY SURVIVORSHIP VARIABLE
AIM V.I. International Growth Fund UNIVERSAL LIFE INSURANCE POLICIES
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund - FUTURITY SURVIVORSHIP II VARIABLE
AIM V.I. Growth Fund Sun Life of Canada (U.S.) UNIVERSAL LIFE INSURANCE POLICIES
AIM V.I. Core Equity Fund Variable Account I - FUTURITY PROTECTOR VARIABLE UNIVERSAL
AIM V.I. International Growth Fund LIFE INSURANCE POLICIES
AIM V.I. Premier Equity Fund - FUTURITY ACCUMULATOR VARIABLE
AIM V.I. Small Cap Equity UNIVERSAL LIFE INSURANCE POLICIES
- FUTURITY ACCUMULATOR II VARIABLE
UNIVERSAL LIFE INSURANCE POLICIES
- FUTURITY PROTECTOR II VARIABLE
UNIVERSAL LIFE INSURANCE POLICIES
|
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SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) - SUN LIFE CORPORATE VARIABLE UNIVERSAL
AIM V.I. Premier Equity Fund Variable Account G LIFE INSURANCE POLICIES
AIM V.I. Small Cap Equity
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
AIM V.I. Core Equity Fund
AIM V.I. International Growth Fund
AIM V.I. Premier Equity Fund
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 Growth 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 Growth Fund Variable Account F - ALL-STAR TRADITIONS
AIM V.I. Premier Equity Fund - ALL-STAR FREEDOM
- ALL-STAR EXTRA
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Keyport Variable Account A - KEYPORT ADVISOR CHARTER
AIM V.I. Premier Equity Fund
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Keyport Variable Account A - KEYPORT ADVISOR OPTIMA
AIM V.I. Growth Fund
AIM V.I. Premier Equity Fund
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Keyport Variable Account A - KEYPORT ADVISOR VISTA
AIM V.I. Growth Fund
AIM V.I. International Growth Fund
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Keyport Variable Account A - KEYPORT CHARTER
AIM V.I. International Growth Fund - KEYPORT VISTA
AIM V.I. Premier Equity Fund - KEYPORT OPTIMA
- KEYPORT LATITUDE
SERIES (I) SHARES
AIM V.I. Basic Value Fund Sun Life of Canada (U.S.) SUN LIFE LARGE CASE VUL
AIM V.I. Mid Cap Core Fund Variable Account G
SERIES (I) SHARES
AIM V.I. Basic Value Fund Sun Life of Canada (U.S.) SUN LIFE LARGE CASE PPVUL
AIM V.I. Mid Cap Core Fund Variable Account H
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SERIES (I) SHARES Keyport 401 Variable ALTERNATIVE ADVANTAGE
AIM V.I. International Growth Fund Account P
SERIES (I) SHARES Sun Life of Canada (U.S.) MAGNASTAR PPVUL
AIM V.I. Basic Value Fund Variable Account R and S
AIM V.I. International Growth Fund
|
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ Donna F. Anderson
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Donna F. Anderson
Title: Assistant Secretary Title: Assistant Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ John S. Cooper
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: John S. Cooper
Title: Assistant Secretary Title: Executive Vice President
SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
By: /s/ Raymond Scanlon
------------------------------------
For the President
Name: Raymond Scanlon
Title: Vice President
By: /s/ Bruce Teichner
------------------------------------
For the Secretary
Name: Bruce Teichner
Title: Assistant Vice President and
Senior Counsel
CLARENDON INSURANCE AGENCY, INC.
By: /s/ Michelle D'Albero
------------------------------------
For the President
Name: Michelle D'Albero
By: /s/ William T. Evers
------------------------------------
For the Secretary
Name: William T. Evers
|
3 of 3
AMENDMENT NO. 14
PARTICIPATION AGREEMENT
AUGUST 1, 2007
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, April 1, 2002, August 14, 2003, December 31, 2003, September 1, 2004, January 29, 2007 and May 1, 2007 (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:
1. Schedule A of the Agreement is deleted in its entirety and replaced with the following:
SCHEDULE A
SEPARATE ACCOUNTS UTILIZING
FUNDS AVAILABLE UNDER THE POLICIES THE FUNDS CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
---------------------------------- --------------------------- -----------------------------------------
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund - FUTURITY VARIABLE AND FIXED ANNUITY
AIM V.I. Growth Fund Sun Life of Canada (U.S.) CONTRACT
AIM V.I. Core Equity Fund Variable Account F - FUTURITY FOCUS VARIABLE AND FIXED
AIM V.I. International Growth Fund ANNUITY CONTRACT
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund - FUTURITY II VARIABLE AND FIXED ANNUITY
AIM V.I. Growth Fund Sun Life of Canada (U.S.) CONTRACT
AIM V.I. Core Equity Fund Variable Account F - FUTURITY III VARIABLE AND FIXED
AIM V.I. International Growth Fund ANNUITY CONTRACT
AIM V.I. Premier Equity Fund - 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 - FUTURITY VARIABLE UNIVERSAL LIFE
AIM V.I. Growth Fund Sun Life of Canada (U.S.) INSURANCE POLICIES
AIM V.I. Core Equity Fund Variable Account I - FUTURITY SURVIVORSHIP VARIABLE
AIM V.I. International Growth Fund UNIVERSAL LIFE INSURANCE POLICIES
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund - FUTURITY SURVIVORSHIP II VARIABLE
AIM V.I. Growth Fund Sun Life of Canada (U.S.) UNIVERSAL LIFE INSURANCE POLICIES
AIM V.I. Core Equity Fund Variable Account I - FUTURITY PROTECTOR VARIABLE UNIVERSAL
AIM V.I. International Growth Fund LIFE INSURANCE POLICIES
AIM V.I. Premier Equity Fund - FUTURITY ACCUMULATOR VARIABLE
AIM V.I. Small Cap Equity UNIVERSAL LIFE INSURANCE POLICIES
- FUTURITY ACCUMULATOR II VARIABLE
UNIVERSAL LIFE INSURANCE POLICIES
- FUTURITY PROTECTOR II VARIABLE
UNIVERSAL LIFE INSURANCE POLICIES
SERIES (I) SHARES Sun Life of Canada (U.S.) - SUN PROTECTOR VARIABLE UNIVERSAL LIFE
AIM V.I. Core Equity Fund Variable Account I INSURANCE POLICIES
AIM V.I. International Growth Fund - SUN EXECUTIVE VARIABLE UNIVERSAL LIFE
INSURANCE POLICIES
- SUN PRIME VARIABLE UNIVERSAL LIFE
INSURANCE POLICIES
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SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) - SUN LIFE CORPORATE VARIABLE UNIVERSAL
AIM V.I. Premier Equity Fund Variable Account G LIFE INSURANCE POLICIES
AIM V.I. Small Cap Equity
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
AIM V.I. Core Equity Fund
AIM V.I. International Growth Fund
AIM V.I. Premier Equity Fund
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 Growth 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 Growth Fund Variable Account F - ALL-STAR TRADITIONS
AIM V.I. Premier Equity Fund - ALL-STAR FREEDOM
- ALL-STAR EXTRA
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Keyport Variable Account A - KEYPORT ADVISOR CHARTER
AIM V.I. Premier Equity Fund
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Keyport Variable Account A - KEYPORT ADVISOR OPTIMA
AIM V.I. Growth Fund
AIM V.I. Premier Equity Fund
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Keyport Variable Account A - KEYPORT ADVISOR VISTA
AIM V.I. Growth Fund
AIM V.I. International Growth Fund
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Keyport Variable Account A - KEYPORT CHARTER
AIM V.I. International Growth Fund - KEYPORT VISTA
AIM V.I. Premier Equity Fund - KEYPORT OPTIMA
- KEYPORT LATITUDE
SERIES (I) SHARES
AIM V.I. Basic Value Fund Sun Life of Canada (U.S.) SUN LIFE LARGE CASE VUL
AIM V.I. Mid Cap Core Fund Variable Account G
SERIES (I) SHARES
AIM V.I. Basic Value Fund Sun Life of Canada (U.S.) SUN LIFE LARGE CASE PPVUL
AIM V.I. Mid Cap Core Fund Variable Account H
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SERIES (I) SHARES Keyport 401 Variable ALTERNATIVE ADVANTAGE
AIM V.I. International Growth Fund Account P
SERIES (I) SHARES Sun Life of Canada (U.S.) MAGNASTAR PPVUL
AIM V.I. Basic Value Fund Variable Account R and S
AIM V.I. International Growth Fund
|
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ Donna F. Anderson
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Donna F. Anderson
Title: Assistant Secretary Title: Assistant Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ John S. Cooper
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: John S. Cooper
Title: Assistant Secretary Title: Executive Vice President
SUN LIFE ASSURANCE COMPANY OF CANADA
(U.S.)
By: /s/ Bruce Jones
------------------------------------
For the President
Name: Bruce Jones
Title: Vice President
By: /s/ Bruce A. Teichner
------------------------------------
For the Secretary
Name: Bruce A. Teichner
Title: Assistant Vice President and
Senior Counsel
CLARENDON INSURANCE AGENCY, INC.
By: /s/ Michelle D'Albero
------------------------------------
For the President
Name: Michelle D'Albero
By: /s/ William T. Evers
------------------------------------
For the Secretary
Name: William T. Evers
|
3 of 3
AMENDMENT AND NOVATION OF
PARTICIPATION AGREEMENT
AFSG Securities Corporation, ("AFSG") the undersigned, for and in consideration of the furtherance of the business purposes of Transamerica Capital, Inc. ("TCI"), does hereby substitute TCI in all of AFSG's rights, title, interest in and to, and duties, obligations and responsibilities under the Participation Agreement ("Agreement") between AFSG, AIM Variable Insurance Funds, A I M Distributors, Inc., and Transamerica Life Insurance Company dated May 1, 1998 including all schedules, addenda, and exhibits thereto, and amendments thereof prior to the date of this Amendment and Novation.
This Amendment and Novation is complete and irrevocable.
By acknowledging this Amendment and Novation AIM Variable Insurance Funds, A I M Distributors, Inc., and Transamerica Life Insurance Company waive and release AFSG from all duties, liabilities or responsibilities under the Agreement, including any required notices of, or time periods for, termination or amendment of the Agreement. Notwithstanding any provision in the Agreement providing for the termination of the Agreement upon its amendment, AIM Variable Insurance Funds, A I M Distributors, Inc., and Transamerica Life Insurance Company hereby consent to this Amendment and Novation and agree to enter into a new Participation Agreement (the "New Agreement") with TCI upon any termination of the Agreement that may be deemed to occur by virtue of this Amendment and Novation. The substantive terms of the New Agreement shall be identical to the current substantive terms of the Agreement and shall remain in full force and effect unless otherwise specifically amended herein or in writing signed by the parties hereafter.
The undersigned further agree that the New Agreement shall reflect the following:
1. All references in the New Agreement to "AFSG Securities Corporation" or "AFSG" as applicable shall be replaced by "Transamerica Capital, Inc." or "TCI" as applicable.
2. Any future communications under the New Agreement shall be delivered as follows:
Mr. Dennis Gallagher, General Counsel
Transamerica Fund Complex
570 Carillon Parkway
St. Petersburg, FL 33716
This Amendment and Novation shall be effective as of the 1st day of May, 2007.
IF AIM VARIABLE INSURANCE FUNDS, A I M DISTRIBUTORS, INC., AND TRANSAMERICA LIFE INSURANCE COMPANY DO NOT ACKNOWLEDGE THIS AMENDMENT AND NOVATION IN WRITING BY MAY 1, 2007, SUBMISSION OF AN APPLICATION OR ORDER FOR AIM VARIABLE INSURANCE FUNDS, A I M DISTRIBUTORS, INC., AND TRANSAMERICA LIFE INSURANCE COMPANY ON OR AFTER MAY 1, 2007, SHALL BE DEEMED WRITTEN CONSENT BY AIM VARIABLE INSURANCE FUNDS, A I M DISTRIBUTORS, INC., AND TRANSAMERICA LIFE INSURANCE COMPANY TO THIS AMENDMENT AND NOVATION.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment and Novation as of May 1, 2007.
AFSG Securities Corporation Transamerica Capital, Inc.
By: /s/ Kyle Keelan By: /s/ Robert Frederick
--------------------------------- ------------------------------------
NAME: Kyle Keelan NAME: Robert Frederick
TITLE: Senior Vice President TITLE: COO & Executive Vice President
Date: 04/01/2007 Date: 04/01/2007
ACKNOWLEDGED AND ACCEPTED BY ACKNOWLEDGED AND ACCEPTED BY
Transamerica Life Insurance Company: AIM Variable Insurance Funds:
Signed: /s/ Priscilla I. Hechler Signed: /s/ Donna F. Anderson
----------------------------- --------------------------------
Print Name: Priscilla I. Hechler Print Name: Donna F. Anderson
Title: Assistant Secretary Title: Assistant Vice President
Date: 5/11/07 Date: 5/30/07
|
ACKNOWLEDGED AND ACCEPTED BY
A I M Distributors, Inc.:
Signed: /s/ Gene L. Needles
-----------------------------
Print Name: Gene L. Needles
Title: President
Date: 5/21/07
-------------------------------
|
AMENDMENT TO
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated as of May 1, 1998, by and among AIM Variable Insurance Funds, a Delaware trust ("AVIF"); A I M Distributors, Inc., a Delaware corporation ("AIM"); Transamerica Life Insurance Company (formerly, PFL Life Insurance Company), an Iowa life insurance company ("LIFE COMPANY") and Transamerica Capital, Inc. (replacing AFSG SECURITIES CORPORATION by Amendment and Novation), 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 THE CONTRACTS
Series I and II shares
AIM V.I. Basic Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity Fund
AIM V.I. Diversified Income Fund
AIM V.I. Dynamics Fund
AIM V.I. Financial Services Fund
AIM V.I. Global Health Care Fund
AIM V.I. Global Real Estate Fund
AIM V.I. Government Securities Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Large Cap Growth Fund
AIM V.I. Leisure Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. Small Cap Equity Fund
AIM V.I. Technology Fund
AIM V.I. Utilities Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
- Retirement Builder Variable Annuity Account
- Separate Account VA A
- PFL Corporate Account One (1940 Act Exclusion)
- Separate Account VA B
- Separate Account VA C
- Separate Account VA D
- Separate Account VA F
- Separate Account VA J
- Separate Account VA K
- Separate Account VA L
- Separate Account VA P
- Separate Account VA Q
- Separate Account VA R
- Separate Account VA S
- Separate Account VA Y
- Separate Account VA Z
- Separate Account VA-5
- Separate Account VUL A
- Transamerica Corporate Separate Account Sixteen
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
- Retirement Income Builder II Variable Annuity
- Portfolio Select Variable Annuity
- Legacy Builder Plus
- The Atlas Portfolio Builder Variable Annuity
- Advantage V, Variable Universal Life Policy (1933 Act Exempt)
- Advantage X
- Transamerica Landmark Variable Annuity
- Transamerica Freedom Variable Annuity
- Transamerica EXTRA Variable Annuity
- Transamerica Access Variable Annuity
- Flexible Premium Variable Annuity - C under the marketing name "Transamerica Principium"
- Premier Asset Builder Variable Annuity
- Immediate Income Builder II
- Retirement Income Builder - BAI Variable Annuity under the marketing name "Retirement Income Builder IV"
- Transamerica Preferred Advantage Variable Annuity
- Flexible Premium Variable Annuity - A under the marketing names:
"Transamerica Opportunity Builder" and "Transamerica Traditions"
- Flexible Premium Variable Annuity - D under the marketing name "Huntington Allstar Select"
- Flexible Premium Variable Annuity - J under the marketing name "Transamerica Axiom"
- Flexible Premium Variable Annuity - K under the marketing name "Transamerica Ascent"
- Distinct Asset(SM) Variable Annuity
- Legacy Builder Plus VUL
- Variable Protector VUL
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective date: July 30, 2007
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ Donna F. Anderson
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Donna F. Anderson
Title: Assistant Secretary Title: Assistant Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ John S. Cooper
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: John S. Cooper
Title: Assistant Secretary Title: Executive Vice President
TRANSAMERICA LIFE INSURANCE COMPANY
Attest: /s/ Kathy Mullarkey By: /s/ Arthur D. Woods
----------------------------- ------------------------------------
Name Kathy Mullarkey Name: Arthur D. Woods
Title: Paralegal Title: Vice President
TRANSAMERICA CAPITAL, INC.
Attest: /s/ Kathy Mullarkey By: /s/ Brenda L. Smith
----------------------------- ------------------------------------
Name: Kathy Mullarkey Name: Brenda L. Smith
Title: Paralegal Title: Assistant Vice President
|
AMENDMENT NO. 10
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated June 1, 1998, by and among AIM Variable Insurance Funds, 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 Equity Services Corporation ("AGESC"), a Delaware corporation, 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 the Agreement to add to Schedule A of the Agreement the contracts of the Life Company relating to the Life Company's AIG Corporate Investor VUL, Form No. 99301 and AIG Income Advantage VUL, Form No. 07704.
NOW, THEREFORE, in consideration of their mutual promises, the Parties agree as follows:
1. Except as amended herein, the Agreement is hereby ratified and confirmed in all respects.
2. Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
SEPARATE ACCOUNTS UTILIZING POLICIES/CONTRACTS FUNDED BY THE SEPARATE
FUNDS AVAILABLE UNDER THE POLICIES SOME OR ALL OF THE FUNDS ACCOUNTS
---------------------------------- ------------------------------- -------------------------------------------
AIM V.I. International Growth Fund American General Life Insurance Platinum Investor I
AIM V.I. Core Equity Fund Company Separate Account VL-R Flexible Premium Variable Life
(AIM V.I. Premier Equity merged into Established: May 1, 1997 Insurance Policy
AIM V.I. Core Equity) Policy Form No. 97600
Platinum Investor II
Flexible Premium Variable Life
Insurance Policy
Policy Form No. 97610
Corporate America
Flexible Premium Variable Life
Insurance Policy
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
Platinum Investor III
Flexible Premium Variable Life
Insurance Policy
Policy Form No. 00600
Platinum Investor PLUS Flexible
Premium Variable Life Insurance
Policy
Policy Form No. 02600
Platinum Investor FlexDirector
Flexible Premium Variable Life
Insurance Policy
Policy Form No. 03601
|
AIM V.I. International Growth Fund American General Life Insurance Platinum Investor IV
AIM V.I. Core Equity Fund Company Separate Account VL-R Flexible Premium Variable Life
(AIM V.I. Premier Equity merged into Established: May 1, 1997 Insurance Policy
AIM V.I. Core Equity) (continued) Policy Form No. 04604
(continued)
Legacy Plus
Flexible Premium Variable Life
Insurance Policy
Policy Form No. 98615
AIM V.I. International Growth Fund Platinum Investor VIP
Flexible Premium Variable Universal
Life Insurance Policy
Policy Form No. 05604
AIG Corporate Investor VUL
Flexible Premium Variable Life
Insurance Policy
Policy Form No. 99301
AG Legacy Plus
Flexible Premium Variable Life
Insurance Policy
Policy Form No. 99616
AIM V.I. Global Real Estate Fund AIG Income Advantage VUL
AIM V.I. International Growth Fund Flexible Premium Variable Life
Insurance Policy
SEC Registration No. 333-144594
Policy Form No. 07704 (Still need to
confirm with counsel)
AIM V.I. Capital Appreciation Fund The One VUL Solution
AIM V.I. Government Securities Fund Flexible Premium Variable Life
AIM V.I. High Yield Fund Insurance Policy
AIM V.I. International Growth Fund Policy Form No. 99615
AIM V.I. International Growth Fund American General Life Insurance Platinum Investor Variable Annuity
AIM V.I. Core Equity Fund Company Separate Account D Policy Form No. 98020
(AIM V.I. Premier Equity merged into Established: November 19, 1973
AIM V.I. Core Equity) Platinum Investor Immediate Variable
Annuity
Policy Form No. 03017
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3. Schedule B of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE B
- AIM VARIABLE INSURANCE FUNDS
AIM V.I. Capital Appreciation Fund
AIM V.I. Core Equity Fund
AIM V.I. Global Real Estate Fund
AIM V.I. Government Securities Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
- AIM LOGO GRAPHIC STANDARDS
(AIM INVESTMENTS(R) LOGO) LOGO COLORS
ONE COLOR - both the box and the word Investments
print black with a white Chevron and White AIM
inside the box.
(AIM INVESTMENTS(R) LOGO) 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.
FOUR COLOR PROCESS - the box prints Cyan 100%,
Magenta 0%, Yellow 100%, Black 20% to simulate PMS
356 Green. The word Investments prints solid black.
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Effective Date: August 31, 2007
AIM VARIABLE INSURANCE FUNDS
Attest:/s/ P. Michelle Grace By: /s/ Carolyn Gibbs
------------------------------ ------------------------------------
Name: P. Michelle Grace Name: Carolyn Gibbs
Title: Assistant Secretary Title: Assistant Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ John S. Cooper
------------------------------ ------------------------------------
Name: P. Michelle Grace Name: John S. Cooper
Title: Assistant Secretary Title: Executive Vice President
AMERICAN GENERAL LIFE INSURANCE COMPANY
Attest: /s/ Lauren W. Jones By: /s/ Gary W. Parker
------------------------------ ------------------------------------
Name: Lauren W. Jones Name: Gary W. Parker
Title: Assistant Secretary Title: Executive Vice President
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(SEAL)
AMERICAN GENERAL EQUITY SERVICES
CORPORATION
Attest: /s/ Lauren W. Jones By: /s/ Mark R. McGuire
------------------------------ ------------------------------------
Name: Lauren W. Jones Name: Mark R. McGuire
Title: Assistant Secretary Title: Senior Vice President
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(SEAL)
AMENDMENT TO
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated as of July 1, 1998, by and among AIM Variable Insurance Funds, a Delaware trust; A I M Distributors, Inc., a Delaware corporation; The Union Central Life Insurance Company, an Ohio life insurance company; and Ameritas Investment Corp. (formerly, Carillon 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 THE CONTRACTS
AIM V.I. Basic Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity Fund
AIM V.I. Diversified Income Fund
AIM V.I. Dynamics Fund
AIM V.I. Financial Services Fund
AIM V.I. Global Health Care Fund
AIM V.I. Global Real Estate Fund
AIM V.I. Large Cap Growth Fund
AIM V.I. Government Securities Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Leisure Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. Small Cap Equity Fund
AIM V.I. Technology Fund
AIM V.I. Utilities Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
- UCL Mutual Fund Separate Account Nos. 27 & 28
- Carillon Account
- Carillon Life Account
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
- ESP ("Employee Savings Plan") Allocated Group Annuity Policy Policy Form Nos. UC64347 and UC64342
- Union Central Variable Annuity I - Contract No. UC8134
- Union Central Variable Annuity II - Contract No. UC8137
- Union Central Variable Annuity II SA - Contract No. UC8137
- Union Central Variable Annuity III - Contract No. 8138
- Union Central Excel Accumulator Variable Universal Life - Contract No. 8707
- Union Central Excel Choice Variable Universal Life - Contract No. 8703
- Union Central Executive Edge Variable Universal Life - Contract No. 8703
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective date: November 5, 2007
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ Carolyn Gibbs
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Carolyn Gibbs
Title: Assistant Secretary Title: Assistant Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ John S. Cooper
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: John S. Cooper
Title: Assistant Secretary Title: Executive Vice President
THE UNION CENTRAL LIFE INSURANCE COMPANY
Attest: /s/ Anne S. Livingston By: /s/ Angelo de Jesus
----------------------------- ------------------------------------
Name: Anne S. Livingston Name: Angelo de Jesus
Title: Relationship Manager, Title: 2nd Vice President
Investment Products
AMERITAS INVESTMENT CORP. (FORMERLY,
CARILLON INVESTMENTS, INC.)
Attest: /s/ Kelly J. Spilker By: /s/ Cheryl L. Heilman
----------------------------- ------------------------------------
Name: Kelly J. Spilker Name: Cheryl L. Heilman
Title: Administrative Specialist Title: Vice President & COO
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AMENDED AND RESTATED
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS
A I M DISTRIBUTORS, INC.
AND
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
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....................................... 2 2.1 Timely Pricing and Orders........................................ 2 2.2 Timely Payments.................................................. 3 2.3 Applicable Price................................................. 3 2.4 Dividends and Distributions...................................... 4 2.5 Book Entry....................................................... 4 Section 3. Costs and Expenses............................................ 4 3.1 General.......................................................... 4 3.2 Parties To Cooperate............................................. 4 Section 4. Legal Compliance.............................................. 5 4.1 Tax Laws......................................................... 5 4.2 Insurance and Certain Other Laws................................. 7 4.3 Securities Laws.................................................. 7 4.4 Notice of Certain Proceedings and Other Circumstances............ 8 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...................................... 11 5.1 General.......................................................... 11 5.2 Disinterested Directors.......................................... 11 5.3 Monitoring for Material Irreconcilable Conflicts................. 12 5.4 Conflict Remedies................................................ 12 5.5 Notice to LIFE COMPANY........................................... 13 5.6 Information Requested by Board of Directors...................... 14 5.7 Compliance with SEC Rules........................................ 14 5.8 Other Requirements............................................... 14 Section 6. Termination................................................... 14 6.1 Events of Termination............................................ 14 6.2 Notice Requirement for Termination............................... 15 6.3 Funds To Remain Available........................................ 16 6.4 Survival of Warranties and Indemnifications...................... 16 6.5 Continuance of Agreement for Certain Purposes.................... 16 Section 7. Parties To Cooperate Respecting Termination................... 16 |
Section 8. Assignment.................................................... 16 Section 9. Notices....................................................... 17 Section 10. Voting Procedures............................................ 17 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.................. 20 12.3 Effect of Notice................................................. 22 12.4 Successors....................................................... 22 Section 13. Applicable Law............................................... 22 Section 14. Execution in Counterparts.................................... 22 Section 15. Severability................................................. 22 Section 16. Rights Cumulative............................................ 23 Section 17. Headings..................................................... 23 Section 18. Confidentiality.............................................. 23 Section 19. Trademarks and Fund Names.................................... 23 Section 20. Parties to Cooperate......................................... 24 Section 21. Force Majeure................................................ 25 Schedule A............................................................... 27 Schedule B............................................................... 28 Schedule C............................................................... 29 |
AMENDEDED AND RESTATED
PARTICIPATION AGREEMENT
THIS Amended and Restated Participation Agreement (the "Agreement" ) made and entered into this 31st day of July, 2007, supersedes and replaces the Participation Agreement, dated as of July 27, 1998, together with all subsequent amendments ("Prior Agreement") by and among certain parties, including series and classes of AIM Variable Insurance Funds, a Delaware trust ("AVIF"), A I M Distributors, Inc., a Delaware corporation ("AIM"), Commonwealth Annuity and Life Insurance Company, a Massachusetts 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").
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 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, 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 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 (or such other time
set by the Board for purposes of determining the current net asset value of a
Fund in accordance with Rule 22c-1 under the 1940 Act) 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, , in accordance with Section 22(c)
and Rule 22c-1 under the 1940 Act, 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. In
connection with this Section 2.3(a), LIFE COMPANY represents and warrants that
it will not submit any order for Shares or engage in any practice, nor will it
allow or suffer any person acting on its behalf to submit any order for Shares
or engage in any practice, that would violate or cause a violation of applicable
law or regulation including, without limitation Section 22 of the 1940 Act and
the rules thereunder.
(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) Without limiting the scope or effect of Section 1.1 hereof, pursuant to which the Board may reject a Share purchase order by or on behalf of LIFE COMPANY under the circumstances described therein, LIFE COMPANY agree to cooperate with the Fund and AIM to prevent any person exercising, or purporting to exercise, rights or privileges under one or more Contracts (including, but not limited to Contract owners, annuitants, insureds or participants, as the case may be (collectively, "Participants")) from engaging in any trading practices in any Fund that the Board or AIM determines, in good faith and in their sole discretion, to be detrimental or potentially detrimental to the other shareholders of the Fund, or to be in contravention of any applicable law or regulation including, without limitation, Section 22 of the 1940 Act and the rules thereunder. Such cooperation may include, but shall not be limited to, identifying the person or persons engaging in such trading practices, facilitating the imposition of any applicable redemption fee on such person or persons, limiting the telephonic or electronic trading privileges of such person or persons, and taking such other remedial steps, all to the extent permitted or required by applicable law.
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 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 Delaware 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 Section 2932 of the Delaware 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 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 Delaware 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 currently does not intend to make any payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise, although it reserves the right to make such payments in the future. To the extent that it decides to finance distribution expenses pursuant to Rule 12b-1, AVIF undertakes to have its Board of Directors, a majority of whom are not "interested" persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance distribution expenses.
(e) 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 a camera ready copy 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. 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 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 by LIFE COMPANY, 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"), unless AIM or the Board
determines that doing so would not serve the best interests of the shareholders
of the affected Funds or would be inconsistent with applicable law or
regulation. 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 (i) terminations under Section
5 and the effect of such terminations will be governed by Section 5 of this
Agreement or (ii) any rejected purchase and/or redemption order as described in
Section 2.3(c) hereof.
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
A I M DISTRIBUTORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Peter A. Davidson, Esq.
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY
132 Turnpike Road
Southborough, MA 01772
Facsimile: (212) 493-0324
Attn: Michael A. Reardon
President and CEO
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 AND AIM BY LIFE COMPANY
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, LIFE COMPANY agrees 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 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) 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 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 and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of LIFE COMPANY or its affiliates, agents, 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 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 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 in this Agreement or arise out of or result from any other material breach of this Agreement by LIFE COMPANY; 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) LIFE COMPANY shall not 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) LIFE COMPANY shall not 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 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 of any such action shall not relieve LIFE COMPANY 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 shall be entitled to participate, at its 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 to such Indemnified Party of LIFE COMPANY's election to assume the defense thereof, the Indemnified Party will cooperate fully with LIFE COMPANY and shall bear the fees and expenses of any additional counsel retained by it, and LIFE
COMPANY shall 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.
12.2 OF LIFE COMPANY 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 its affiliates, and each person, if any, who controls LIFE COMPANY and 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 12.2) 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 or its 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, 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 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 or its 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 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 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, 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 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 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.
SECTION 21. FORCE MAJEURE.
Each Party shall be excused from the performance of any of its obligations to the other where such nonperformance is occasioned by any event beyond its control which shall include, without limitation, any applicable order, rule or regulation of any federal, state or local body, agency or instrumentality with jurisdiction, work stoppage, accident, natural disaster, war, acts of terrorism or civil disorder, provided that the Party so excused shall use all reasonable efforts to minimize its nonperformance and overcome, remedy, cure or remove such event as soon as is reasonably practicable, and such performance shall be excused only for so long as, in any given case, the force or circumstances making performance impossible shall exist.
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/ P. Michelle Grace By: /s/ Donna F. Anderson
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Donna F. Anderson
Title Assistant Secretary Title: Assistant Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ John S. Cooper
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: John S. Cooper
Title Assistant Secretary Title: Executive Vice President
COMMONWEALTH ANNUITY AND LIFE INSURANCE
COMPANY, on behalf of itself and its
separate accounts
Attest: /s/ Joseph M. Petty By: /s/ Michael A. Reardon
----------------------------- ------------------------------------
Name: Joseph M. Petty Name: Michael A. Reardon
Title Assistant Vice President Title: President and CEO
|
SCHEDULE A
SERIES I SHARES
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS POLICIES FUNDED BY THE
THE POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
---------------------------------- -------------------------------- -------------------------------------
AIM V.I. Capital Appreciation Fund Fulcrum Variable Life Account Fulcrum Fund Variable Annuity
AIM V.I. Core Equity Fund
AIM V.I. Dynamics Fund FUVUL Separate Account ValuPlus Assurance (First Union)
AIM V.I. Global Health Care Fund
AIM V.I. High Yield Fund Separate Account VA-P Pioneer Vision; Pioneer C-Vision; and
AIM V.I. International Growth Fund Pioneer XtraVision; Pioneer No-Load
AIM V.I. Large Cap Growth Fund
AIM V.I. Utilities Fund Separate Account VA-K (Delaware) Delaware Medallion; Delaware Golden
Medallion
Separate Account VA-K Agency Ultimate Advantage; Advantage,
ExecAnnuity; IVA; Fund Quest; Annuity
Scout
Group VEL Account Executive Solutions
Select Separate Account Select Reward, Select Resource (I &
II), Select Charter; Select Acclaim
Select Separate Account II Select Life II
Separate Account IMO Select Life Plus; VUL 2001; VUL 2001
Survivorship
Select Separate Account III Select III, VEL III
Inheiritage Account Select Inheiritage
SERIES II SHARES
AIM V.I. Basic Value Fund Separate Account IMO Select Life Plus, VUL 2001, VUL 2001
AIM V.I. Capital Appreciation Fund Survivorship
AIM V.I. Capital Development Fund Separate Account VA-K ExecAnnuity Plus; Advantage;
AIM V.I. Core Equity Fund Immediate Advantage; Premier Choice
AIM V.I. Large Cap Growth Fund
Select Separate Account Select Charter; Select Reward; Select
Resource (I & II); Select Acclaim
Select Separate Account III Select SPL II
AIM V. I. Leisure Fund Commonwealth Annuity Separate Preferred Plus
AIM V. I. Core Equity Fund Account A Advantage IV
|
SCHEDULE B
AIM LOGO GRAPHIC STANDARDS
(AIM INVESTMENTS(R) LOGO) LOGO COLORS
ONE COLOR - both the box and the 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.
(AIM INVESTMENTS(R) LOGO) The box prints in PMS 356 Green with Chevron and AIM
white and with the word Investments printing Black.
FOUR COLOR PROCESS - the box prints Cyan 100%,
Magenta 0%, Yellow 100%, Black 20% to simulate PMS
356 Green. The word Investments prints solid black.
|
SCHEDULE C
EXPENSE ALLOCATIONS
LIFE COMPANY AVIF / AIM
--------------------------------------------------------- ------------------------------------------------------
preparing and filing the Account's registration statement preparing and filing the Fund's registration statement
text composition for Account prospectuses and supplements text composition for Fund prospectuses and supplements
text alterations of prospectuses (Account) and text alterations of prospectuses (Fund) and
supplements (Account) supplements (Fund)
printing Account and Fund prospectuses and supplements a camera ready Fund prospectus
text composition and printing Account SAIs text composition and printing Fund SAIs
mailing and distributing Account SAIs to policy owners mailing and distributing Fund SAIs to policy owners
upon request by policy owners upon request by policy owners
mailing and distributing prospectuses (Account and Fund)
and supplements (Account and Fund) to policy owners of
record as required by Federal Securities Laws 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 proxy statements and voting instruction tabulation of proxy statements and voting instruction
solicitation materials to policy owners with respect to solicitation materials to policy owners with respect
proxies related to the Account to proxies related to the Fund
preparation, printing and distributing sales material and
advertising relating to the Funds, insofar as such
materials relate to the Contracts and 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
|
AMENDMENT NO. 7
PARTICIPATION AGREEMENT
This Amendment to the Participation Agreement (the "Agreement") dated October 15, 1998, by and among AIM Variable Insurance Funds, a Delaware trust; A I M Distributors, Inc., a Delaware corporation, Lincoln Life & Annuity Company of New York, a New York life insurance company, and Lincoln Financial Advisors Corporation, is effective April 2, 2007, regardless of when executed.
WHEREAS, a merger of Lincoln Life & Annuity Company of New York and Jefferson Pilot LifeAmerica Insurance Company ("JPLA") is expected to occur on or about April 2, 2007;
WHEREAS, effective on or about April 2, 2007, JPLA will change its state of domicile from New Jersey to New York and will change its name to Lincoln Life & Annuity Company of New York;
WHEREAS, the Principal Underwriter (Underwriter) for Lincoln Life & Annuity Company of New York may be either Lincoln Financial Advisors Corporation ("LFA") or Lincoln Financial Distributors, Inc. ("LFD"), a broker-dealer;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree to amend the Agreement as follows:
1. The parties consent to an assignment of the responsibilities of the former Lincoln Life & Annuity Company of New York under this Agreement to the new Lincoln Life & Annuity Company of New York.
2. The parties consent to an assignment of the responsibilities of LFA under this Agreement to LFD.
Each of the parties has caused this Amendment to be executed in its name and on behalf of its duly authorized officer on the date specified below.
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective date: April 2, 2007
LINCOLN LIFE & ANNUITY COMPANY OF NEW
AIM VARIABLE INSURANCE FUNDS YORK
By: /s/ Donna F. Anderson By: /s/ Kelly D. Clevenger
--------------------------------- ------------------------------------
Name: Donna F. Anderson Name: Kelly D. Clevenger
Title: Assistant Vice President Title: Second Vice President
A I M DISTRIBUTORS, INC. LINCOLN FINANCIAL DISTRIBUTORS, INC.
By: /s/ Gene L. Needles By: /s/ Tim Ryan
--------------------------------- ------------------------------------
Name: Gene L. Needles Name: Tim Ryan
Title: President Title: Senior Vice President
|
AMENDMENT TO
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated April 30, 1997, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware corporation, Prudential Insurance Company of America, a New Jersey life insurance company and Prudential Investment Management Services, L.L.C., a New Jersey 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 POLICIES FUNDED BY THE
FUND AVAILABLE UNDER THE POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
--------------------------------- ---------------------------------- -----------------------------
AIM V.I. Capital Appreciation Fund Prudential Variable Contract Group Variable Universal Life
AIM V.I. Core Equity Fund Account GI-2 Insurance Contracts
AIM V.I. Diversified Income Fund Established June 24, 1988
AIM V.I. Dynamics Fund
AIM V.I. Financial Services Fund
AIM V.I. Government Securities Fund
AIM V.I. Global Heath Care Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Technology Fund
AIM V.I. Utilities Fund
AIM V.I. Government Securities Fund Prudential Discovery Premier Group Discovery Premier Group
AIM V.I. International Growth Fund Variable Contract Account Retirement Annuity
AIM V.I. Core Equity Fund Established November 9, 1999
AIM V.I. Dynamics Fund
AIM V.I. Core Equity Fund Prudential Discovery Select Group Discovery Select Group
Variable Contract Account Retirement Annuity
Established February 11, 1997
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
EFFECTIVE DATE: MAY 1, 2006
AIM VARIABLE INSURANCE FUNDS A I M DISTRIBUTORS, INC.
By: /s/ Robert H. Graham By: /s/ Gene L. Needles
--------------------------------- ------------------------------------
Name: Robert H. Graham Name: Gene L. Needles
Title: President Title: President
THE PRUDENTIAL INSURANCE COMPANY OF PRUDENTIAL INVESTMENT MANAGEMENT
AMERICA SERVICES LLC
By: /s/ Illegible By: /s/ Illegible
--------------------------------- ------------------------------------
Name: Illegible Name: Illegible
Title: Vice President Title: Vice President
|
AMENDMENT TO
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated April 1, 1999, by and among AIM Variable Insurance Funds, a Delaware trust; A I M Distributors, Inc., a Delaware corporation, Liberty Life Assurance Company of Boston, a Massachusetts life insurance company, and Liberty Life Distributors LLC, is hereby amended as follows:
Effective December 21, 2007, Liberty Life Distributors LLC merged into "Liberty Life Securities". All references to Liberty Life Distributors LLC will hereby be deleted and replaced with "Liberty Life Securities".
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM V.I. Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity Fund
AIM V.I. Diversified Income Fund
AIM V.I. Dynamics Fund
AIM V.I. Global Health Care
AIM V.I. Government Securities Fund
AIM V.I. Financial Services Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Large Cap Growth Fund
AIM V.I. Leisure Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. Global Real Estate Fund
AIM V.I. Small Cap Equity Fund
AIM V.I. Technology Fund
AIM V.I. Utilities Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
- LLAC Variable Account
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
- Modified Single Premium Variable Life Contract
- Flexible Premium Variable Life Insurance Contract
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective date: January 1, 2008
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ Carolyn Gibbs
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Carolyn Gibbs
----------------------------------
Title: Assistant Secretary Title: Assistant Vice President
---------------------------------
A I M DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ John S. Cooper
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: John S. Cooper
Title: Assistant Secretary Title: President
LIBERTY LIFE ASSURANCE COMPANY
OF BOSTON
Attest: /s/ Kenneth W. Gould, Jr. By: /s/ Douglas Wood
----------------------------- ------------------------------------
Name: Kenneth W. Gould Jr. Name: Douglas Wood
----------------------------- ----------------------------------
Title: Administration Manager Title: CFO
----------------------------- ---------------------------------
LIBERTY LIFE SECURITIES
Attest: /s/ Kenneth W. Gould, Jr. By: /s/ John L. Treece
----------------------------- ------------------------------------
Name: Kenneth W. Gould Jr. Name: John L. Treece
----------------------------- ----------------------------------
Title: Administration Manager Title: President
----------------------------- ---------------------------------
|
AMENDMENT AND NOVATION OF
PARTICIPATION AGREEMENT
AFSG Securities Corporation, ("AFSG") the undersigned, for and in consideration of the furtherance of the business purposes of Transamerica Capital, Inc. ("TCI"), does hereby substitute TCI in all of AFSG's rights, title, interest in and to, and duties, obligations and responsibilities under the Participation Agreement ("Agreement") between AFSG, AIM Variable Insurance Funds, and Life Investors Insurance Company of America dated August 21, 1999 including all schedules, addenda, and exhibits thereto, and amendments thereof prior to the date of this Amendment and Novation.
This Amendment and Novation is complete and irrevocable.
By acknowledging this Amendment and Novation AIM Variable Insurance Funds, and Life Investors Insurance Company of America waive and release AFSG from all duties, liabilities or responsibilities under the Agreement, including any required notices of, or time periods for, termination or amendment of the Agreement. Notwithstanding any provision in the Agreement providing for the termination of the Agreement upon its amendment, AIM Variable Insurance Funds, and Life Investors Insurance Company of America hereby consent to this Amendment and Novation and agree to enter into a new Participation Agreement (the "New Agreement") with TCI upon any termination of the Agreement that may be deemed to occur by virtue of this Amendment and Novation. The substantive terms of the New Agreement shall be identical to the current substantive terms of the Agreement and shall remain in full force and effect unless otherwise specifically amended herein or in writing signed by the parties hereafter.
The undersigned further agree that the New Agreement shall reflect the following:
1. All references in the New Agreement to "AFSG Securities Corporation" or "AFSG" as applicable shall be replaced by "Transamerica Capital, Inc." or "TCI" as applicable.
2. Any future communications under the New Agreement shall be delivered as follows:
Mr. Dennis Gallagher, General Counsel
Transamerica Fund Complex
570 Carillon Parkway
St. Petersburg, FL 33716
This Amendment and Novation shall be effective as of the 1st day of May, 2007.
IF AIM VARIABLE INSURANCE FUNDS AND LIFE INVESTORS INSURANCE COMPANY OF AMERICA DO NOT ACKNOWLEDGE THIS AMENDMENT AND NOVATION IN WRITING BY MAY 1, 2007, SUBMISSION OF AN APPLICATION OR ORDER FOR AIM VARIABLE INSURANCE FUNDS AND LIFE INVESTORS INSURANCE COMPANY OF AMERICA ON OR AFTER MAY 1, 2007, SHALL BE DEEMED WRITTEN CONSENT BY AIM VARIABLE INSURANCE FUNDS AND LIFE INVESTORS INSURANCE COMPANY OF AMERICA TO THIS AMENDMENT AND NOVATION.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment and Novation as of May 1, 2007.
AFSG Securities Corporation Transamerica Capital, Inc.
By: /s/ Kyle Keelan By: /s/ Robert Frederick
--------------------------------- ------------------------------------
NAME: Kyle Keelan NAME: Robert Frederick
TITLE: Senior Vice President TITLE: COO & Executive Vice President
Date: 04/01/2007 Date: 04/01/2007
ACKNOWLEDGED AND ACCEPTED BY ACKNOWLEDGED AND ACCEPTED BY
AIM Variable Insurance Funds: Life Investors Insurance Company of
America:
Signed: /s/ Donna F. Anderson Signed: /s/ Priscilla I. Hechler
----------------------------- --------------------------------
Print Name: Donna F. Anderson Print Name: Priscilla I. Hechler
Title: Assistant Vice President Title: Assistant Secretary
Date: 5/30/07 Date: 5/11/07
|
AMENDMENT NO. 8
TO
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated June 8, 1999, by and among AIM Variable Insurance Funds, Principal Life Insurance Company, and Princor Financial Services Corporation (collectively, the "parties") is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
FUNDS AVAILABLE UNDER THE CONTRACTS
SERIES I AND II SHARES
AIM V.I. Aggressive Growth Fund (Effective May 1, 2006 AIM V.I. Aggressive
Growth Fund will be merged into AIM V.I. Capital Appreciation Fund)
AIM V.I. Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Blue Chip Fund (Effective June 12, 2006, AIM V.I. Blue Chip Fund will
merge into AIM V.I. Large Cap Growth Fund)
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Stock Fund (Effective May 1, 2006 AIM VI Core Stock Fund will
merge into AIM VI Core Equity Fund)
AIM V.I. Core Equity Fund
AIM V.I. Demographic Trends Fund
AIM V.I. Diversified Dividend Fund
AIM V.I. Diversified Income Fund
AIM V.I. Dynamics Fund
AIM V.I. Financial Services Fund
AIM V.I. Global Equity Fund
AIM V.I. Global Health Care Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund (Effective May 1, 2006 AIM V.I. Growth Fund with merge into
AIM V.I. Capital Appreciation Fund)
AIM V.I. High Yield Fund
AIM V.I. International Core Equity Fund
AIM V.I. International Growth Fund
AIM V.I. Large Cap Growth Fund
AIM V.I. Leisure Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. Premier Equity Fund (Effective May 1, 2006 AIM V.I. Premier Equity Fund
will merge into AIM V.I. Core Equity Fund)
AIM V.I. Real Estate Fund (will be renamed AIM V.I. Global Real Estate Fund,
effective July 3, 2006)
AIM V.I. Small Cap Equity Fund
AIM V.I. Small Company Growth Fund (will be renamed AIM V.I. Small Cap Growth
Fund, effective July 3, 2006)
AIM V.I. Technology Fund
AIM V.I. Utilities Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
- Principal Life Insurance Company Separate Account B
- Principal Life Insurance Company Variable Life Separate Account
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective date: May 1, 2006
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
PRINCOR FINANCIAL SERVICES CORPORATION
Attest: /s/ Cynthia Switzer By: /s/ Ernest Gillum
----------------------------- ------------------------------------
Name: Cynthia Switzer Name: Ernest Gillum
Title: Paralegal Analyst Title: V.P. Chief Comp. Officer - PMC
PRINCIPAL LIFE INSURANCE COMPANY
Attest: /s/ Cynthia Switzer By: /s/ Sara Wiener
----------------------------- ------------------------------------
Name: Cynthia Switzer Name: Sara Wiener
Title: Paralegal Analyst Title: Director - Product Management
|
AMENDMENT NO. 1
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated June 14, 1999, by and among AIM Variable Insurance Funds, a Delaware trust, Security First Life Insurance Company, a Delaware life insurance company and Security First Financial, Inc., is hereby amended as follows:
Effective December 18, 2000, Security First Life Insurance Company (defined as "LIFE COMPANY") changed its name to MetLife Investors USA Insurance Company. All references to Security First Life Insurance Company will hereby be deleted and replaced with MetLife Investors USA Insurance Company.
Effective December 1, 2004, General American Distributors, Inc., a Missouri corporation, merged with and succeeded MetLife Investors Distribution Company (formerly Security First Financial, Inc.) and concurrently changed its name to MetLife Investors Distribution Company. MetLife Investors Distribution Company will assume the duties and responsibilities as principal underwriter of the contracts and become a party to this agreement in place of Security First Financial, Inc. (defined as "UNDERWRITER"). All references to Security First Financial, Inc. will hereby be deleted and replaced with MetLife Investors Distribution Company.
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM V.I. Basic Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity Fund
AIM V.I. Diversified Income Fund
AIM V.I. Dynamics Fund
AIM V.I. Financial Services Fund
AIM V.I. Global Health Care Fund
AIM V.I. Global Real Estate Fund
AIM V.I. Government Securities Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Large Cap Growth Fund
AIM V.I. Leisure Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. Small Cap Equity Fund
AIM V.I. Technology Fund
AIM V.I. Utilities Fund
SEPARATE ACCOUNT UTILIZING THE FUNDS
- MetLife Investors Life Separate Account A
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
- PrimElite IV 8010
- Capital Strategist 135
- Foresight 137
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: April 30, 2007
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ Donna F. Anderson
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Donna F. Anderson
Title: Assistant Secretary Title: Assistant Vice President
METLIFE INVESTORS USA INSURANCE COMPANY
Attest: /s/ Jonnie Crawford By: /s/ Richard C. Pearson
----------------------------- ------------------------------------
Name: Jonnie Crawford Name: Richard C. Pearson
Title: Assistant Secretary Title: Vice President
METLIFE INVESTORS DISTRIBUTION COMPANY
Attest: /s/ Jonnie Crawford By: /s/ Richard C. Pearson
----------------------------- ------------------------------------
Name: Jonnie Crawford Name: Richard C. Pearson
Title: Assistant Secretary Title: Executive Vice President
|
AMENDMENT NO. 3 TO
PARTICIPATION AGREEMENT
WHEREAS, AIM VARIABLE INSURANCE FUNDS, A I M DISTRIBUTORS, INC, GE LIFE AND ANNUITY ASSURANCE COMPANY on behalf of itself and its separate accounts and CAPITAL BROKERAGE CORPORATION have previously entered into a Participation Agreement dated March 2, 2000 (the "Agreement");
WHEREAS, effective JANUARY 1, 2006, GE LIFE AND ANNUITY ASSURANCE COMPANY
changed its name to GENWORTH LIFE AND ANNUITY INSURANCE COMPANY;
WHEREAS, effective May 23, 2005, the SEC adopted Rule 22c-2 under the 1940 Act which requires every mutual fund (or on AVIF's behalf, the principal underwriter or transfer agent) to enter into a written agreement with each financial intermediary who sells shares or otherwise maintains accounts which hold shares of AVIF for the benefit of a shareholder.
WHEREAS, all terms not defined in this Amendment shall have the same meaning as ascribed to them in the Agreement.
NOW, THEREFORE, the premises considered the parties agree as follows:
1. All references throughout the Agreement to GE Life and Annuity Assurance Company shall be changed to Genworth Life and Annuity Insurance Company.
2. Schedule A to the Agreement is replaced in its entirety with the attached Amended and Restated Schedule A, dated February 27, 2007.
3. The following new Section 2.6 is added to the Agreement:
2.6 CONTROL OF EXCESSIVE SHORT-TERM TRADING
(a) LIFE COMPANY acknowledges that AVIF has adopted policies and procedures reasonably designed to prevent frequent or excessive purchases, exchanges and redemptions of Fund Shares in quantities great enough to disrupt orderly management of the corresponding Fund's investment portfolio. Disclosure pertaining to these policies is contained in the current prospectus for the Fund, as currently required by applicable federal securities law.
(b) AVIF acknowledges that LIFE COMPANY, on behalf of its Account, has adopted policies and procedures reasonably designed to detect and deter frequent transfers of Contract value among the subaccounts of the Account including those investing in the Funds which are available as investment options under the Contracts. These policies and procedures are described in the current prospectuses of the Account through which the Contracts are offered.
(c) LIFE COMPANY will cooperate with AIM's requests in taking steps to deter and detect such transfers by Contract owners. In connection therewith, and in compliance with Rule 22c-2 under the 1940 Act, LIFE COMPANY will provide AIM, upon AIM's request, with the taxpayer identification number ("TIN"), if known, of any or all Contract owners and the amount, date, name or other identifier of any investment professional(s) associated with the Contract owner(s) (if known), and transaction type (purchase or redemption) of every purchase or redemption of shares of AVIF held through an Account maintained by LIFE COMPANY during the period covered by the request.
(i) Requests made pursuant to this Section 2.6(c) must set forth a specific time period, not to exceed ninety (90) days from the date of the request, for which the transaction is sought. AIM may request transaction information older than ninety (90) days from the date of the request as it deems necessary to investigate compliance with policies established by AVIF for the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by AVIF.
(ii) If requested by AIM, LIFE COMPANY shall provide the information specified above with respect to each account for each trading day.
(iii) LIFE COMPANY agrees to transmit the requested information that is on its books and records to AIM or its designee promptly, but in any event not later than five (5) business days, after receipt of a request. If the requested information is not on LIFE COMPANY's books and records, LIFE COMPANY agrees to: (A) provide or arrange to provide to AIM the requested information from Contract owners who hold an account with an indirect intermediary; or (B) if directed by AIM, block further purchases of AVIF shares from such indirect intermediary. In such instance, LIFE COMPANY agrees to inform AIM whether it plans to perform (A) or (B). Responses required by this Paragraph must be communicated in writing and in a format mutually agreed upon by LIFE COMPANY and AIM. To the extent practicable, the format for any transaction information provided to AIM should be consistent with the NSCC Standardized Data Reporting Format. For purposes of this provision, the term indirect intermediary has the same meaning as in Rule 22c-2 under the 1940 Act.
(iv) AVIF and AIM agree not to use the information received for marketing or any other similar purpose without the prior written consent of the Life Company.
(v) LIFE COMPANY agrees to execute written instructions from AIM to restrict or prohibit further purchases of AVIF shares as directed by a Contract owner that has been identified by AIM as having engaged in transactions of AVIF's shares that violate policies established by AVIF for
the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by AVIF.
(vi) Instructions submitted by AIM to LIFE COMPANY, pursuant to this
Section 2.6(c) must include the TIN, if known, and the specific
restriction(s) to be executed. If the TIN is not known, the
instructions must include an equivalent identifying number of the
shareholder(s) or account(s) or other agreed upon information to which
the instruction relates.
(vii) LIFE COMPANY agrees to execute institutions received by LIFE COMPANY from AIM, pursuant to this Section 2.6(c) as soon as reasonably practicable, but not later than five (5) business days after receipt of the instructions by LIFE COMPANY. LIFE COMPANY agrees to provide AIM with written confirmation that the instructions have been executed. LIFE COMPANY agrees to provide this written confirmation as soon as reasonably practicable, but in no event, later than ten (10) business days after the instructions have been executed.
(Signatures on Next Page)
Agreed and Executed:
AIM VARIABLE INSURANCE FUNDS
By: /s/ John M. Zerr
------------------------------------
Name: John M. Zerr
Title: Senior Vice President
Date: February 27, 2007
----------------------------------
|
A I M DISTRIBUTORS, INC.
By: /s/ Gene L. Needles
------------------------------------
Name: Gene L. Needles
Title: President
Date: February 27, 2007
----------------------------------
|
GENWORTH LIFE AND ANNUITY INSURANCE
COMPANY
By: /s/ Geoffrey S. Stiff
------------------------------------
Name: Geoffrey S. Stiff
Title: Senior Vice President
Date: February 27, 2007
----------------------------------
|
CAPITAL BROKERAGE CORPORATION
By: /s/ Geoffrey S. Stiff
------------------------------------
Name: Geoffrey S. Stiff
Title: Senior Vice President
Date: February 27, 2007
----------------------------------
|
Amended and Restated Schedule A to Fund Participation Agreement
February 27, 2007
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Basic Value Fund - Series II shares AIM V.I. Capital Appreciation Fund - Series I shares AIM V.I. Capital Development Fund - Series I shares AIM V.I. Core Equity Fund - Series I shares AIM V.I. Global Real Estate Fund - Series II shares AIM V.I. Government Securities Fund - Series I shares AIM V.I. International Growth Fund - Series II shares AIM V.I. Large Cap Growth Fund - Series I shares AIM V.I. Technology Fund - Series I shares AIM V.I. Utilities Fund - Series I shares
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Genworth Life & Annuity VA Separate Account 1 Genworth Life & Annuity VA Separate Account 2 Genworth Life & Annuity VA Separate Account 3 Genworth Life & Annuity VL Separate Account 1
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
UTILIZING THE FUNDS
RetireReady Accumulator Variable Life Insurance RetireReady Legacy Variable Life Insurance RetireReady Protection Plus Variable Life Insurance
Variable Income Provider Immediate Variable Annuity
Foundation Variable Annuity
Personal Income Design Variable Annuity
Savvy Investor Variable Annuity
RetireReady Bonus Variable Annuity
RetireReady Choice Variable Annuity
RetireReady Extra Variable Annuity
RetireReady Extra II Variable Annuity
RetireReady Freedom Variable Annuity
RetireReady Selections Variable Annuity
AMENDMENT NO. 8
PARTICIPATION AGREEMENT
EFFECTIVE JANUARY 29, 2007
The Participation Agreement, made and entered into as of the 17th day of April, 2000, and amended May 1, 2000, September 1, 2000, April 1, 2002, September 1, 2004, and October 1, 2006 (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:
1. Schedule A of the Agreement is deleted in its entirety and replaced with the following:
SCHEDULE A
SEPARATE ACCOUNTS
FUNDS AVAILABLE UNDER THE POLICIES UTILIZING THE FUNDS CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
---------------------------------- ----------------------------- -----------------------------------------
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - Futurity - NY Variable and Fixed
AIM V.I. Core Equity Fund Variable Account C Annuity Contract
AIM V.I. International Growth Fund
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - Futurity Accolade - NY Variable
AIM.V.I. Dynamics Fund Variable Account C and Fixed Annuity Contract
AIM V.I. Core Equity Fund
AIM V.I. International Growth Fund
AIM V.I. Small Cap Growth Fund
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - DVA(1)/CERT(NY)
AIM.V.I. Dynamics Fund KBL Variable Account A
AIM V.I. International Growth Fund - DVA(1)/NY
AIM V.I. Small Cap Growth Fund
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - Futurity Accumulator II Variable
AIM.V.I. Dynamics Fund Variable Account D Universal Life Insurance Policies
AIM V.I. Core Equity Fund
AIM V.I. International Growth Fund - Futurity Protector II Variable
AIM V.I. Small Cap Growth Fund Universal Life Insurance Policies
- Futurity Survivorship II Variable
Universal Life Insurance Policies
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - Futurity Corporate Variable
AIM.V.I. Dynamics Fund Variable Account J Universal Life Insurance Policies
AIM V.I. Core Equity Fund
AIM V.I. International Growth Fund
AIM V.I. Small Cap Growth Fund
SERIES (I) SHARES
AIM V.I. Basic Value Fund Sun Life (N.Y.) - Large Case Variable Universal
AIM V.I. Mid Cap Core Equity Fund Variable Account J Life Insurance Policies
SERIES (I) SHARES
AIM V.I. Basic Value Fund Sun Life (N.Y.) - Large Case Private Placement
AIM V.I. Mid Cap Core Equity Fund Variable Account H Variable Universal Life Insurance
Policies
SERIES (II) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - All-Star NY
AIM V.I. International Growth Fund Variable Account C
AIM V.I. Small Cap Growth Fund - All-Star Freedom NY
- All-Star Extra NY
|
1 of 2
SERIES (I) SHARES Sun Life (N.Y.) Variable - Alternative Advantage
AIM V.I. International Growth Fund Account E
SERIES (I) SHARES
AIM V.I. International Growth Fund Variable accounts created - Alternative Advantage
under Sun Life Financial
Insurance and Annuity Company
(Bermuda) Ltd. for private
placement products
SERIES (I) SHARES
AIM V.I. Core Equity Fund KBL Variable Account A - Keyport Optima
AIM V.I. Capital Appreciation Fund
AIM V.I. International Growth Fund - Keyport Advisor Optima
- Keyport Advisor
- Keyport Latitude
SERIES (I) SHARES
AIM V.I. Basic Value Fund Sun Life of Canada (N.Y.) - Magnastar PPVUL
AIM V.I. International Growth Fund Variable Account L and M
|
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ Philip A. Taylor
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Philip A. Taylor
Title: Assistant Secretary Title: President
AIM DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ Gene L. Needles
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Gene L. Needles
Title: Assistant Secretary Title: President
|
SUN LIFE INSURANCE AND ANNUITY COMPANY
OF NEW YORK
By: /s/ Raymond Scanlon By: /s/ Bruce A. Teichner
--------------------------------- ------------------------------------
For the President For the Secretary
Name: Raymond Scanlon Name: Bruce A. Teichner
Title: Vice President Title: Assistant Vice President and
Senior Counsel
|
SUN LIFE FINANCIAL INSURANCE AND ANNUITY COMPANY (BERMUDA) LTD.
By: /s/ Robert Vrolyk By: /s/ Daniel Smyth
--------------------------------- ------------------------------------
For the President For the Secretary
Name: Robert Vrolyk Name: Daniel Smyth
Title: Vice President Title: Vice President
|
CLARENDON INSURANCE AGENCY, INC.
By: /s/ Michelle D'Albero
---------------------------------
For the President
Name: Michelle D'Albero
Title: Counsel
By: /s/ William T. Evers
---------------------------------
For the Secretary
Name: William T. Evers
Title: Assistant Vice President and
Senior Counsel
|
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AMENDMENT NO. 9
PARTICIPATION AGREEMENT
EFFECTIVE MAY 1, 2007
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, April 1, 2002, September 1, 2004, October 1, 2006, and January 29, 2007 (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:
1. Schedule A of the Agreement is deleted in its entirety and replaced with the following:
SCHEDULE A
SEPARATE ACCOUNTS
FUNDS AVAILABLE UNDER THE POLICIES UTILIZING THE FUNDS CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
---------------------------------- ----------------------------- -----------------------------------------
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - Futurity - NY Variable and Fixed
AIM V.I. Core Equity Fund Variable Account C Annuity Contract
AIM V.I. International Growth Fund
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - Futurity Accolade - NY Variable
AIM.V.I. Dynamics Fund Variable Account C and Fixed Annuity Contract
AIM V.I. Core Equity Fund
AIM V.I. International Growth Fund
AIM V.I. Small Cap Equity Fund
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - DVA(1)/CERT(NY)
AIM.V.I. Dynamics Fund KBL Variable Account A
AIM V.I. International Growth Fund - DVA(1)/NY
AIM V.I. Small Cap Equity Fund
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - Futurity Accumulator II Variable
AIM.V.I. Dynamics Fund Variable Account D Universal Life Insurance Policies
AIM V.I. Core Equity Fund
AIM V.I. International Growth Fund - Futurity Protector II Variable
AIM V.I. Small Cap Equity Fund Universal Life Insurance Policies
- Futurity Survivorship II
Variable Universal Life Insurance
Policies
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - Futurity Corporate Variable
AIM.V.I. Dynamics Fund Variable Account J Universal Life Insurance Policies
AIM V.I. Core Equity Fund
AIM V.I. International Growth Fund
AIM V.I. Small Cap Equity Fund
SERIES (I) SHARES
AIM V.I. Basic Value Fund Sun Life (N.Y.) - Large Case Variable Universal
AIM V.I. Mid Cap Core Equity Fund Variable Account J Life Insurance Policies
SERIES (I) SHARES
AIM V.I. Basic Value Fund Sun Life (N.Y.) - Large Case Private Placement
AIM V.I. Mid Cap Core Equity Fund Variable Account H Variable Universal Life Insurance
Policies
SERIES (II) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - All-Star NY
AIM V.I. International Growth Fund Variable Account C
AIM V.I. Small Cap Equity Fund - All-Star Freedom NY
- All-Star Extra NY
|
1 of 2
SERIES (I) SHARES Sun Life (N.Y.) Variable - Alternative Advantage
AIM V.I. International Growth Fund Account E
SERIES (I) SHARES
AIM V.I. International Growth Fund Variable accounts created - Alternative Advantage
under Sun Life Financial
Insurance and Annuity Company
(Bermuda) Ltd. for private
placement products
SERIES (I) SHARES
AIM V.I. Core Equity Fund KBL Variable Account A - Keyport Optima
AIM V.I. Capital Appreciation Fund
AIM V.I. International Growth Fund - Keyport Advisor Optima
- Keyport Advisor
- Keyport Latitude
SERIES (I) SHARES
AIM V.I. Basic Value Fund Sun Life of Canada (N.Y.) - Magnastar PPVUL
AIM V.I. International Growth Fund Variable Account L and M
|
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ Donna F. Anderson
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Donna F. Anderson
Title: Assistant Secretary Title: Assistant Vice President
AIM DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ John S. Cooper
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: John S. Cooper
Title: Assistant Secretary Title: Executive Vice President
|
SUN LIFE INSURANCE AND ANNUITY COMPANY
OF NEW YORK
By: /s/ Raymond Scanlon By: /s/ Bruce A. Teichner
--------------------------------- ------------------------------------
For the President For the Secretary
Name: Raymond Scanlon Name: Bruce A. Teichner
Title: Vice President Title: Assistant Vice President and
Senior Counsel
|
SUN LIFE FINANCIAL INSURANCE AND
ANNUITY COMPANY (BERMUDA) LTD.
By: /s/ Robert Vrolyk By: /s/ Daniel Smyth
--------------------------------- ------------------------------------
For the President For the Secretary
Name: Robert Vrolyk Name: Daniel Smyth
Title: Vice President Title: Vice President
|
CLARENDON INSURANCE AGENCY, INC.
By: /s/ Michelle D'Albero
---------------------------------
For the President
Name: Michelle D'Albero
Title: Counsel
By: /s/ William T. Evers
---------------------------------
For the Secretary
Name: William T. Evers
Title: Assistant Vice President and
Senior Counsel
|
2 of 2
AMENDMENT NO. 10
PARTICIPATION AGREEMENT
EFFECTIVE AUGUST 1, 2007
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, April 1, 2002, September 1, 2004, October 1, 2006, January 29, 2007 and May 1, 2007 (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:
1. Schedule A of the Agreement is deleted in its entirety and replaced with the following:
SCHEDULE A
SEPARATE ACCOUNTS CONTRACTS FUNDED BY
FUNDS AVAILABLE UNDER THE POLICIES UTILIZING THE FUNDS THE SEPARATE ACCOUNTS
---------------------------------- ------------------------ ----------------------------
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - Futurity - NY Variable
AIM V.I. Core Equity Fund Variable Account C and Fixed Annuity
AIM V.I. International Growth Fund Contract
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - Futurity Accolade - NY
AIM.V.I. Dynamics Fund Variable Account C Variable and Fixed
AIM V.I. Core Equity Fund Annuity Contract
AIM V.I. International Growth Fund
AIM V.I. Small Cap Equity Fund
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - DVA(1)/CERT(NY)
AIM.V.I. Dynamics Fund KBL Variable Account A
AIM V.I. International Growth Fund - DVA(1)/NY
AIM V.I. Small Cap Equity Fund
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - Futurity Accumulator II
AIM.V.I. Dynamics Fund Variable Account D Variable Universal Life
AIM V.I. Core Equity Fund Insurance Policies
AIM V.I. International Growth Fund
AIM V.I. Small Cap Equity Fund - Futurity Protector II
Variable Universal Life
Insurance Policies
- Futurity Survivorship
II Variable Universal
Life Insurance Policies
SERIES (I) SHARES
AIM V.I. Core Equity Fund Sun Life (N.Y.) - Sun Protector Variable
AIM V.I. International Growth Fund Variable Account D Universal Life
Insurance Policies
- Sun Executive Variable
Universal Life
Insurance Policies
- Sun Prime Variable
Universal Life
Insurance Policies
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - Futurity Corporate
AIM.V.I. Dynamics Fund Variable Account J Variable Universal Life
AIM V.I. Core Equity Fund Insurance Policies
AIM V.I. International Growth Fund
AIM V.I. Small Cap Equity Fund
SERIES (I) SHARES
AIM V.I. Basic Value Fund Sun Life (N.Y.) - Large Case Variable
AIM V.I. Mid Cap Core Equity Fund Variable Account J Universal Life
Insurance Policies
SERIES (I) SHARES
AIM V.I. Basic Value Fund Sun Life (N.Y.) - Large Case Private
AIM V.I. Mid Cap Core Equity Fund Variable Account H Placement Variable
Universal Life
Insurance Policies
SERIES (II) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) - All-Star NY
AIM V.I. International Growth Fund Variable Account C
AIM V.I. Small Cap Equity Fund - All-Star Freedom NY
- All-Star Extra NY
|
1 of 2
SERIES (I) SHARES
AIM V.I. International Growth Fund Sun Life (N.Y.) Variable - Alternative Advantage
Account E
SERIES (I) SHARES
AIM V.I. International Growth Fund Variable accounts - Alternative Advantage
created under Sun Life
Financial Insurance and
Annuity Company
(Bermuda) Ltd. for
private placement
products
SERIES (I) SHARES
AIM V.I. Core Equity Fund KBL Variable Account A - Keyport Optima
AIM V.I. Capital Appreciation Fund
AIM V.I. International Growth Fund - Keyport Advisor Optima
- Keyport Advisor
- Keyport Latitude
SERIES (I) SHARES
AIM V.I. Basic Value Fund Sun Life of Canada - Magnastar PPVUL
(N.Y.)
AIM V.I. International Growth Fund Variable Account L and M
|
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ Donna F. Anderson
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Donna F. Anderson
Title: Assistant Secretary Title: Assistant Vice President
AIM DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ John S. Cooper
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: John S. Cooper
Title: Assistant Secretary Title: Executive Vice President
|
SUN LIFE INSURANCE AND ANNUITY
COMPANY OF NEW YORK
By: /s/ Bruce Jones By: /s/ Bruce A. Teichner
--------------------------------- ------------------------------------
For the President For the Secretary
Name: Bruce Jones Name: Bruce A. Teichner
Title: Vice President Title: Assistant Vice President and
Senior Counsel
|
SUN LIFE FINANCIAL INSURANCE AND
ANNUITY COMPANY (BERMUDA) LTD.
By: /s/ Robert Vrolyk By: /s/ Daniel Smyth
--------------------------------- ------------------------------------
For the President For the Secretary
Name: Robert Vrolyk Name: Daniel Smyth
Title: Vice President Title: Vice President
|
CLARENDON INSURANCE AGENCY, INC.
By: /s/ Michelle D'Albero
---------------------------------
For the President
Name: Michelle D'Albero
Title: Counsel
By: /s/ William T. Evers
---------------------------------
For the Secretary
Name: William T. Evers
Title: Assistant Vice President and
Senior Counsel
|
2 of 2
AMENDMENT NO. 2
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated April 3, 2000, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware corporation, First MetLife Investors Insurance Company (formerly First Cova Life Insurance Company), a New York life insurance company and MetLife Investors Distribution Company, a Missouri corporation, 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 THE CONTRACTS
AIM V.I. Basic Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity Fund
AIM V.I. Diversified Income Fund
AIM V.I. Dynamics Fund
AIM V.I. Financial Services Fund
AIM V.I. Global Health Care Fund
AIM V.I. Global Real Estate Fund
AIM V.I. Government Securities Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Large Cap Growth Fund
AIM V.I. Leisure Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. Small Cap Equity Fund
AIM V.I. Technology Fund
AIM V.I. Utilities Fund
SEPARATE ACCOUNT UTILIZING THE FUNDS
- First MetLife Investors Variable Annuity Account One
CONTRACTS FUNDED BY THE SEPARATE ACCOUNT
- Contract Form #CNY-672
- Form 6010
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: April 30, 2007
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ Donna F. Anderson
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Donna F. Anderson
Title: Assistant Secretary Title: Assistant Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ Gene L. Needles
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Gene L. Needles
Title: Assistant Secretary Title: President
FIRST METLIFE INVESTORS INSURANCE
COMPANY
Attest: /s/ Jonnie Crawford By: /s/ Richard C. Pearson
----------------------------- ------------------------------------
Name: Jonnie Crawford Name: Richard C. Pearson
Title: Assistant Secretary Title: Vice President
METLIFE INVESTORS DISTRIBUTION COMPANY
Attest: /s/ Jonnie Crawford By: /s/ Richard C. Pearson
----------------------------- ------------------------------------
Name: Jonnie Crawford Name: Richard C. Pearson
Title: Assistant Secretary Title: Executive Vice President
|
AMENDMENT AND NOVATION OF
PARTICIPATION AGREEMENT
AFSG Securities Corporation, ("AFSG") the undersigned, for and in consideration of the furtherance of the business purposes of Transamerica Capital, Inc. ("TCI"), does hereby substitute TCI in all of AFSG's rights, title, interest in and to, and duties, obligations and responsibilities under the Participation Agreement ("Agreement") between AFSG, AIM Variable Insurance Funds, A I M Distributors, Inc., and Peoples Benefit Life Insurance Company dated February 1, 2001 including all schedules, addenda, and exhibits thereto, and amendments thereof prior to the date of this Amendment and Novation.
This Amendment and Novation is complete and irrevocable.
By acknowledging this Amendment and Novation AIM Variable Insurance Funds, A I M Distributors, Inc., and Peoples Benefit Life Insurance Company waive and release AFSG from all duties, liabilities or responsibilities under the Agreement, including any required notices of, or time periods for, termination or amendment of the Agreement. Notwithstanding any provision in the Agreement providing for the termination of the Agreement upon its amendment, AIM Variable Insurance Funds, A I M Distributors, Inc., and Peoples Benefit Life Insurance Company hereby consent to this Amendment and Novation and agree to enter into a new Participation Agreement (the "New Agreement") with TCI upon any termination of the Agreement that may be deemed to occur by virtue of this Amendment and Novation. The substantive terms of the New Agreement shall be identical to the current substantive terms of the Agreement and shall remain in full force and effect unless otherwise specifically amended herein or in writing signed by the parties hereafter.
The undersigned further agree that the New Agreement shall reflect the following:
1. All references in the New Agreement to "AFSG Securities Corporation" or "AFSG" as applicable shall be replaced by "Transamerica Capital, Inc." or "TCI" as applicable.
2. Any future communications under the New Agreement shall be delivered as follows:
Mr. Dennis Gallagher, General Counsel
Transamerica Fund Complex
570 Carillon Parkway
St. Petersburg, FL 33716
This Amendment and Novation shall be effective as of the 1st day of May, 2007.
IF AIM VARIABLE INSURANCE FUNDS, A I M DISTRIBUTORS, INC., AND PEOPLES BENEFIT LIFE INSURANCE COMPANY DO NOT ACKNOWLEDGE THIS AMENDMENT AND NOVATION IN WRITING BY MAY 1, 2007, SUBMISSION OF AN APPLICATION OR ORDER FOR AIM VARIABLE INSURANCE FUNDS, A I M DISTRIBUTORS, INC., AND PEOPLES BENEFIT LIFE INSURANCE COMPANY ON OR AFTER MAY 1, 2007, SHALL BE DEEMED WRITTEN CONSENT BY AIM VARIABLE INSURANCE FUNDS, A I M DISTRIBUTORS, INC., AND PEOPLES BENEFIT LIFE INSURANCE COMPANY TO THIS AMENDMENT AND NOVATION.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment and Novation as of May 1, 2007.
AFSG Securities Corporation Transamerica Capital, Inc.
By: /s/ Kyle Keelan By: /s/ Robert Frederick
--------------------------------- ------------------------------------
NAME: Kyle Keelan NAME: Robert Frederick
TITLE: Senior Vice President TITLE: COO & Executive Vice President
Date: 04/01/2007 Date: 04/01/2007
ACKNOWLEDGED AND ACCEPTED BY ACKNOWLEDGED AND ACCEPTED BY
AIM Variable Insurance Funds: A I M Distributors, Inc.:
Signed: /s/ Donna F. Anderson Signed: /s/ Gene L. Needles
----------------------------- --------------------------------
Print Name: Donna F. Anderson Print Name: Gene L. Needles
Title: Assistant Vice President Title: President
Date: 5/30/07 Date: 5/21/07
|
ACKNOWLEDGED AND ACCEPTED BY
Peoples Benefit Life Insurance
Company:
Signed: /s/ Priscilla I. Hechler
-----------------------------
Print Name: Priscilla I. Hechler
Title: Assistant Vice President
and Assistant Secretary
Date: 5/11/07
|
AMENDMENT AND NOVATION OF
PARTICIPATION AGREEMENT
AFSG Securities Corporation, ("AFSG") the undersigned, for and in consideration of the furtherance of the business purposes of Transamerica Capital, Inc. ("TCI"), does hereby substitute TCI in all of AFSG's rights, title, interest in and to, and duties, obligations and responsibilities under the Participation Agreement ("Agreement") between AFSG, AIM Variable Insurance Funds and Western Reserve Life Assurance Co. of Ohio dated April 30, 2001 including all schedules, addenda, and exhibits thereto, and amendments thereof prior to the date of this Amendment and Novation.
This Amendment and Novation is complete and irrevocable.
By acknowledging this Amendment and Novation AIM Variable Insurance Funds and Western Reserve Life Assurance Co. of Ohio waive and release AFSG from all duties, liabilities or responsibilities under the Agreement, including any required notices of, or time periods for, termination or amendment of the Agreement. Notwithstanding any provision in the Agreement providing for the termination of the Agreement upon its amendment, AIM Variable Insurance Funds and Western Reserve Life Assurance Co. of Ohio hereby consent to this Amendment and Novation and agree to enter into a new Participation Agreement (the "New Agreement") with TCI upon any termination of the Agreement that may be deemed to occur by virtue of this Amendment and Novation. The substantive terms of the New Agreement shall be identical to the current substantive terms of the Agreement and shall remain in full force and effect unless otherwise specifically amended herein or in writing signed by the parties hereafter.
The undersigned further agree that the New Agreement shall reflect the following:
1. All references in the New Agreement to "AFSG Securities Corporation" or "AFSG" as applicable shall be replaced by "Transamerica Capital, Inc." or "TCI" as applicable.
2. Any future communications under the New Agreement shall be delivered as follows:
Mr. Dennis Gallagher, General Counsel
Transamerica Fund Complex
570 Carillon Parkway
St. Petersburg, FL 33716
This Amendment and Novation shall be effective as of the 1st day of May, 2007.
IF AIM VARIABLE INSURANCE FUNDS AND WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO DO NOT ACKNOWLEDGE THIS AMENDMENT AND NOVATION IN WRITING BY MAY 1, 2007, SUBMISSION OF AN APPLICATION OR ORDER FOR AIM VARIABLE INSURANCE FUNDS AND WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO ON OR AFTER MAY 1, 2007, SHALL BE DEEMED WRITTEN CONSENT BY AIM VARIABLE INSURANCE FUNDS AND WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO TO THIS AMENDMENT AND NOVATION.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment and Novation as of May 1, 2007.
AFSG Securities Corporation Transamerica Capital, Inc.
By: /s/ Kyle Keelan By: /s/ Robert Frederick
--------------------------------- ------------------------------------
NAME: Kyle Keelan NAME: Robert Frederick
TITLE: Senior Vice President TITLE: COO & Executive Vice President
Date: 04/01/2007 Date: 04/01/2007
ACKNOWLEDGED AND ACCEPTED BY ACKNOWLEDGED AND ACCEPTED BY
AIM Variable Insurance Funds: Western Reserve Life Assurance Co. of
Ohio:
Signed: /s/ Donna F. Anderson Signed: /s/ Priscilla I. Hechler
----------------------------- --------------------------------
Print Name: Donna F. Anderson Print Name: Priscilla I. Hechler
Title: Asst. VP Title: Asst V.P.
Date: 5/8/07 Date: 4/11/07
|
AMENDMENT AND NOVATION OF
PARTICIPATION AGREEMENT
AFSG Securities Corporation, ("AFSG") the undersigned, for and in consideration of the furtherance of the business purposes of Transamerica Capital, Inc. ("TCI"), does hereby substitute TCI in all of AFSG's rights, title, interest in and to, and duties, obligations and responsibilities under the Participation Agreement ("Agreement") between AFSG, AIM Variable Insurance Funds and Transamerica Financial Life Insurance Company dated May 1, 2002 including all schedules, addenda, and exhibits thereto, and amendments thereof prior to the date of this Amendment and Novation.
This Amendment and Novation is complete and irrevocable.
By acknowledging this Amendment and Novation AIM Variable Insurance Funds and Transamerica Financial Life Insurance Company waive and release AFSG from all duties, liabilities or responsibilities under the Agreement, including any required notices of, or time periods for, termination or amendment of the Agreement. Notwithstanding any provision in the Agreement providing for the termination of the Agreement upon its amendment, AIM Variable Insurance Funds and Transamerica Financial Life Insurance Company hereby consent to this Amendment and Novation and agree to enter into a new Participation Agreement (the "New Agreement") with TCI upon any termination of the Agreement that may be deemed to occur by virtue of this Amendment and Novation. The substantive terms of the New Agreement shall be identical to the current substantive terms of the Agreement and shall remain in full force and effect unless otherwise specifically amended herein or in writing signed by the parties hereafter.
The undersigned further agree that the New Agreement shall reflect the following:
1. All references in the New Agreement to "AFSG Securities Corporation" or "AFSG" as applicable shall be replaced by "Transamerica Capital, Inc." or "TCI" as applicable.
2. Any future communications under the New Agreement shall be delivered as follows:
Mr. Dennis Gallagher, General Counsel
Transamerica Fund Complex
570 Carillon Parkway
St. Petersburg, FL 33716
This Amendment and Novation shall be effective as of the 1st day of May, 2007.
IF AIM VARIABLE INSURANCE FUNDS AND TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY DO NOT ACKNOWLEDGE THIS AMENDMENT AND NOVATION IN WRITING BY MAY 1, 2007, SUBMISSION OF AN APPLICATION OR ORDER FOR AIM VARIABLE INSURANCE FUNDS AND TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY ON OR AFTER MAY 1, 2007, SHALL BE DEEMED WRITTEN CONSENT BY AIM VARIABLE INSURANCE FUNDS AND TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY TO THIS AMENDMENT AND NOVATION.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment and Novation as of May 1, 2007.
AFSG Securities Corporation Transamerica Capital, Inc.
By: /s/ Kyle Keelan By: /s/ Robert Frederick
--------------------------------- ------------------------------------
NAME: Kyle Keelan NAME: Robert Frederick
TITLE: Senior Vice President TITLE: COO & Executive Vice President
Date: 04/01/2007 Date: 04/01/2007
ACKNOWLEDGED AND ACCEPTED BY ACKNOWLEDGED AND ACCEPTED BY
Transamerica Financial Life Insurance AIM Variable Insurance Funds:
Company:
Signed: /s/ Priscilla I. Hechler Signed: /s/ Donna F. Anderson
---------------------------- --------------------------------
Print Name: Priscilla I. Hechler Print Name: Donna F. Anderson
Title: Asst V.P. Title: Asst. VP
Date: 4/11/07 Date: 5/8/07
|
AMENDMENT TO
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated as of May 1, 2002, by and among AIM Variable Insurance Funds, a Delaware trust ("AVIF"), Transamerica Financial Life Insurance Company (formerly, AUSA Life Insurance Company, Inc.) ("LIFE COMPANY") and Transamerica Capital, Inc. (replacing AFSG Securities Corporation by Amendment and Novation), 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 THE CONTRACTS
AIM V.I. Basic Value Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Core Equity Fund
AIM V.I. High Yield Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
- Separate Account VA BNY - September 27, 1994
- Separate Account VA GNY - February 13, 2007
- Separate Account VA-5NLNY - November 10, 1993
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
- Transamerica Landmark NY Variable Annuity
- Flexible Premium Variable Annuity - L under the marketing name "Transamerica Ascent"
- Distinct Asset(SM) Variable Annuity
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: July 30, 2007
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ Donna F. Anderson
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Donna F. Anderson
Title: Assistant Secretary Title: Assistant Vice President
TRANSAMERICA FINANCIAL LIFEINSURANCE
COMPANY (FORMERLY, AUSA LIFE INSURANCE
COMPANY, INC.)
BY ITS AUTHORIZED OFFICER,
Attest: /s/ Kathleen S. Mullarkey By: /s/ Arthur D. Woods
----------------------------- ------------------------------------
Name: Kathleen S. Mullarkey Name: Arthur D. Woods
Title: Paralegal Title: Vice President
TRANSAMERICA CAPITAL, INC.
Attest: /s/ Kathleen S. Mullarkey By: /s/ Brenda L. Smith
----------------------------- ------------------------------------
Name: Kathleen S. Mullarkey Name: Brenda L. Smith
Title: Paralegal Title: Assistant Vice President
|
AMENDMENT TO
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated as of September 1, 2005 and amended as of March 2, 2007, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware corporation, American National Insurance Company, a health, accident and life insurance company, a Texas corporation, is hereby amended as follows:
The following is added under: "SECTION 2 PROCESSING AND TRANSACTIONS" before SECTION 2.1(A):
"Notwithstanding the provisions of paragraph (b) of this Section 2.1, 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 AVIF 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. AVIF agrees to provide LIFE COMPANY with account positions and activity data relating to Share transactions via Networking. LIFE COMPANY shall place trades with NSCC using Defined Contribution Clearance & Settlement (hereinafter, "DCC&S") indicators, no later than 8:00 a.m. Central Time, and 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 Zero) system that allows mutual funds and life insurance companies to exchange account level information electronically; "DCC&S" shall refer to an NSCC program that facilitates the automated processing and reporting of defined contribution transactions among asset managers, plan trustees, and plan administrators, including third-party administrators; 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 by 9:00 a.m. Central Time. 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. Unless otherwise specified, all defined terms shall have the same meaning given to them in the Agreement.
Effective Date: March 2, 2007
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ Philip A. Taylor
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Philip A. Taylor
Title: Assistant Secretary Title: President
A I M DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ Gene L. Needles
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Gene L. Needles
Title: Assistant Secretary Title: President
AMERICAN NATIONAL INSURANCE COMPANY
Attest: /s/ Kristen Clause By: /s/ Dwain A. Akins, J.D.
----------------------------- ------------------------------------
Name: Kristen Clause Name: Dwain A. Akins, J.D.
Title: Director - Variable & Title: Senior Vice President - Corporate
Investments Affairs Chief Compliance Officer
|
AMENDMENT NO. 2
PARTICIPATION AGREEMENT
The Participation Agreement dated April 30, 2004, by and among AIM Variable Insurance Funds, a Delaware trust ("AVIF"), A I M Distributors, Inc., a Delaware corporation ("AIM"), Ameritas Life Insurance Corp. (formerly Ameritas Variable Life Insurance Company), a Nebraska life insurance company ("LIFE COMPANY"), and Ameritas Investment Corp. ("UNDERWRITER"), is hereby amended as follows:
SCHEDULE A IS DELETED AND REPLACED WITH SCHEDULE A ON THE FOLLOWING PAGE.
The effective date of this Amendment is November 5, 2007.
All other provisions of the Agreement shall remain the same.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and behalf by its duly authorized representative.
AMERITAS LIFE INSURANCE CORP. (FORMERLY
AMERITAS VARIABLE LIFE INSURANCE COMPANY)
By: /s/ Robert C. Barth
---------------------------------
Name: Robert C. Barth
Title: Sr. Vice President
|
AMERITAS INVESTMENT CORP.
By: /s/ Cheryl C. Heilman
---------------------------------
Name: Cheryl C. Heilman
Title: Vice President
|
AIM VARIABLE INSURANCE FUNDS
By: /s/ Carolyn Gibbs ---------------------------------- Name: Carolyn Gibbs Title: Assistant Vice President |
A I M DISTRIBUTORS, INC.
By: /s/ John S. Cooper
---------------------------------
Name: John S. Cooper
Title: Executive Vice President
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM V.I. Dynamics Fund
AIM V.I. International Growth Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
AMERITAS VARIABLE SEPARATE ACCOUNT V
AMERITAS VARIABLE SEPARATE ACCOUNT VA-2
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
AMERITAS VARIABLE SEPARATE ACCOUNT V
4010 - Overture Applause!
4016 - Overture Applause! II
4018 - Overture Encore!
4065 - Overture Bravo!
4020 - Corporate Benefit VUL
4022 - Overture Ovation!
4024 - Overture VIVA
4101 - Protector hVUL
AMERITAS VARIABLE SEPARATE ACCOUNT VA-2
4782 - Overture Annuity II
4784 - Overture Annuity III
4786 - Overture Annuity III-Plus
4882 - Overture Acclaim!
4884 - Overture Accent!
4888 - Overture Medley!
AMENDMENT NO. 1
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement") dated as of April 30, 2004, by and among AIM Variable Insurance Funds, a Delaware trust ("AVIF"), A I M Distributors, Inc., a Delaware corporation ("AIM"), Ameritas Life Insurance Corp., a Nebraska life insurance company ("LIFE COMPANY") on behalf of itself and its Separate Accounts, and Ameritas Investment Corp. ("UNDERWRITER"), is hereby amended as follows:
SCHEDULE A IS DELETED IN ITS ENTIRETY AND REPLACED WITH SCHEDULE A ON THE
FOLLOWING PAGE.
The effective date of this Amendment is November 5, 2007.
All other provisions of the Agreement shall remain the same.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and behalf by its duly authorized representative.
AMERITAS LIFE INSURANCE CORP.
By: /s/ Robert C. Barth
---------------------------------
Name: Robert C. Barth
Title: Sr. Vice President
|
AMERITAS INVESTMENT CORP.
By: /s/ Cheryl C. Heilman
---------------------------------
Name: Cheryl C. Heilman
Title: Vice President
|
AIM VARIABLE INSURANCE FUNDS
By: /s/ Carolyn Gibbs
---------------------------------
Name: Carolyn Gibbs
Title: Assistant Vice President
|
A I M DISTRIBUTORS, INC.
By: /s/ John S. Cooper
---------------------------------
Name: John S. Cooper
Title: Executive Vice President
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM V.I. Dynamics Fund - Series I shares AIM V.I. International Growth Fund - Series I shares AIM V.I. Leisure Fund - Series I shares
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Ameritas Life Insurance Corp. Separate Account LLVL Ameritas Life Insurance Corp. Separate Account LLVA
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
AMERITAS LIFE INSURANCE CORP. SEPARATE ACCOUNT LLVL
- 4055 - Ameritas Low-Load Variable Universal Life
- 6065 - Ameritas Low-Load Survivorship Variable Universal Life
AMERITAS LIFE INSURANCE CORP. SEPARATE ACCOUNT LLVA
- 4080 - Ameritas No-Load Variable Annuity
- 6150 - Ameritas No-Load Variable Annuity
AMENDMENT NO. 2 TO
PARTICIPATION AGREEMENT
WHEREAS, AIM VARIABLE INSURANCE FUNDS, A I M DISTRIBUTORS, INC, GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK on behalf of itself and its separate accounts and CAPITAL BROKERAGE CORPORATION have previously entered into a Participation Agreement dated March 2, 2003 (the "Agreement");
WHEREAS, effective JANUARY 1, 2006, GE CAPITAL LIFE ASSURANCE COMPANY OF
NEW YORK changed its name to GENWORTH LIFE INSURANCE COMPANY OF NEW YORK;
WHEREAS, effective May 23, 2005, the SEC adopted Rule 22c-2 under the 1940 Act which requires every mutual fund (or on AVIF's behalf, the principal underwriter or transfer agent) to enter into a written agreement with each financial intermediary who sells shares or otherwise maintains accounts which hold shares of AVIF for the benefit of a shareholder.
WHEREAS, all terms not defined in this Amendment shall have the same meaning as ascribed to them in the Agreement.
NOW, THEREFORE, the premises considered the parties agree as follows:
1. All references throughout the Agreement to GE Capital Life Assurance Company of New York shall be changed to Genworth Life Insurance Company of New York.
2. Schedule A to the Agreement is replaced in its entirety with the attached Amended and Restated Schedule A, dated February 27, 2007.
3. The following new Section 2.6 is added to the Agreement:
2.6 CONTROL OF EXCESSIVE SHORT-TERM TRADING
(a) LIFE COMPANY acknowledges that AVIF has adopted policies and procedures reasonably designed to prevent frequent or excessive purchases, exchanges and redemptions of Fund Shares in quantities great enough to disrupt orderly management of the corresponding Fund's investment portfolio. Disclosure pertaining to these policies is contained in the current prospectus for the Fund, as currently required by applicable federal securities law.
(b) AVIF acknowledges that LIFE COMPANY, on behalf of its Account, has adopted policies and procedures reasonably designed to detect and deter frequent transfers of Contract value among the subaccounts of the Account including those investing in the Funds which are available as investment options under the Contracts. These policies and procedures are described in the current prospectuses of the Account through which the Contracts are offered.
(c) LIFE COMPANY will cooperate with AIM's requests in taking steps to deter and detect such transfers by Contract owners. In connection therewith, and in compliance with Rule 22c-2 under the 1940 Act, LIFE COMPANY will provide AIM, upon AIM's request, with the taxpayer identification number ("TIN"), if known, of any or all Contract owners and the amount, date, name or other identifier of any investment professional(s) associated with the Contract owner(s) (if known), and transaction type (purchase or redemption) of every purchase or redemption of shares of AVIF held through an Account maintained by LIFE COMPANY during the period covered by the request.
(i) Requests made pursuant to this Section 2.6(c) must set forth a specific time period, not to exceed ninety (90) days from the date of the request, for which the transaction is sought. AIM may request transaction information older than ninety (90) days from the date of the request as it deems necessary to investigate compliance with policies established by AVIF for the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by AVIF.
(ii) If requested by AIM, LIFE COMPANY shall provide the information specified above with respect to each account for each trading day.
(iii) LIFE COMPANY agrees to transmit the requested information that is on its books and records to AIM or its designee promptly, but in any event not later than five (5) business days, after receipt of a request. If the requested information is not on LIFE COMPANY's books and records, LIFE COMPANY agrees to: (A) provide or arrange to provide to AIM the requested information from Contract owners who hold an account with an indirect intermediary; or (B) if directed by AIM, block further purchases of AVIF shares from such indirect intermediary. In such instance, LIFE COMPANY agrees to inform AIM whether it plans to perform (A) or (B). Responses required by this Paragraph must be communicated in writing and in a format mutually agreed upon by LIFE COMPANY and AIM. To the extent practicable, the format for any transaction information provided to AIM should be consistent with the NSCC Standardized Data Reporting Format. For purposes of this provision, the term indirect intermediary has the same meaning as in Rule 22c-2 under the 1940 Act.
(iv) AVIF and AIM agree not to use the information received for marketing or any other similar purpose without the prior written consent of the Life Company.
(v) LIFE COMPANY agrees to execute written instructions from AIM to restrict or prohibit further purchases of AVIF shares as directed by a Contract owner that has been identified by AIM as having engaged in transactions of AVIF's shares that violate policies established by AVIF for
the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by AVIF.
(vi) Instructions submitted by AIM to LIFE COMPANY, pursuant to this
Section 2.6(c) must include the TIN, if known, and the specific
restriction(s) to be executed. If the TIN is not known, the
instructions must include an equivalent identifying number of the
shareholder(s) or account(s) or other agreed upon information to which
the instruction relates.
(vii) LIFE COMPANY agrees to execute institutions received by LIFE COMPANY from AIM, pursuant to this Section 2.6(c) as soon as reasonably practicable, but not later than five (5) business days after receipt of the instructions by LIFE COMPANY. LIFE COMPANY agrees to provide AIM with written confirmation that the instructions have been executed. LIFE COMPANY agrees to provide this written confirmation as soon as reasonably practicable, but in no event, later than ten (10) business days after the instructions have been executed.
(Signatures on Next Page)
Agreed and Executed:
AIM VARIABLE INSURANCE FUNDS
By: /s/ John M. Zerr
------------------------------------
Name: John M. Zerr
Title: Senior Vice President
Date:
--------------------------
|
A I M DISTRIBUTORS, INC.
By: /s/ Gene L. Needles
------------------------------------
Name: Gene L. Needles
Title: President
Date:
--------------------------
|
GENWORTH LIFE INSURANCE COMPANY OF
NEW YORK
By: /s/ Geoffrey S. Stiff
------------------------------------
Name: Geoffrey S. Stiff
Title: Senior Vice President
Date:
--------------------------
|
CAPITAL BROKERAGE CORPORATION
By: /s/ Geoffrey S. Stiff
------------------------------------
Name: Geoffrey S. Stiff
Title: Senior Vice President
Date:
--------------------------
|
Amended and Restated Schedule A to Fund Participation Agreement
February 27, 2007
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Basic Value Fund - Series II shares AIM V.I. Capital Appreciation Fund - Series I shares AIM V.I. Core Equity Fund - Series I shares AIM V.I. Global Real Estate Fund - Series II shares AIM V.I. International Growth Fund - Series II shares AIM V.I. Large Cap Growth Fund - Series I shares
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Genworth Life of New York VA Separate Account 1 Genworth Life of New York VL Separate Account 1
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS UTILIZING THE FUNDS
RetireReady Accumulator NY Variable Life Insurance
Foundation NY Variable Annuity
RetireReady Bonus NY Variable Annuity
RetireReady Choice NY Variable Annuity
RetireReady Selections NY Variable Annuity
AMENDMENT NO. 1
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated April 30, 2004, by and among AIM Variable Insurance Funds, a Delaware trust; A I M Distributors, Inc., a Delaware corporation, and FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY, a New York life insurance company ("FG-WL&A"), 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 as the principal underwriter of the Contracts ("UNDERWRITER"), 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 THE CONTRACTS
AIM V.I. Basic Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity Fund
AIM V.I. Diversified Income Fund
AIM V.I. Dynamics Fund
AIM V.I. Financial Services Fund
AIM V.I. Global Health Care Fund
AIM V.I. Global Real Estate Fund
AIM V.I. Government Securities Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Large Cap Growth Fund
AIM V.I. Leisure Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. Small Cap Equity Fund
AIM V.I. Technology Fund
AIM V.I. Utilities Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
CONTRACTS FORM NUMBERS --------- ------------ Charles Schwab & Co., Inc. J434 NY Schwab Variable Annuity COLI VUL-2 Series Account J355 NY COLI VUL-4 Series Account J500NY |
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective date: November 15, 2007
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. MICHELLE GRACE By: /s/ CAROLYN GIBBS
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Carolyn Gibbs
Title: Assistant Secretary Title: Assistant Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ JOHN S. COOPER
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: John S. Cooper
Title: Assistant Secretary Title: Executive Vice President
FIRST GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
Attest: /s/ JULIE COLLETT By: /s/ RON LAEYENDECKER
----------------------------- ------------------------------------
Name: Julie Collett Name: Ron Laeyendecker
Title: Sr. Counsel Title: Sr. VP
|
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS,
A I M DISTRIBUTORS, INC.,
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS, AND AS UNDERWRITER OF VARIABLE
CONTRACTS AND POLICIES
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...................................... 2 2.1 Timely Pricing and Orders......................................... 2 2.2 Timely Payments................................................... 3 2.3 Applicable Price.................................................. 3 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............. 8 4.5 G-WL&A To Provide Documents; Information About AVIF............... 9 4.6 AVIF To Provide Documents; Information About G-WL&A............... 10 SECTION 5. MIXED AND SHARED FUNDING..................................... 11 5.1 General........................................................... 11 5.2 Disinterested Trustees............................................ 12 5.3 Monitoring for Material Irreconcilable Conflicts.................. 12 5.4 Conflict Remedies................................................. 13 5.5 Notice to G-WL&A.................................................. 14 5.6 Information Requested by Board.................................... 14 5.7 Compliance with SEC Rules......................................... 14 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......................................... 17 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................................................... 18 SECTION 9. NOTICES...................................................... 18 SECTION 10. VOTING PROCEDURES............................................ 18 SECTION 11. FOREIGN TAX CREDITS.......................................... 19 |
SECTION 12. INDEMNIFICATION.............................................. 19 12.1 Of AVIF and AIM by G-WL&A and UNDERWRITER........................ 19 12.2 Of G-WL&A and UNDERWRITER by AVIF and AIM........................ 21 12.3 Effect of Notice................................................. 24 12.4 Successors....................................................... 24 SECTION 13. APPLICABLE LAW............................................... 24 SECTION 14. EXECUTION IN COUNTERPARTS.................................... 24 SECTION 15. SEVERABILITY................................................. 24 SECTION 16. RIGHTS CUMULATIVE............................................ 24 SECTION 17. HEADINGS..................................................... 24 SECTION 18. CONFIDENTIALITY.............................................. 25 SECTION 19. TRADEMARKS AND FUND NAMES.................................... 25 SECTION 20. PARTIES TO COOPERATE......................................... 26 SECTION 21. AMENDMENTS; NEED FOR......................................... 26 SECTION 22. FORCE MAJEURE................................................ 26 |
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 30th day of April, 2004 ("Agreement"), by and among AIM VARIABLE INSURANCE FUNDS, a Delaware Trust ("AVIF"), A I M Distributors, Inc., a Delaware corporation ("AIM"), GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY, a Colorado life insurance company ("G-WL&A"), 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 as 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 twenty-eight 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, G-WL&A 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, G-WL&A 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, G-WL&A 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, G-WL&A intends to purchase Shares in one or more of the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, GWL&A intends to utilize its NSCC member broker/dealer affiliate,
GWFS
Equities, Inc., ("GWFS") to transmit instructions for the purchase, redemption and transfer of Fund shares on behalf of the Account, and GWFS, alone, or with the assistance of a recordkeeping affiliate, to perform certain recordkeeping functions associated with the transfer of Fund shares into and out of the Account in order to recognize certain organizational economies; and
WHEREAS, AIM is a broker-dealer registered with the SEC under the 1934 Act and a member in good standing of the 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 G-WL&A 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 AVIF (the "Board") may refuse to sell Shares of any Fund to any person, or suspend or terminate the offering of Shares of any Fund (a) if such action is required by law or by regulatory authorities having jurisdiction, (b) 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, or (c) if such action is required by any policies that the Board has adopted and that apply to all Participating Insurance Companies.
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 G-WL&A 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) G-WL&A is open for business.
(b) G-WL&A 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. G-WL&A 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 G-WL&A 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 G-WL&A.
(c) With respect to payment of the purchase price by G-WL&A and of redemption proceeds by AVIF, G-WL&A 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), G-WL&A 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 G-WL&A. 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 (except that for any money market fund, materiality shall be determined in a manner consistent with Rule 2a-7 under the 1940 Act).
2.2 TIMELY PAYMENTS
G-WL&A 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 G-WL&A 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 G-WL&A 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 G-WL&A receives prior to the
close of regular trading on the New York Stock Exchange (or such other time set
by the Board for purposes of determining the current net asset value of a Fund
in accordance with Rule 22c-1 under the 1940 Act) 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), G-WL&A shall be the designated agent of AVIF for receipt of
orders relating to Contract transactions, in accordance with Section 22(c) and
Rule 22c-1 under the 1940 Act, 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. In connection with this
Section 2.3(a), G-WL&A represents and warrants that it will not knowingly submit
any order for Shares or engage in any practice, nor will it knowingly allow or
suffer any person acting on its behalf to submit any order for Shares or engage
in any practice, that would violate or cause a violation of applicable law or
regulation including, without limitation Section 22 of the 1940 Act and the
rules thereunder.
(b) All other Share purchases and redemptions by G-WL&A 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) Without limiting the scope or effect of Section 1.1 hereof, pursuant to which the Board may reject a Share purchase order by or on behalf of G-WL&A under the circumstances described therein, G-WL&A and its designated affiliate agrees to cooperate with the Fund and AIM to prevent any person exercising, or purporting to exercise, rights or privileges under one or more Contracts (including, but not limited to Contract owners, annuitants, insureds or participants, as the case may be (collectively, "Participants")) from engaging in any trading practices in any Fund that the Board or AIM determines, in good faith and in their sole discretion, to be detrimental or potentially detrimental to the other shareholders of the Fund, or to be in contravention of any applicable law or regulation including, without limitation, Section 22 of the 1940 Act and the rules thereunder. Such cooperation may include, but shall not be limited to, identifying the person or persons engaging in such trading practices, facilitating the imposition of any applicable redemption fee on such person or persons, limiting the telephonic or electronic trading privileges of such person or persons, and taking such other remedial steps, all to the extent permitted or required by applicable law and the Funds' then current prospectus.
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 G-WL&A of any income dividends or capital gain distributions payable on the Shares of any Fund. G-WL&A 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 G-WL&A 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. G-WL&A 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 G-WL&A. Shares ordered from AVIF will be recorded in an appropriate title for G-WL&A, 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 use its best efforts to qualify and to maintain qualification of each Fund as a RIC. AVIF will notify G-WL&A 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 G-WL&A 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) Notwithstanding any other provision of this Agreement, but without limiting the ability of AVIF and/or AIM to assume the defense of any action pursuant to Section 12.2(d) hereof, G-WL&A agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of G-WL&A or, to G-WL&A's knowledge, of any Participants, that any Fund has failed to comply with the diversification requirements of Section 817(h) of the Code or G-WL&A 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) G-WL&A shall promptly notify AVIF of such assertion or potential claim (subject to the Confidentiality provisions of Section 18 as to any Participant);
(ii) G-WL&A shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure;
(iii) G-WL&A shall use all commercially reasonable 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) G-WL&A 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 G-WL&A will retain control of the conduct of such conferences discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by G-WL&A to the IRS, any Participant or any other claimant in connection with any of the foregoing proceedings or contests that would affect AIM, it affiliates and/or AVIF and/or AVIF's shareholders, (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 G-WL&A 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 G-WL&A to any such person without the express written consent of AVIF which shall not be unreasonably withheld;
(vi) G-WL&A 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 G-WL&A) 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) G-WL&A 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 G-WL&A 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 solely by AVIF.
Notwithstanding the foregoing, GWL&A agrees to share in fifty percent (50%) of the reasonable costs of appeal should the decision of the appellate court relieve GWL&A of any direct liability with respect to the claim appealed thereto; and
(viii) AVIF and its affiliates shall have no liability as a result of such failure or alleged failure if G-WL&A 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, G-WL&A may, in its discretion, authorize AVIF or its affiliates to act in the name of G-WL&A 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 G-WL&A 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) G-WL&A 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; G-WL&A 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) G-WL&A 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. G-WL&A 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 G-WL&A, which efforts shall include, without limitation, the furnishing of information that is not otherwise available to G-WL&A and that is required by state insurance law to enable G-WL&A to obtain the authority needed to issue the Contracts in any applicable state.
(b) G-WL&A 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 Colorado and has full corporate power, authority and legal right to execute, deliver and perform its duties and comply with its obligations under this Agreement, and (ii) 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) G-WL&A 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 the law(s) of G-WL&A's state(s) of organization and domicile, (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) G-WL&A 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, and then-current stickers (collectively referred to herein as "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 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, Statement of Additional Information, and then-current stickers (collectively referred to herein as "AVIF 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 G-WL&A 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 G-WL&A. 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) G-WL&A or its designated underwriter affiliate 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. G-WL&A and its designated underwriter affiliate 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 G-WL&A TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF
(a) G-WL&A 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) G-WL&A 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 G-WL&A in the manner required by Section 9 hereof.
(c) Neither G-WL&A 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) G-WL&A 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 GWL&A, AVIF nor any of their 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 G-WL&A
(a) AVIF will provide to G-WL&A 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 G-WL&A a camera ready copy of all AVIF prospectuses and printed copies, in an amount specified by G-WL&A, 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 G-WL&A in a timely manner so as to enable G-WL&A, 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 G-WL&A or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which G-WL&A, 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 G-WL&A 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. G-WL&A 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 G-WL&A, 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 G-WL&A for distribution; or (iii) in sales literature or other promotional material approved by G-WL&A or its affiliates, except with the express written permission of G-WL&A.
(e) AVIF shall cause its principal underwriter to adopt and implement procedures reasonably designed to ensure that information concerning G-WL&A, 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 G-WL&A, 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 G-WL&A, 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 the exemptive order granted to AVIF. AVIF hereby notifies G-WL&A 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 TRUSTEES
AVIF agrees that its Board 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 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 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"). G-WL&A agrees to inform the Board 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, G-WL&A will assist the Board in carrying out its responsibilities by providing the Board with all information reasonably necessary for the Board to consider any issue raised, including information as to a decision by G-WL&A to disregard voting instructions of Participants. G-WL&A'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 or a majority of the Disinterested Trustees that a material irreconcilable conflict exists, G-WL&A 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 G-WL&A's decision to disregard Participant voting instructions and that decision represents a minority position or would preclude a majority vote, G-WL&A 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 G-WL&A that this provision is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by G-WL&A 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 G-WL&A conflicts with the majority of other state regulators, then G-WL&A will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board informs G-WL&A 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 G-WL&A for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) G-WL&A 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. G-WL&A 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 G-WL&A
AVIF will promptly make known in writing to G-WL&A the Board's 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
G-WL&A and AVIF (or its investment adviser) will at least annually submit to the Board of AVIF such reports, materials or data as the Board may reasonably request so that the Board 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. All reports received by the Board of potential or existing conflicts, and all Board 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 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 G-WL&A or its affiliates by the NASD, the SEC, any state insurance regulator or any other regulatory body regarding G-WL&A'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 G-WL&A 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, G-WL&A 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 G-WL&A, 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 G-WL&A; or
(e) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(f) at the option of G-WL&A if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if G-WL&A reasonably believes that the Fund may fail to so qualify; or
(g) at the option of G-WL&A if the Fund fails to comply with Section 817(h) of the Code or with successor or similar provisions, or if G-WL&A reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by G-WL&A 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 by G-WL&A, AVIF will, at
the option of G-WL&A, 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"), unless AIM or the Board determines that
doing so would not serve the best interests of the shareholders of the affected
Funds or would be inconsistent with applicable law or regulation. 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 (i) terminations under Section 5 and the
effect of such terminations will be governed by Section 5 of this Agreement or
(ii) any rejected purchase and/or redemption order as described in Section
2.3(c) hereof.
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 G-WL&A 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. For purposes of this Agreement, the designation of an affiliate of a Party to perform some, or all, the duties and obligations hereto shall not be construed as an assignment. An affiliate is that entity which is controlled, either directly or indirectly by a Party and shall include any entity that conforms to such definition as of the effective date of the Agreement as well as any entity that conforms to the definition anytime thereafter.
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: Peter A. Davidson, Esq.
GREAT-WEST LIFE AND ANNUITY INSURANCE COMPANY
8515 East Orchard Road
Greenwood Village, Colorado 80111 Attn: Vice President, Institutional Insurance cc: Beverly A. Byrne, V.P. Counsel and Associate Secretary
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof, G-WL&A 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. G-WL&A will vote Shares in accordance with timely instructions received from Participants. G-WL&A 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 G-WL&A 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. G-WL&A reserves the right to vote shares held in any Account in its own right, to the extent permitted by law. G-WL&A 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
G-WL&A 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 trustees and with whatever rules the SEC may promulgate with
respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with G-WL&A 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 G-WL&A
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, G-WL&A and its designated affiliates 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 G-WL&A 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 G-WL&A or its designated affiliate 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 G-WL&A or their respective affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of G-WL&A 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 G-WL&A 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 G-WL&A or its designated affiliates 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 G-WL&A or its designated affiliates in this Agreement or arise out of or result from any other material breach of this Agreement by G-WL&A or its designated affiliates; or
(v) arise as a result of failure by the Contracts issued by G-WL&A 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 G-WL&A nor its designated affiliates 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 G-WL&A nor its designated affiliates shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless AVIF
or AIM shall have notified G-WL&A and its designated affiliates 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 G-WL&A and its
designated affiliates of any such action shall not relieve G-WL&A and its
designated affiliates 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, G-WL&A and its designated affiliates 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 G-WL&A or its designated affiliates to
such Indemnified Party of G-WL&A's or its designated affiliates' election to
assume the defense thereof, the Indemnified Party will cooperate fully with
G-WL&A and its designated affiliates and shall bear the fees and expenses of any
additional counsel retained by it, and neither LIFE COMPANY nor its designated
affiliates 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 G-WL&A 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 G-WL&A and its respective affiliates, and each person, if any, who controls G-WL&A or its 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 G-WL&A, or its 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, 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 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 G-WL&A or its 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 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 G-WL&A 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 G-WL&A of Shares of another investment company or portfolio for those of any adversely affected Fund as a funding medium for each Account that G-WL&A 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 G-WL&A, 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, G-WL&A 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 G-WL&A or its designated affiliates hereunder or by any other Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by G-WL&A or any other 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 G-WL&A or any other 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 G-WL&A or any of
its affiliates (collectively, the "G-WL&A 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 G-WL&A
Protected Parties or any of their employees or agents in connection with
G-WL&A's performance of its duties under this Agreement are the valuable
property of the G-WL&A Protected Parties. AVIF agrees that if it comes into
possession of any list or compilation of the identities of or other information
about the G-WL&A Protected Parties' customers, or any other information or
property of the G-WL&A Protected Parties, other than such information as may be
independently developed or compiled by AVIF from information supplied to it by
the G-WL&A Protected Parties' customers who also maintain accounts separate from
those Accounts registered by G-WL&A 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 G-WL&A's
prior written consent; or (b) as required by law or judicial process. G-WL&A
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. G-WL&A 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 G-WL&A from information supplied to it by the AVIF Protected
Parties' customers who also maintain accounts directly with G-WL&A, G-WL&A 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., G-WL&A or its designated affiliates, neither G-WL&A nor its designated affiliates 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 G-WL&A or any of its affiliates, or any variation of any such trademark, trade name, service mark or logo, without G-WL&A's prior written consent, the granting of which shall be at G-WL&A'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; NEED FOR
No provision of this Agreement may be amended or modified in any manner except by mutual written agreement executed by all parties hereto. The Parties shall, from time to time, review this Agreement to determine the extent to which an amendment thereto may be necessary or appropriate to reflect changes in applicable law or regulation, and shall cooperate in implementing any such amendment in a timely manner, it being understood and agreed to that no such amendment shall take effect except upon mutual written agreement of all Parties as stated above.
SECTION 22. FORCE MAJEURE
Each Party shall be excused from the performance of any of its obligations to the other where such nonperformance is occasioned by any event beyond its control which shall include, without limitation, any applicable order, rule or regulation of any federal, state or local body, agency or instrumentality with jurisdiction, work stoppage, accident, natural disaster, war, acts of terrorism or civil disorder, provided that the Party so excused shall use all reasonable efforts to minimize its nonperformance and overcome, remedy, cure or remove such event as soon as is reasonably practicable, and such performance shall be excused only for so long as, in any given case, the force or circumstances making performance impossible shall exist.
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 A. Coppedge By: /s/ Robert H. Graham
----------------------------- ------------------------------------
Name: Jim A. Coppedge Name: Robert H. Graham
Title: Assistant Secretary Title: President
A I M DISTRIBUTORS, INC.
Attest: /s/ Jim A. Coppedge By: /s/ Gene L. Needles
----------------------------- ------------------------------------
Name: Jim A. Coppedge Name: Gene L. Needles
Title: Assistant Secretary Title: President
GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY, as Underwriter and on behalf of
itself and its separate accounts and its
Affiliate
Attest: /s/ Don M. Galaxy By: /s/ Ron Laeyendecker
----------------------------- ------------------------------------
Name: Don M. Galaxy Name: Ron Laeyendecker
Title: Vice President Title: Vice President
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
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. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Large Cap Growth Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. Premier Equity Fund
AIM V.I. Real Estate Fund
AIM V.I. Small Cap Equity Fund
INVESCO VIF - Core Equity Fund (name will be changed to AIM V.I. Core Stock Fund
on October 15, 2004)
INVESCO VIF - Dynamics Fund (name will be changed to AIM V.I. Dynamics Fund on
October 15, 2004)
INVESCO VIF - Financial Services Fund (name will be changed to AIM V.I.
Financial Services Fund on October 15, 2004)
INVESCO VIF - Health Sciences Fund (name will be changed to AIM V.I. Health
Sciences Fund on October 15, 2004)
INVESCO VIF - Leisure Fund (name will be changed to AIM V.I. Leisure Fund on
October 15, 2004)
INVESCO VIF - Small Company Growth Fund (name will be changed to AIM V.I. Small
Company Growth Fund on October 15, 2004)
INVESCO VIF - Technology Fund (name will be changed to AIM V.I. Technology Fund
on October 15, 2004)
INVESCO VIF - Total Return Fund (name will be changed to AIM V.I. Total Return
Fund on October 15, 2004)
INVESCO VIF - Utilities Fund (name will be changed to AIM V.I. Utilities Fund on
October 15, 2004)
SEPARATE ACCOUNTS UTILIZING THE FUNDS
CONTRACTS FORM NUMBERS
--------- ------------
Future Funds Series Account GTDAMF92 Vol
GTGAMF92 ER
GTMSG184-1
GTSAMF191
COLI VUL - 2 Series Account J355
COLI VUL - 7 Series Account J350
|
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 G-WL&A, as appropriate, such as in the event that the error was not discovered until after G-WL&A 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 G-WL&A has not mailed redemption checks to Participants, G-WL&A 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). In no event shall G-WL&A be liable to Participants for any such adjustments or underpayment amounts unless the error is due to G-WL&A's own willful misfeasance, bad faith, or gross negligence. A pricing error within categories (a) or (b) above shall be deemed to be "materially incorrect" or constitute a "material error" for purposes of this Agreement.
Reprocessing Cost Reimbursement
To the extent a reprocessing of Participant transactions is required pursuant to paragraph (b), above, AIM shall reimburse G-WL&A for G-WL&A's reprocessing costs in an amount not to exceed $1.00 per contract affected by $10 or more.
SCHEDULE C
EXPENSE ALLOCATIONS
G-WL&A AVIF / AIM
------ ----------
preparing and filing the Account's Preparing and filing the Fund's
registration statement registration statement
text composition for Account text composition for Fund prospectuses
prospectuses and supplements and supplements
text alterations of prospectuses text alterations of prospectuses (Fund)
(Account) and supplements (Account) and supplements (Fund)
printing Account and Fund prospectuses a camera ready Fund prospectus
and supplements
text composition and printing Account text composition and printing Fund SAIs
SAIs
mailing and distributing Account SAIs mailing and distributing Fund SAIs to
to policy owners upon request by policy owners upon request by policy
policy owners owners
mailing and distributing prospectuses
(Account and Fund) and supplements
(Account and Fund) to policy owners of
record as required by Federal
Securities Laws and to prospective
purchasers
text composition (Account), printing, text composition of annual and
mailing, and distributing annual and semi-annual reports (Fund)
semi-annual reports for Account (Fund
and Account as, applicable)
text composition, printing, mailing, text composition, printing, mailing,
distributing, and tabulation of proxy distributing and tabulation of proxy
statements and voting instruction statements and voting instruction
solicitation materials to policy solicitation materials to policy owners
owners with respect to proxies related with respect to proxies related to the
to the Account Fund
If required by G-WLA: preparation,
printing and distributing sales
material and advertising relating to
the Accounts, insofar as such
materials relate to the Contracts and
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
|
AMENDMENT NO. 3
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated April 30, 2004, by and among AIM Variable Insurance Funds, a Delaware trust; A I M Distributors, Inc., a Delaware corporation, and GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY, a Colorado life insurance company ("G-WL&A"), 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 as the principal underwriter of the Contracts ("UNDERWRITER"), 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 THE CONTRACTS
AIM V.I. Basic Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity Fund
AIM V.I. Diversified Income Fund
AIM V.I. Dynamics Fund
AIM V.I. Financial Services Fund
AIM V.I. Global Health Care Fund
AIM V.I. Global Real Estate Fund
AIM V.I. Government Securities Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Large Cap Growth Fund
AIM V.I. Leisure Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. Small Cap Equity Fund
AIM V.I. Technology Fund
AIM V.I. Utilities Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
CONTRACTS FORM NUMBERS
--------- ------------
Future Funds Series Account GTDAMF92 Vol
GTGAMF92 ER
GTSMF184-1
GTSAMF191
COLI VUL - 2 Series Account J355
COLI VUL - 4 Series Account J500
COLI VUL - 7 Series Account J350
Charles Schwab & Co., Inc. J444MMFAPP
Schwab Variable Annuity J444SAAPP
J434VAROR
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective date: November 15, 2007
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ Carolyn Gibbs
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: Carolyn Gibbs
Title: Assistant Secretary Title: Assistant Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ John S. Cooper
----------------------------- ------------------------------------
Name: P. Michelle Grace Name: John S. Cooper
Title: Assistant Secretary Title: Executive Vice President
GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY
Attest: /s/ Julie Collett By: /s/ Ron Laeyendecker
----------------------------- ------------------------------------
Name: Julie Collett Name: Ron Laeyendecker
Title: Senior Counsel Title: Senior Vice President
|
THIRD AMENDED AND RESTATED
MEMORANDUM OF AGREEMENT
(SECURITIES LENDING WAIVER)
This Third Amended and Restated Memorandum of Agreement is entered into as of the dates indicated on Exhibit "A" between AIM Counselor Series Trust, AIM Equity Funds, AIM Funds Group, AIM Growth Series, AIM International Mutual Funds, AIM Investment Funds, AIM Investment Securities Funds, AIM Sector Funds, AIM Stock Funds, AIM Summit Fund, AIM Tax-Exempt Funds, AIM Treasurer's Series Trust, AIM Variable Insurance Funds, Short-Term Investments Trust and Tax-Free Investments Trust (each a "Fund" and collectively, the "Funds"), on behalf of the portfolios listed on Exhibit "A" to this Memorandum of Agreement (the "Portfolios"), and A I M Advisors, Inc. ("AIM"). This Memorandum of Agreement restates the Memorandum of Agreement previously in effect prior to July 1, 2007 and entered into as of the effective dates indicated on Exhibit "A" between AIM Counselor Series Trust, AIM Equity Funds, AIM Funds Group, AIM Growth Series, AIM International Mutual Funds, AIM Investment Funds, AIM Investment Securities Funds, AIM Sector Funds, AIM Stock Funds, AIM Summit Fund, AIM Tax-Exempt Funds, AIM Variable Insurance Funds, AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust, on behalf of the portfolios and AIM.
For and in consideration of the mutual terms and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Funds and AIM agree as follows:
1. Each Fund, for itself and its Portfolios, and AIM agree that until the expiration date, if any, of the commitment set forth on the attached Exhibit "A" occurs, as such Exhibit "A" is amended from time to time, AIM has agreed that it will not charge any administrative fee under each Portfolio's advisory agreement in connection with securities lending activities without prior approval from the Portfolio's Board (such agreement is referred to as the "Waiver").
2. Neither a Fund nor AIM may remove or amend the Waiver to a Fund's detriment prior to requesting and receiving the approval of the Portfolio's Board to remove or amend the Waiver. AIM will not have any right to reimbursement of any amount so waived.
Unless a Fund, by vote of its Board of Trustees terminates the Waiver, or a Fund and AIM are unable to reach an agreement on the amount of the Waiver to which the Fund and AIM desire to be bound, the Waiver will continue indefinitely with respect to such Fund. Exhibit "A" will be amended to reflect the new date through which a Fund and AIM agree to be bound.
Nothing in this Memorandum of Agreement is intended to affect any other memorandum of agreement executed by any Fund or AIM with respect to any other fee waivers, expense reimbursements and/or expense limitations.
IN WITNESS WHEREOF, each Fund, on behalf of itself and its Portfolios listed in Exhibit "A" to this Memorandum of Agreement, and AIM have entered into this Memorandum of Agreement as of the dates indicated on Exhibit "A".
AIM COUNSELOR SERIES TRUST
AIM EQUITY FUNDS
AIM FUNDS GROUP
AIM GROWTH SERIES
AIM INTERNATIONAL MUTUAL FUNDS
AIM INVESTMENT FUNDS
AIM INVESTMENT SECURITIES FUNDS
AIM SECTOR FUNDS
AIM STOCK FUNDS
AIM SUMMIT FUND
AIM TAX-EXEMPT FUNDS
AIM VARIABLE INSURANCE FUNDS
By: /s/ John M. Zerr
------------------------------------
Title: Senior Vice President
|
AIM TREASURER'S SERIES TRUST
SHORT-TERM INVESTMENTS TRUST
TAX-FREE INVESTMENTS TRUST
By: /s/ Karen Dunn Kelley
------------------------------------
Title: President
|
A I M ADVISORS, INC.
By: /s/ John M. Zerr
------------------------------------
Title: Senior Vice President
|
EXHIBIT "A"
AIM COUNSELOR SERIES TRUST
PORTFOLIO EFFECTIVE DATE COMMITTED UNTIL* --------- ------------------ ---------------- AIM Floating Rate Fund April 14, 2006 AIM Multi-Sector Fund November 25, 2003 AIM Select Real Estate Income Fund March 9, 2007 AIM Structured Core Fund March 31, 2006 AIM Structured Growth Fund March 31, 2006 AIM Structured Value Fund March 31, 2006 |
AIM EQUITY FUNDS
PORTFOLIO EFFECTIVE DATE COMMITTED UNTIL* --------- ------------------ ---------------- AIM Capital Development Fund June 21, 2000 AIM Charter Fund June 21, 2000 AIM Constellation Fund June 21, 2000 AIM Diversified Dividend Fund December 28, 2001 AIM Large Cap Basic Value Fund June 21, 2000 AIM Large Cap Growth Fund June 21, 2000 |
AIM FUNDS GROUP
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM Basic Balanced Fund September 28, 2001 AIM European Small Company Fund August 30, 2000 AIM Global Value Fund December 27, 2000 AIM International Small Company Fund August 30, 2000 AIM Mid Cap Basic Value Fund December 27, 2001 AIM Select Equity Fund June 1, 2000 AIM Small Cap Equity Fund August 30, 2000 |
AIM GROWTH SERIES
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM Basic Value Fund June 5, 2000 AIM Global Equity Fund September 1, 2001 AIM Mid Cap Core Equity Fund September 1, 2001 AIM Small Cap Growth Fund September 11, 2000 |
* Committed until the Fund or AIM requests and receives the approval of the Fund's Board to remove or amend such fee waiver. Such commitments are evergreen until amended and apply to each Portfolio of a Fund.
AIM INTERNATIONAL MUTUAL FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM Asia Pacific Growth Fund June 21, 2000 AIM European Growth Fund June 21, 2000 AIM Global Aggressive Growth Fund June 21, 2000 AIM Global Growth Fund June 21, 2000 AIM International Growth Fund June 21, 2000 AIM International Core Equity Fund November 25, 2003 |
AIM INVESTMENT FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM China Fund March 31, 2006 AIM Developing Markets Fund September 1, 2001 AIM Global Health Care Fund September 1, 2001 AIM International Total Return Fund March 31, 2006 AIM Japan Fund March 31, 2006 AIM LIBOR Alpha Fund March 31, 2006 AIM Trimark Endeavor Fund November 4, 2003 AIM Trimark Fund November 4, 2003 AIM Trimark Small Companies Fund November 4, 2003 |
AIM INVESTMENT SECURITIES FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM Global Real Estate Fund April 29, 2005 AIM High Yield Fund June 1, 2000 AIM Income Fund June 1, 2000 AIM Intermediate Government Fund June 1, 2000 AIM Limited Maturity Treasury Fund June 1, 2000 AIM Money Market Fund June 1, 2000 AIM Municipal Bond Fund June 1, 2000 AIM Real Estate Fund September 11, 2000 AIM Short Term Bond Fund August 29, 2002 AIM Total Return Bond Fund December 28, 2001 |
* Committed until the Fund or AIM requests and receives the approval of the Fund's Board to remove or amend such fee waiver. Such commitments are evergreen until amended and apply to each Portfolio of a Fund.
AIM SECTOR FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM Energy Fund November 25, 2003 AIM Financial Services Fund November 25, 2003 AIM Gold & Precious Metals Fund November 25, 2003 AIM Leisure Fund November 25, 2003 AIM Technology Fund November 25, 2003 AIM Utilities Fund November 25, 2003 |
AIM STOCK FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM Dynamics Fund November 25, 2003 AIM S&P 500 Index Fund November 25, 2003 |
AIM SUMMIT FUND
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM Summit Fund July 24, 2000 |
AIM TAX-EXEMPT FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM High Income Municipal Fund June 1, 2000 AIM Tax-Exempt Cash Fund June 1, 2000 AIM Tax-Free Intermediate Fund June 1, 2000 |
AIM TREASURER'S SERIES TRUST
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- Premier Portfolio November 25, 2003 Premier Tax-Exempt Portfolio November 25, 2003 Premier U.S. Government Money November 25, 2003 Portfolio |
* Committed until the Fund or AIM requests and receives the approval of the Fund's Board to remove or amend such fee waiver. Such commitments are evergreen until amended and apply to each Portfolio of a Fund.
AIM VARIABLE INSURANCE FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM V.I. Basic Balanced Fund May 1, 2000 AIM V.I. Basic Value Fund September 10, 2001 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. Diversified Income Fund May 1, 2000 AIM V.I. Dynamics Fund April 30, 2004 AIM V.I. Financial Services Fund April 30, 2004 AIM V.I. Global Health Care Fund April 30, 2004 AIM V.I. Global Real Estate Fund April 30, 2004 AIM V.I. Government Securities 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. Large Cap Growth Fund September 1, 2003 AIM V.I. Leisure Fund April 30, 2004 AIM V.I. Mid Cap Core Equity Fund September 10, 2001 AIM V.I. Money Market Fund May 1, 2000 AIM V.I. Small Cap Equity Fund September 1, 2003 AIM V.I. Technology Fund April 30, 2004 AIM V.I. Utilities Fund April 30, 2004 |
SHORT-TERM INVESTMENTS TRUST
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- Government & Agency Portfolio June 1, 2000 Government TaxAdvantage Portfolio June 1, 2000 Liquid Assets Portfolio June 1, 2000 STIC Prime Portfolio June 1, 2000 Treasury Portfolio June 1, 2000 |
TAX-FREE INVESTMENTS TRUST
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- Tax-Free Cash Reserve Portfolio June 1, 2000 |
* Committed until the Fund or AIM requests and receives the approval of the Fund's Board to remove or amend such fee waiver. Such commitments are evergreen until amended and apply to each Portfolio of a Fund.
MEMORANDUM OF AGREEMENT
(ADVISORY FEE WAIVERS)
This Memorandum of Agreement is entered into as of the effective date on the attached Exhibit (the "Exhibit"), between AIM Equity Funds, AIM Funds Group, AIM Investment Funds, AIM Sector Funds, AIM Stock Funds, AIM Treasurer's Series Trust and AIM Variable Insurance Funds (each a "Trust" or, collectively, the "Trusts"), on behalf of the funds listed on the Exhibit to this Memorandum of Agreement (the "Funds"), and A I M Advisors, Inc. ("AIM"). This Memorandum of Agreement restates the following: (i) Amended and Restated Memorandum of Agreement dated July 1, 2006, between AIM Counselor Series Trust, AIM Equity Funds, AIM Funds Group, AIM Growth Series, AIM International Mutual Funds, AIM Investment Funds, AIM Investment Securities Funds, AIM Sector Funds, AIM Special Opportunities Funds, AIM Stock Funds, AIM Summit Fund, AIM Treasurer's Series Trust, AIM Variable Insurance Funds and AIM; (ii) Memorandum of Agreement as of the effective dates indicated on the Exhibit between AIM Counselor Series Trust, AIM Special Opportunities Fund and AIM; and (iii) Memorandum of Agreement as of the effective dates indicated on the Exhibit between AIM Funds Group, AIM International Mutual Funds, AIM Treasurer's Series Trust, AIM Variable Insurance Funds and AIM. AIM shall and hereby agrees to waive fees of the Funds, on behalf of their respective classes as applicable, severally and not jointly, as indicated in the Exhibit.
For and in consideration of the mutual terms and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Trusts and AIM agree that until at least the expiration date set forth on the Exhibit (the "Expiration Date") and with respect to those Funds listed on the Exhibit, AIM will waive its advisory fees at the rate set forth on the Exhibit.
The Boards of Trustees and AIM may terminate or modify this Memorandum of Agreement prior to the Expiration Date only by mutual written consent. AIM will not have any right to reimbursement of any amount so waived or reimbursed.
Subject to the foregoing paragraphs, each of the Trusts and AIM agree to review the then-current waivers for each class of the Funds listed on the Exhibit on a date prior to the Expiration Date to determine whether such waivers should be amended, continued or terminated. The waivers will expire upon the Expiration Date unless the Trusts and AIM have agreed to continue them. The Exhibit will be amended to reflect any such agreement.
It is expressly agreed that the obligations of the Trusts hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents or employees of the Trusts personally, but shall only bind the assets and property of the Funds, as provided in each Trust's Agreement and Declaration of Trust. The execution and delivery of this Memorandum of Agreement have been authorized by the Trustees of each Trust, and this Memorandum of Agreement has been executed and delivered by an authorized officer of each Trust acting as such; neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the assets and property of the Funds, as provided in each Trust's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, each of the Trusts and AIM have entered into this Memorandum of Agreement as of the Effective Date on the attached Exhibit.
AIM EQUITY FUNDS
AIM FUNDS GROUP
AIM INVESTMENT FUNDS
AIM SECTOR FUNDS
AIM STOCK FUNDS
AIM TREASURER'S SERIES TRUST
AIM VARIABLE INSURANCE FUNDS
on behalf of the Funds listed in the
Exhibit to this Memorandum of Agreement
By: /s/ John M. Zerr
------------------------------------
Title: Senior Vice President
|
A I M ADVISORS, INC.
By: /s/ John M. Zerr
------------------------------------
Title: Senior Vice President
|
EXHIBIT TO ADVISORY FEE MOA
EFFECTIVE EXPIRATION
AIM EQUITY FUNDS WAIVER DESCRIPTION DATE DATE
---------------------------- -------------------------------------------- --------- ----------
AIM Charter Fund AIM will waive advisory fees to the extent 1/1/2005 12/31/2012
necessary so that advisory fees AIM receives
do not exceed the annualized rates listed
below.
0.75% of the first $150M
0.615% of the next $4.85B
0.57% of the next $2.5B
0.545% of the next $2.5B
0.52% of the excess over $10B
AIM Constellation Fund AIM will waive advisory fees to the extent 3/27/2005 12/31/2012
necessary so that advisory fees AIM receives
do not exceed the annualized rates listed
below.
0.695% of the first $250M
0.615% of the next $4B
0.595% of the next $750M
0.57% of the next $2.5B
0.545% of the next $2.5B
0.52% of the excess over $10B
|
EFFECTIVE EXPIRATION
AIM FUNDS GROUP WAIVER DESCRIPTION DATE DATE
---------------------------- -------------------------------------------- --------- ----------
AIM Basic Balanced Fund AIM will waive advisory fees to the extent 1/1/2005 12/31/2012
necessary so that advisory fees AIM receives
do not exceed the annualized rates listed
below.
0.62% of the first $250M
0.605% of the next $250M
0.59% of the next $500M
0.575% of the next $1.5B
0.56% of the next $2.5B
0.545% of the next $2.5B
0.53% of the next $2.5B
0.515% of the excess over $10B
|
EFFECTIVE EXPIRATION
AIM INVESTMENT FUNDS WAIVER DESCRIPTION DATE DATE
---------------------------- -------------------------------------------- --------- ----------
AIM Global Health Care Fund AIM will waive advisory fees to the extent 1/1/2005 12/31/2009
necessary so that advisory fees AIM receives
do not exceed the annualized rates listed
below.
0.75% of the first $250M
0.74% of the next $250M
0.73% of the next $500M
0.72% of the next $1.5B
0.71% of the next $2.5B
0.70% of the next $2.5B
0.69% of the next $2.5B
0.68% of the excess over $10B
|
EFFECTIVE EXPIRATION
AIM SECTOR FUNDS WAIVER DESCRIPTION DATE DATE
---------------------------- -------------------------------------------- --------- ----------
AIM Gold & Precious Metals AIM will waive advisory fees to the extent 1/1/2005 6/30/2008
Fund necessary so that advisory fees AIM receives
do not exceed the annualized rates listed
below.
0.75% of the first $250M
0.74% of the next $250M
0.73% of the next $500M
0.72% of the next $1.5B
0.71% of the next $2.5B
0.70% of the next $2.5B
0.69% of the next $2.5B
0.68% of the excess over $10B
AIM Utilities Fund AIM will waive advisory fees to the extent 1/1/2005 6/30/2008
necessary so that advisory fees AIM receives
do not exceed the annualized rates listed
below.
0.75% of the first $250M
0.74% of the next $250M
0.73% of the next $500M
0.72% of the next $1.5B
0.71% of the next $2.5B
0.70% of the next $2.5B
0.69% of the next $2.5B
0.68% of the excess over $10B
|
EFFECTIVE EXPIRATION
AIM STOCK FUNDS WAIVER DESCRIPTION DATE DATE
---------------------------- -------------------------------------------- --------- ----------
AIM S&P 500 Index Fund AIM will waive advisory fees to the extent 1/1/2005 6/30/2008
necessary so that advisory fees AIM receives
do not exceed the annualized rates listed
below.
0.25% of the first $250M
0.24% of the next $250M
0.23% of the next $500M
0.22% of the next $1.5B
0.21% of the next $2.5B
0.20% of the next $2.5B
0.19% of the next $2.5B
0.18% of the excess over $10B
|
EFFECTIVE EXPIRATION
AIM TREASURER'S SERIES TRUST WAIVER DESCRIPTION DATE DATE
---------------------------- -------------------------------------------- --------- ----------
Premier Portfolio AIM will waive advisory fees in the amount 2/25/2005 6/30/2008
of 0.08% of the Fund's average daily net
assets
Premier U.S. Government AIM will waive advisory fees in the amount 2/25/2005 6/30/2008
Money Portfolio of 0.08% of the Fund's average daily net
assets
|
EFFECTIVE EXPIRATION
AIM VARIABLE INSURANCE FUNDS WAIVER DESCRIPTION DATE DATE
---------------------------- -------------------------------------------- --------- ----------
AIM V. I. Basic Balanced AIM will waive advisory fees to the extent 1/1/2005 12/31/2009
Fund necessary so that advisory fees AIM receives
do not exceed the annualized rates listed
below.
0.62% of the first $150M
0.50% of the next $4.85B
0.475% of the next $5B
0.45% of the excess over $10B
AIM V. I. Capital AIM will waive advisory fees to the extent 5/1/2006 12/31/2009
Appreciation Fund necessary so that advisory fees AIM receives
do not exceed the annualized rates listed
below.
0.695% of the first $250M
0.625% of the next $750M
0.62% of the next $1.5B
0.595% of the next $2.5B
0.57% of the next $2.5B
0.545% of the next $2.5B
0.52% of the excess over $10B
|
AIM VARIABLE INSURANCE EFFECTIVE EXPIRATION
FUNDS - CONTINUED WAIVER DESCRIPTION DATE DATE
---------------------------- -------------------------------------------- --------- ----------
AIM V. I. Capital AIM will waive advisory fees to the extent 1/1/2005 4/30/2009
Development Fund necessary so that advisory fees AIM receives
do not exceed the annualized rates listed
below.
0.745% of the first $250M
0.73% of the next $250M
0.715% of the next $500M
0.70% of the next $1.5B
0.685% of the next $2.5B
0.67% of the next $2.5B
0.655% of the next $2.5B
0.64% of the excess over $10B
AIM V. I. Core Equity Fund AIM will waive advisory fees to the extent 1/1/2005 12/31/2009
necessary so that advisory fees AIM receives
do not exceed the annualized rates listed
below.
0.695% of the first $250M
0.67% of the next $250M
0.645% of the next $500M
0.62% of the next $1.5B
0.595% of the next $2.5B
0.57% of the next $2.5B
0.545% of the next $2.5B
0.52% of the excess over $10B
|
MEMORANDUM OF AGREEMENT
(EXPENSE LIMITATIONS)
This Memorandum of Agreement is entered into as of the Effective Date on the attached exhibits (the "Exhibits"), between AIM Counselor Series Trust, AIM Equity Funds, AIM Growth Series, AIM Investment Funds, AIM Investment Securities Funds, AIM Sector Funds, AIM Stock Funds, AIM Tax-Exempt Funds, AIM Variable Insurance Funds, Short-Term Investments Trust and Tax-Free Investments Trust (each a "Trust" or, collectively, the "Trusts"), on behalf of the funds listed on the Exhibits to this Memorandum of Agreement (the "Funds"), and A I M Advisors, Inc. ("AIM"). This Memorandum of Agreement restates the Memorandum of Agreement dated April 1, 2007 between AIM Counselor Series Trust, AIM Equity Funds, AIM Funds Group, AIM Growth Series, AIM Investment Funds, AIM Investment Securities Funds, AIM Sector Funds, AIM Stock Funds, AIM Tax-Exempt Funds, AIM Variable Insurance Funds, Short-Term Investments Trust and Tax-Free Investments Trust. AIM shall and hereby agrees to waive fees or reimburse expenses of each Fund, on behalf of its respective classes as applicable, severally and not jointly, as indicated in the attached Exhibits.
For and in consideration of the mutual terms and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Trusts and AIM agree as follows:
For the Contractual Limits (listed in Exhibits A - D), the Trusts and AIM agree until at least the expiration date set forth on the attached Exhibits A - D (the "Expiration Date") that AIM will waive its fees or reimburse expenses to the extent that expenses of a class of a Fund (excluding (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the Funds' Boards of Trustees; (vi) expenses of the underlying funds that are paid indirectly as a result of share ownership of the underlying funds, and (vii) expenses that each Fund has incurred but did not actually pay because of an expense offset arrangement, if applicable) exceed the rate, on an annualized basis, set forth on the Exhibits of the average daily net assets allocable to such class. Acquired fund fees and expenses are not fees or expenses incurred by a fund directly but are expenses of the investment companies in which a fund invests. These fees and expenses are incurred indirectly through the valuation of a fund's investment in these investment companies. Acquired fund fees and expenses are required to be disclosed and included in the total annual fund operating expenses in the prospectus fee table. As a result, the net total annual fund operating expenses shown in the prospectus fee table may exceed the expense limits reflected in Exhibits A-D. With regard to the Contractual Limits, the Board of Trustees of the Trust and AIM may terminate or modify this Memorandum of Agreement prior to the Expiration Date only by mutual written consent. AIM will not have any right to reimbursement of any amount so waived or reimbursed.
For the Contractual Limits, each of the Trusts and AIM agree to review the then-current expense limitations for each class of each Fund listed on the Exhibits on a date prior to the Expiration Date to determine whether such limitations should be amended, continued or terminated. The expense limitations will expire upon the Expiration Date unless the Trusts and AIM have agreed to continue them. The Exhibits will be amended to reflect any such agreement.
For the Voluntary Limits (listed in Exhibits A - D), the Trusts and AIM agree that these are not contractual in nature and that AIM may establish, amend and/or terminate such expense limitations at any time in its sole discretion after consultation with the Funds' Boards of Trustees. Any delay or failure by AIM to update this Memorandum of Agreement with regards to the terminations, extensions, or expirations of the Voluntary Limits shall have no effect on the term of such Voluntary Limitations; the Voluntary Limitations are listed herein for informational purposes only.
It is expressly agreed that the obligations of each Trust hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents or employees of the Trusts personally, but shall only bind the assets and property of each Fund, as provided in each Trust's Agreement and Declaration of Trust. The execution and delivery of this Memorandum of Agreement have been authorized by the Trustees of the Trusts, and this Memorandum of Agreement has been executed and delivered by an authorized officer of the Trusts acting as such; neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the assets and property of the Funds, as provided in each Trust's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, each of the Trusts and AIM have entered into this Memorandum of Agreement as of the Effective Dates on the attached Exhibits.
AIM COUNSELOR SERIES TRUST
AIM EQUITY FUNDS
AIM GROWTH SERIES
AIM INVESTMENT FUNDS
AIM INVESTMENT SECURITIES FUNDS
AIM SECTOR FUNDS
AIM STOCK FUNDS
AIM TAX-EXEMPT FUNDS
AIM VARIABLE INSURANCE FUNDS
on behalf of the Funds listed in the
Exhibits to this Memorandum of Agreement
By: /s/ John M. Zerr
------------------------------------
Title: Senior Vice President
|
SHORT-TERM INVESTMENTS TRUST
TAX-FREE INVESTMENTS TRUST
on behalf of the Funds listed in the
Exhibits to this Memorandum of Agreement
By: /s/ Karen Dunn Kelley
------------------------------------
Title: President
|
A I M Advisors, Inc.
By: /s/ John M. Zerr
------------------------------------
Title: Senior Vice President
|
as of July 1, 2007
EXHIBIT "A" - RETAIL FUNDS(1)
FUNDS WITH FISCAL YEAR END OF MARCH 31
AIM SECTOR FUNDS
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ -------------
AIM Technology Fund
Class A Shares Contractual 1.55% July 1, 2005 June 30, 2008
Class B Shares Contractual 2.30% July 1, 2005 June 30, 2008
Class C Shares Contractual 2.30% July 1, 2005 June 30, 2008
Investor Class Shares Contractual 1.55% July 1, 2005 June 30, 2008
Institutional Class Shares Contractual 1.30% July 1, 2005 June 30, 2008
AIM Utilities Fund
Class A Shares Contractual 1.30% April 1, 2006 June 30, 2008
Class B Shares Contractual 2.05% April 1, 2006 June 30, 2008
Class C Shares Contractual 2.05% April 1, 2006 June 30, 2008
Investor Class Shares Contractual 1.30% April 1, 2006 June 30, 2008
Institutional Class Shares Contractual 1.05% April 1, 2006 June 30, 2008
|
AIM TAX-EXEMPT FUNDS
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT Date
---- ------------ ---------- ------------------ -------------
AIM High Income Municipal
Fund
Class A Shares Voluntary 0.70% April 1, 2007 N/A(2)
Class B Shares Voluntary 1.45% April 1, 2007 N/A(2)
Class C Shares Voluntary 1.45% April 1, 2007 N/A(2)
Institutional Class Shares Voluntary 0.45% April 1, 2007 N/A(2)
|
See page 8 for footnotes to Exhibit A.
as of July 1, 2007
FUNDS WITH FISCAL YEAR END OF JULY 31
AIM INVESTMENT SECURITIES FUNDS
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ -------------
AIM Global Real Estate Fund
Class A Shares Contractual 1.40% July 1, 2005 June 30, 2008
Class B Shares Contractual 2.15% April 29, 2005 June 30, 2008
Class C Shares Contractual 2.15% April 29, 2005 June 30, 2008
Class R Shares Contractual 1.65% April 29, 2005 June 30, 2008
Institutional Class Shares Contractual 1.15% April 29, 2005 June 30, 2008
AIM Short Term Bond Fund
Class A Shares Contractual 0.85% July 1, 2005 June 30, 2008
Class C Shares Contractual 1.10%(3) February 1, 2006 June 30, 2008
Class R Shares Contractual 1.10% August 30, 2002 June 30, 2008
Institutional Class Shares Contractual 0.60% August 30, 2002 June 30, 2008
AIM Total Return Bond Fund
Class A Shares Contractual 1.00% July 1, 2005 June 30, 2008
Class B Shares Contractual 1.75% July 1, 2002 June 30, 2008
Class C Shares Contractual 1.75% July 1, 2002 June 30, 2008
Class R Shares Contractual 1.25% April 30, 2004 June 30, 2008
Institutional Class Shares Contractual 0.75% April 30, 2004 June 30, 2008
|
AIM STOCK FUNDS
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ -------------
AIM Dynamics Fund
Class A Shares Contractual 1.20% July 1, 2005 June 30, 2008
Class B Shares Contractual 1.95% August 12, 2003 June 30, 2008
Class C Shares Contractual 1.95% August 12, 2003 June 30, 2008
Class R Shares Contractual 1.45% October 25, 2005 June 30, 2008
Investor Class Shares Contractual 1.20% August 12, 2003 June 30, 2008
Institutional Class Shares Contractual 0.95% August 12, 2003 June 30, 2008
AIM S&P 500 Index Fund
Investor Class Shares Contractual 0.60% August 1, 2005 June 30, 2008
Institutional Class Shares Contractual 0.35% August 12, 2003 June 30, 2008
|
See page 8 for footnotes to Exhibit A.
as of July 1, 2007
FUNDS WITH FISCAL YEAR END OF AUGUST 31
AIM COUNSELOR SERIES TRUST
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ -------------
AIM Floating Rate Fund
Class A Shares Contractual 1.50% April 14, 2006 June 30, 2008
Class C Shares Contractual 2.00% April 14, 2006 June 30, 2008
Class R Shares Contractual 1.75% April 14, 2006 June 30, 2008
Institutional Class Shares Contractual 1.25% April 14, 2006 June 30, 2008
AIM Structured Core Fund
Class A Contractual 1.00% March 31, 2006 June 30, 2008
Class B Contractual 1.75% March 31, 2006 June 30, 2008
Class C Contractual 1.75% March 31, 2006 June 30, 2008
Class R Contractual 1.25% March 31, 2006 June 30, 2008
Institutional Class Contractual 0.75% March 31, 2006 June 30, 2008
AIM Structured Growth Fund
Class A Contractual 1.00% March 31, 2006 June 30, 2008
Class B Contractual 1.75% March 31, 2006 June 30, 2008
Class C Contractual 1.75% March 31, 2006 June 30, 2008
Class R Contractual 1.25% March 31, 2006 June 30, 2008
Institutional Class Contractual 0.75% March 31, 2006 June 30, 2008
AIM Structured Value Fund
Class A Contractual 1.00% March 31, 2006 June 30, 2008
Class B Contractual 1.75% March 31, 2006 June 30, 2008
Class C Contractual 1.75% March 31, 2006 June 30, 2008
Class R Contractual 1.25% March 31, 2006 June 30, 2008
Institutional Class Contractual 0.75% March 31, 2006 June 30, 2008
|
FUNDS WITH FISCAL YEAR END OF OCTOBER 31
AIM EQUITY FUNDS
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ -------------
AIM Diversified Dividend Fund
Class A Shares Contractual 1.00% July 1, 2005 June 30, 2008
Class B Shares Contractual 1.65% May 2, 2003 June 30, 2008
Class C Shares Contractual 1.65% May 2, 2003 June 30, 2008
Class R Shares Contractual 1.25% October 25, 2005 June 30, 2008
Investor Class Shares Contractual 1.00% July 15, 2005 June 30, 2008
Institutional Class Shares Contractual 0.75% October 25, 2005 June 30, 2008
AIM Large Cap Basic Value
Fund
Class A Shares Contractual 1.22% July 1, 2005 June 30, 2008
Class B Shares Contractual 1.97% July 1, 2005 June 30, 2008
Class C Shares Contractual 1.97% July 1, 2005 June 30, 2008
Class R Shares Contractual 1.47% July 1, 2005 June 30, 2008
Investor Class Shares Contractual 1.22% July 1, 2005 June 30, 2008
Institutional Class Shares Contractual 0.97% July 1, 2005 June 30, 2008
AIM Large Cap Growth Fund
Class A Shares Contractual 1.32% July 1, 2005 June 30, 2008
Class B Shares Contractual 2.07% July 1, 2005 June 30, 2008
Class C Shares Contractual 2.07% July 1, 2005 June 30, 2008
Class R Shares Contractual 1.57% July 1, 2005 June 30, 2008
Investor Class Shares Contractual 1.32% July 1, 2005 June 30, 2008
Institutional Class Shares Contractual 1.07% July 1, 2005 June 30, 2008
|
as of July 1, 2007
AIM INVESTMENT FUNDS
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ -------------
AIM China Fund
Class A Shares Contractual 2.05% March 31, 2006 June 30, 2008
Class B Shares Contractual 2.80% March 31, 2006 June 30, 2008
Class C Shares Contractual 2.80% March 31, 2006 June 30, 2008
Institutional Class Shares Contractual 1.80% March 31, 2006 June 30, 2008
AIM Developing Markets Fund
Class A Shares Contractual 1.75% July 1, 2005 June 30, 2008
Class B Shares Contractual 2.50% July 1, 2002 June 30, 2008
Class C Shares Contractual 2.50% July 1, 2002 June 30, 2008
Institutional Class Shares Contractual 1.50% October 25, 2005 June 30, 2008
AIM Global Health Care Fund
Class A Shares Contractual 1.30% July 18, 2005 June 30, 2008
Class B Shares Contractual 2.05% July 18, 2005 June 30, 2008
Class C Shares Contractual 2.05% July 18, 2005 June 30, 2008
Investor Class Shares Contractual 1.30% July 18, 2005 June 30, 2008
AIM International Total
Return Fund
Class A Shares Contractual 1.10% March 31, 2006 June 30, 2008
Class B Shares Contractual 1.85% March 31, 2006 June 30, 2008
Class C Shares Contractual 1.85% March 31, 2006 June 30, 2008
Institutional Class Shares Contractual 0.85% March 31, 2006 June 30, 2008
AIM Japan Fund
Class A Shares Contractual 1.70% March 31, 2006 June 30, 2008
Class B Shares Contractual 2.45% March 31, 2006 June 30, 2008
Class C Shares Contractual 2.45% March 31, 2006 June 30, 2008
Institutional Class Shares Contractual 1.45% March 31, 2006 June 30, 2008
AIM LIBOR Alpha Fund
Class A Shares Contractual 0.85% March 31, 2006 June 30, 2008
Class C Shares Contractual 1.10%(3) March 31, 2006 June 30, 2008
Class R Shares Contractual 1.10% March 31, 2006 June 30, 2008
Institutional Class Shares Contractual 0.60% March 31, 2006 June 30, 2008
AIM Trimark Fund
Class A Shares Contractual 2.15% July 1, 2005 June 30, 2008
Class B Shares Contractual 2.90% November 1, 2004 June 30, 2008
Class C Shares Contractual 2.90% November 1, 2004 June 30, 2008
Class R Shares Contractual 2.40% November 1, 2004 June 30, 2008
Institutional Class Shares Contractual 1.90% November 1, 2004 June 30, 2008
AIM Trimark Small Companies
Fund
Class A Shares Contractual 1.50% September 30, 2005 June 30, 2008
Class B Shares Contractual 2.25% September 30, 2005 June 30, 2008
Class C Shares Contractual 2.25% September 30, 2005 June 30, 2008
Class R Shares Contractual 1.75% September 30, 2005 June 30, 2008
Institutional Class Shares Contractual 1.25% September 30, 2005 June 30, 2008
|
See page 8 for footnotes to Exhibit A.
as of July 1, 2007
FUNDS WITH FISCAL YEAR END OF DECEMBER 31
AIM GROWTH SERIES
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ -------------
AIM Small Cap Growth Fund
Class A Shares Contractual 1.50% April 10, 2006 June 30, 2008
Class B Shares Contractual 2.25% April 10, 2006 June 30, 2008
Class C Shares Contractual 2.25% April 10, 2006 June 30, 2008
Class R Shares Contractual 1.75% April 10, 2006 June 30, 2008
Investor Class Shares Contractual 1.50% April 10, 2006 June 30, 2008
Institutional Class Shares Contractual 1.25% April 10, 2006 June 30, 2008
|
(1) The total operating expenses of any class of shares established after the date of this Memorandum of Agreement will be limited to the amount established for Class A Shares plus the difference between the new class 12b-1 rate and the Class A 12b-1 rate.
(2) AIM may establish, amend or terminate voluntary waivers at any time in its sole discretion after consultation with the Trust.
(3) The expense limit shown is the expense limit after Rule 12b-1 fee waivers by A I M Distributors, Inc.
as of July 1, 2007
EXHIBIT "B" - ASSET ALLOCATION FUNDS(1)
AIM GROWTH SERIES
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION(2) CURRENT LIMIT DATE
---- ------------ -------------------------- ----------------- -------------
AIM Conservative Allocation
Fund
Class A Shares Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.23% of average daily net
assets
Class B Shares Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.23% of average daily net
assets
Class C Shares Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.23% of average daily net
assets
Class R Shares Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.23% of average daily net
assets
Institutional Class Shares Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.23% of average daily net
assets
AIM Growth Allocation Fund
Class A Shares Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.21% of average daily net
assets
Class B Shares Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.21% of average daily net
assets
Class C Shares Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.21% of average daily net
assets
Class R Shares Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.21% of average daily net
assets
Institutional Class Shares Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.21% of average daily net
assets
AIM Income Allocation Fund
Class A Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.03% of average daily net
assets
Class B Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.03% of average daily net
assets
Class C Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.03% of average daily net
assets
Class R Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.03% of average daily net
assets
Institutional Class Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.03% of average daily net
assets
|
See page 13 for footnotes to Exhibit B.
as of July 1, 2007
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION(2) CURRENT LIMIT DATE
---- ------------ -------------------------- ----------------- -------------
AIM Independence Now Fund
Class A Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.16% of average daily net
assets
Class B Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.16% of average daily net
assets
Class C Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.16% of average daily net
assets
Class R Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.16% of average daily net
assets
Institutional Class Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.16% of average daily net
assets
AIM Independence 2010 Fund
Class A Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.17% of average daily net
assets
Class B Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.17% of average daily net
assets
Class C Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.17% of average daily net
assets
Class R Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.17% of average daily net
assets
Institutional Class Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.17% of average daily net
assets
AIM Independence 2020 Fund
Class A Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.24% of average daily net
assets
Class B Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.24% of average daily net
assets
Class C Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.24% of average daily net
assets
Class R Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.24% of average daily net
assets
Institutional Class Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.24% of average daily net
assets
|
See page 13 for footnotes to Exhibit B.
as of July 1, 2007
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION(2) CURRENT LIMIT DATE
---- ------------ -------------------------- ----------------- -------------
AIM Independence 2030 Fund
Class A Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.24% of average daily net
assets
Class B Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.24% of average daily net
assets
Class C Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.24% of average daily net
assets
Class R Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.24% of average daily net
assets
Institutional Class Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.24% of average daily net
assets
AIM Independence 2040 Fund
Class A Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.28% of average daily net
assets
Class B Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.28% of average daily net
assets
Class C Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.28% of average daily net
assets
Class R Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.28% of average daily net
assets
Institutional Class Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.28% of average daily net
assets
AIM Independence 2050 Fund
Class A Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.28% of average daily net
assets
Class B Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.28% of average daily net
assets
Class C Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.28% of average daily net
assets
Class R Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.28% of average daily net
assets
Institutional Class Contractual Limit Other Expenses to January 31, 2007 June 30, 2008
0.28% of average daily net
assets
|
See page 13 for footnotes to Exhibit B.
as of July 1, 2007
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION(2) CURRENT LIMIT DATE
---- ------------ -------------------------- ----------------- -------------
AIM International Allocation
Fund
Class A Contractual Limit Other Expenses to October 31, 2005 June 30, 2008
0.18% of average daily net
assets
Class B Contractual Limit Other Expenses to October 31, 2005 June 30, 2008
0.18% of average daily net
assets
Class C Contractual Limit Other Expenses to October 31, 2005 June 30, 2008
0.18% of average daily net
assets
Class R Contractual Limit Other Expenses to October 31, 2005 June 30, 2008
0.18% of average daily net
assets
Institutional Class Contractual Limit Other Expenses to October 31, 2005 June 30, 2008
0.18% of average daily net
assets
AIM Moderate Allocation Fund
Class A Shares Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.12% of average daily net
assets
Class B Shares Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.12% of average daily net
assets
Class C Shares Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.12% of average daily net
assets
Class R Shares Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.12% of average daily net
assets
Institutional Class Shares Contractual Limit Other Expenses to January 1, 2006 June 30, 2008
0.12% of average daily net
assets
AIM Moderate Growth
Allocation Fund
Class A Shares Contractual Limit Other Expenses to April 29, 2005 June 30, 2008
0.12% of average daily net
assets
Class B Shares Contractual Limit Other Expenses to April 29, 2005 June 30, 2008
0.12% of average daily net
assets
Class C Shares Contractual Limit Other Expenses to April 29, 2005 June 30, 2008
0.12% of average daily net
assets
Class R Shares Contractual Limit Other Expenses to April 29, 2005 June 30, 2008
0.12% of average daily net
assets
Institutional Class Shares Contractual Limit Other Expenses to April 29, 2005 June 30, 2008
0.12% of average daily net
assets
|
See page 13 for footnotes to Exhibit B.
as of July 1, 2007
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION(2) CURRENT LIMIT DATE
---- ------------ -------------------------- ----------------- -------------
AIM Moderately Conservative
Allocation Fund
Class A Shares Contractual Limit Other Expenses to April 29, 2005 June 30, 2008
0.14% of average daily net
assets
Class B Shares Contractual Limit Other Expenses to April 29, 2005 June 30, 2008
0.14% of average daily net
assets
Class C Shares Contractual Limit Other Expenses to April 29, 2005 June 30, 2008
0.14% of average daily net
assets
Class R Shares Contractual Limit Other Expenses to April 29, 2005 June 30, 2008
0.14% of average daily net
assets
Institutional Class Shares Contractual Limit Other Expenses to April 29, 2005 June 30, 2008
0.14% of average daily net
assets
|
(1) Other expenses of any class of shares established after the date of this Memorandum of Agreement will be limited to the same amount established for Class A shares.
(2) Other Expenses are defined as all normal operating expenses of the fund, excluding management fees and 12b-1 expenses, if any. The expense limitation is subject to the exclusions as listed in the Memorandum of Agreement.
as of July 1, 2007
EXHIBIT "C" - INSTITUTIONAL MONEY MARKET FUNDS(1,2)
FUNDS WITH FISCAL YEAR END OF MARCH 31
TAX-FREE INVESTMENTS TRUST
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ -------------
Tax-Free Cash Reserve
Portfolio(3)
Cash Management Class Contractual 0.22% June 30, 2005 June 30, 2008
Corporate Class Contractual 0.22% June 30, 2005 June 30, 2008
Institutional Class Contractual 0.22% June 30, 2005 June 30, 2008
Personal Investment Class Contractual 0.22% June 30, 2005 June 30, 2008
Private Investment Class Contractual 0.22% June 30, 2005 June 30, 2008
Reserve Class Contractual 0.22% June 30, 2005 June 30, 2008
Resource Class Contractual 0.22% June 30, 2005 June 30, 2008
|
FUNDS WITH FISCAL YEAR END OF AUGUST 31
SHORT-TERM INVESTMENTS TRUST
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ -------------
Government & Agency Portfolio
Cash Management Class Contractual 0.12% June 30, 2005 June 30, 2008
Corporate Class Contractual 0.12% June 30, 2005 June 30, 2008
Institutional Class Contractual 0.12% June 30, 2005 June 30, 2008
Personal Investment Class Contractual 0.12% June 30, 2005 June 30, 2008
Private Investment Class Contractual 0.12% June 30, 2005 June 30, 2008
Reserve Class Contractual 0.12% June 30, 2005 June 30, 2008
Resource Class Contractual 0.12% June 30, 2005 June 30, 2008
Government TaxAdvantage
Portfolio
Cash Management Class Contractual 0.12% June 30, 2005 June 30, 2008
Corporate Class Contractual 0.12% June 30, 2005 June 30, 2008
Institutional Class Contractual 0.12% June 30, 2005 June 30, 2008
Personal Investment Class Contractual 0.12% June 30, 2005 June 30, 2008
Private Investment Class Contractual 0.12% June 30, 2005 June 30, 2008
Reserve Class Contractual 0.12% June 30, 2005 June 30, 2008
Resource Class Contractual 0.12% June 30, 2005 June 30, 2008
Liquid Assets Portfolio
Cash Management Class Contractual 0.12% June 30, 2005 June 30, 2008
Corporate Class Contractual 0.12% June 30, 2005 June 30, 2008
Institutional Class Contractual 0.12% June 30, 2005 June 30, 2008
Personal Investment Class Contractual 0.12% June 30, 2005 June 30, 2008
Private Investment Class Contractual 0.12% June 30, 2005 June 30, 2008
Reserve Class Contractual 0.12% June 30, 2005 June 30, 2008
Resource Class Contractual 0.12% June 30, 2005 June 30, 2008
|
See page 15 for footnotes to Exhibit C.
as of July 1, 2007
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ -------------
STIC Prime Portfolio
Cash Management Class Contractual 0.12% June 30, 2005 June 30, 2008
Corporate Class Contractual 0.12% June 30, 2005 June 30, 2008
Institutional Class Contractual 0.12% June 30, 2005 June 30, 2008
Personal Investment Class Contractual 0.12% June 30, 2005 June 30, 2008
Private Investment Class Contractual 0.12% June 30, 2005 June 30, 2008
Reserve Class Contractual 0.12% June 30, 2005 June 30, 2008
Resource Class Contractual 0.12% June 30, 2005 June 30, 2008
Treasury Portfolio
Cash Management Class Contractual 0.12% June 30, 2005 June 30, 2008
Corporate Class Contractual 0.12% June 30, 2005 June 30, 2008
Institutional Class Contractual 0.12% June 30, 2005 June 30, 2008
Personal Investment Class Contractual 0.12% June 30, 2005 June 30, 2008
Private Investment Class Contractual 0.12% June 30, 2005 June 30, 2008
Reserve Class Contractual 0.12% June 30, 2005 June 30, 2008
Resource Class Contractual 0.12% June 30, 2005 June 30, 2008
|
(1) The expense limit shown excludes Rule 12b-1 fees.
(2) The expense rate excluding 12b-1 fees of any class of shares established after the date of this Memorandum of Agreement will be the same as existing classes.
(3) The expense limitation also excludes Trustees' fees and federal registration expenses.
as of July 1, 2007
EXHIBIT "D" - VARIABLE INSURANCE FUNDS
AIM VARIABLE INSURANCE FUNDS
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ -------------
AIM V.I. Basic Balanced Fund
Series I Shares Contractual 0.91% July 1, 2005 April 30, 2009
Series II Shares Contractual 1.16% July 1, 2005 April 30, 2009
AIM V.I. Basic Value Fund
Series I Shares Contractual 1.30% January 1, 2005 April 30, 2009
Series II Shares Contractual 1.45% January 1, 2005 April 30, 2009
AIM V.I. Capital Appreciation
Fund
Series I Shares Contractual 1.30% January 1, 2005 April 30, 2009
Series II Shares Contractual 1.45% January 1, 2005 April 30, 2009
AIM V.I. Capital Development
Fund
Series I Shares Contractual 1.30% January 1, 2005 April 30, 2009
Series II Shares Contractual 1.45% January 1, 2005 April 30, 2009
AIM V.I. Core Equity Fund
Series I Shares Contractual 1.30% January 1, 2005 April 30, 2009
Series II Shares Contractual 1.45% January 1, 2005 April 30, 2009
AIM V.I. Diversified Income
Fund
Series I Shares Contractual 0.75% July 1, 2005 April 30, 2009
Series II Shares Contractual 1.00% July 1, 2005 April 30, 2009
AIM V.I. Dynamics Fund
Series I Shares Contractual 1.30% April 30, 2004 April 30, 2009
Series II Shares Contractual 1.45% April 30, 2004 April 30, 2009
AIM V.I. Financial Services
Fund
Series I Shares Contractual 1.30% April 30, 2004 April 30, 2009
Series II Shares Contractual 1.45% April 30, 2004 April 30, 2009
AIM V.I. Global Health Care
Fund
Series I Shares Contractual 1.30% April 30, 2004 April 30, 2009
Series II Shares Contractual 1.45% April 30, 2004 April 30, 2009
AIM V.I. Global Real Estate
Fund
Series I Shares Contractual 1.30% April 30, 2004 April 30, 2009
Series II Shares Contractual 1.45% April 30, 2004 April 30, 2009
AIM V.I. Government
Securities Fund
Series I Shares Contractual 0.73% July 1, 2005 April 30, 2009
Series II Shares Contractual 0.98% July 1, 2005 April 30, 2009
|
as of July 1, 2007
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ -------------
AIM V.I. High Yield Fund
Series II Shares Contractual 0.95% July 1, 2005 April 30, 2009
Series II Shares Contractual 1.20% April 30, 2004 April 30, 2009
AIM V.I. International Growth
Fund
Series I Shares Contractual 1.30% January 1, 2005 April 30, 2009
Series II Shares Contractual 1.45% January 1, 2005 April 30, 2009
AIM V.I. Large Cap Growth
Fund
Series I Shares Contractual 1.01% July 1, 2005 April 30, 2009
Series II Shares Contractual 1.26% July 1, 2005 April 30, 2009
AIM V.I. Leisure Fund
Series I Shares Contractual 1.01% April 30, 2004 April 30, 2009
Series II Shares Contractual 1.26% April 30, 2004 April 30, 2009
AIM V.I. Mid Cap Core Equity
Fund
Series I Shares Contractual 1.30% September 10, 2001 April 30, 2009
Series II Shares Contractual 1.45% September 10, 2001 April 30, 2009
AIM V.I. Money Market Fund
Series I Shares Contractual 1.30% January 1, 2005 April 30, 2009
Series II Shares Contractual 1.45% January 1, 2005 April 30, 2009
AIM V.I. Small Cap Equity
Fund
Series I Shares Contractual 1.15% July 1, 2005 April 30, 2009
Series II Shares Contractual 1.40% July 1, 2005 April 30, 2009
AIM V.I. Technology Fund
Series I Shares Contractual 1.30% April 30, 2004 April 30, 2009
Series II Shares Contractual 1.45% April 30, 2004 April 30, 2009
AIM V.I. Utilities Fund
Series I Shares Contractual 0.93% September 23, 2005 April 30, 2009
Series II Shares Contractual 1.18% September 23, 2005 April 30, 2009
|
MEMORANDUM OF AGREEMENT
(AFFILIATED MONEY MARKET FUND WAIVER)
This Memorandum of Agreement is entered into as of the dates indicated on Exhibit "A" between AIM Counselor Series Trust, AIM Equity Funds, AIM Funds Group, AIM Growth Series, AIM International Mutual Funds, AIM Investment Funds, AIM Investment Securities Funds, AIM Sector Funds, AIM Stock Funds, AIM Summit Fund, AIM Tax-Exempt Funds, AIM Variable Insurance Fundsand Short-Term Investments Trust (each a "Fund" and collectively, the "Funds"), on behalf of the portfolios listed on Exhibit "A" to this Memorandum of Agreement (the "Portfolios"), and A I M Advisors, Inc. ("AIM").
For and in consideration of the mutual terms and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Funds and AIM agree as follows:
1. Each Fund, for itself and its Portfolios, and AIM agree that until the expiration date, if any, of the commitment set forth on the attached Exhibit "A" occurs, as such Exhibit "A" is amended from time to time, AIM will waive advisory fees payable by an Investing Fund in an amount equal to 100% of the net advisory fee AIM receives on the Uninvested Cash (defined below) from the Affiliated Money Market Fund (defined below) in which the Investing Fund invests (the "Waiver").
i. AIM's Fund Accounting Group will calculate, and apply, the Waiver monthly, based upon the average investment of Uninvested Cash made by the Investing Fund during the previous month in an Affiliated Money Market Fund.
ii. The Waiver will not apply to those investing Funds that do not charge an advisory fee, either due to the terms of their advisory agreement, or as a result of contractual or voluntary fee waivers.
iii. The Waiver will not apply to cash collateral for securities lending.
For purposes of the paragraph above, the following terms shall have the following meanings:
(a) "Affiliated Money Market Fund" - any existing or future Fund that holds itself out as a money market fund and complies with Rule 2a-7 under the Investment Company Act of 1940, as amended; and
(b) "Uninvested Cash" - cash available and uninvested by a Fund that may result from a variety of sources, including dividends or interest received on portfolio securities, unsettled securities transactions, strategic reserves, matured investments, proceeds from liquidation of investment securities, dividend payments, or new investor capital.
2. Neither a Fund nor AIM may remove or amend the Waiver to a Fund's detriment prior to requesting and receiving the approval of the Portfolio's Board of Trustee to remove or amend such Waiver. AIM will not have any right to reimbursement of any amount so waived.
Subject to the foregoing paragraphs, each of the Funds and AIM agree to review the then-current waivers for each class of the Funds listed on the Exhibit on a date prior to the Expiration Date to determine whether such waivers should be amended, continued or terminated. The waivers will expire upon the Expiration Date unless the Funds and AIM have agreed to continue them. The Exhibit will be amended to reflect any such agreement.
Nothing in this Memorandum of Agreement is intended to affect any other memorandum of agreement executed by any Fund or AIM with respect to any other fee waivers, expense reimbursements and/or expense limitations.
IN WITNESS WHEREOF, each Fund, on behalf of itself and its Portfolios listed in Exhibit "A" to this Memorandum of Agreement, and AIM have entered into this Memorandum of Agreement as of the dates indicated on Exhibit "A".
AIM COUNSELOR SERIES TRUST
AIM EQUITY FUNDS
AIM FUNDS GROUP
AIM GROWTH SERIES
AIM INTERNATIONAL MUTUAL FUNDS
AIM INVESTMENT FUNDS
AIM INVESTMENT SECURITIES FUNDS
AIM SECTOR FUNDS
AIM STOCK FUNDS
AIM SUMMIT FUND
AIM TAX-EXEMPT FUNDS
AIM VARIABLE INSURANCE FUNDS
By: /s/ John M. Zerr
------------------------------------
Title: Senior Vice President
|
SHORT-TERM INVESTMENTS TRUST
By: /s/ Karen Dunn Kelley
------------------------------------
Title: President
|
A I M ADVISORS, INC.
By: /s/ John M. Zerr
------------------------------------
Title: Senior Vice President
|
EXHIBIT "A"
AIM COUNSELOR SERIES TRUST
PORTFOLIO EFFECTIVE DATE COMMITTED UNTIL --------- -------------- --------------- AIM Floating Rate Fund July 1, 2007 June 30, 2008 AIM Multi-Sector Fund July 1, 2007 June 30, 2008 AIM Select Real Estate Income Fund July 1, 2007 June 30, 2008 AIM Structured Core Fund July 1, 2007 June 30, 2008 AIM Structured Growth Fund July 1, 2007 June 30, 2008 AIM Structured Value Fund July 1, 2007 June 30, 2008 |
AIM EQUITY FUNDS
PORTFOLIO EFFECTIVE DATE COMMITTED UNTIL --------- -------------- --------------- AIM Capital Development Fund July 1, 2007 June 30, 2008 AIM Charter Fund July 1, 2007 June 30, 2008 AIM Constellation Fund July 1, 2007 June 30, 2008 AIM Diversified Dividend Fund July 1, 2007 June 30, 2008 AIM Large Cap Basic Value Fund July 1, 2007 June 30, 2008 AIM Large Cap Growth Fund July 1, 2007 June 30, 2008 |
AIM FUNDS GROUP
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM Basic Balanced Fund July 1, 2007 June 30, 2008 AIM European Small Company Fund July 1, 2007 June 30, 2008 AIM Global Value Fund July 1, 2007 June 30, 2008 AIM International Small Company Fund July 1, 2007 June 30, 2008 AIM Mid Cap Basic Value Fund July 1, 2007 June 30, 2008 AIM Select Equity Fund July 1, 2007 June 30, 2008 AIM Small Cap Equity Fund July 1, 2007 June 30, 2008 |
AIM GROWTH SERIES
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM Basic Value Fund July 1, 2007 June 30, 2008 AIM Global Equity Fund July 1, 2007 June 30, 2008 AIM Mid Cap Core Equity Fund July 1, 2007 June 30, 2008 AIM Small Cap Growth Fund July 1, 2007 June 30, 2008 |
AIM INTERNATIONAL MUTUAL FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM Asia Pacific Growth Fund July 1, 2007 June 30, 2008 AIM European Growth Fund July 1, 2007 June 30, 2008 AIM Global Aggressive Growth Fund July 1, 2007 June 30, 2008 AIM Global Growth Fund July 1, 2007 June 30, 2008 AIM International Core Equity Fund July 1, 2007 June 30, 2008 AIM International Growth Fund July 1, 2007 June 30, 2008 |
AIM INVESTMENT FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM China Fund July 1, 2007 June 30, 2008 AIM Developing Markets Fund July 1, 2007 June 30, 2008 AIM Global Health Care Fund July 1, 2007 June 30, 2008 AIM International Total Return Fund July 1, 2007 June 30, 2008 AIM LIBOR Alpha Fund July 1, 2007 June 30, 2008 AIM Japan Fund July 1, 2007 June 30, 2008 AIM Trimark Endeavor Fund July 1, 2007 June 30, 2008 AIM Trimark Fund July 1, 2007 June 30, 2008 AIM Trimark Small Companies Fund July 1, 2007 June 30, 2008 |
AIM INVESTMENT SECURITIES FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM Global Real Estate Fund July 1, 2007 June 30, 2008 AIM High Yield Fund July 1, 2007 June 30, 2008 AIM Income Fund July 1, 2007 June 30, 2008 AIM Intermediate Government Fund July 1, 2007 June 30, 2008 AIM Limited Maturity Treasury Fund July 1, 2007 June 30, 2008 AIM Money Market Fund July 1, 2007 June 30, 2008 AIM Municipal Bond Fund July 1, 2007 June 30, 2008 AIM Real Estate Fund July 1, 2007 June 30, 2008 AIM Short Term Bond Fund July 1, 2007 June 30, 2008 AIM Total Return Bond Fund July 1, 2007 June 30, 2008 |
AIM SECTOR FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM Energy Fund July 1, 2007 June 30, 2008 AIM Financial Services Fund July 1, 2007 June 30, 2008 AIM Gold & Precious Metals Fund July 1, 2007 June 30, 2008 AIM Leisure Fund July 1, 2007 June 30, 2008 AIM Technology Fund July 1, 2007 June 30, 2008 AIM Utilities Fund July 1, 2007 June 30, 2008 |
AIM STOCK FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM Dynamics Fund July 1, 2007 June 30, 2008 AIM S&P 500 Index Fund July 1, 2007 June 30, 2008 |
AIM SUMMIT FUND
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM Summit Fund July 1, 2007 June 30, 2008 |
AIM TAX-EXEMPT FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM High Income Municipal Fund July 1, 2007 June 30, 2008 AIM Tax-Exempt Cash Fund July 1, 2007 June 30, 2008 AIM Tax-Free Intermediate Fund July 1, 2007 June 30, 2008 |
AIM VARIABLE INSURANCE FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM V.I. Basic Balanced Fund July 1, 2007 April 30, 2009 AIM V.I. Basic Value Fund July 1, 2007 April 30, 2009 AIM V.I. Capital Appreciation Fund July 1, 2007 April 30, 2009 AIM V.I. Capital Development Fund July 1, 2007 April 30, 2009 AIM V.I. Core Equity Fund July 1, 2007 April 30, 2009 AIM V.I. Diversified Income Fund July 1, 2007 April 30, 2009 AIM V.I. Dynamics Fund July 1, 2007 April 30, 2009 AIM V.I. Financial Services Fund July 1, 2007 April 30, 2009 AIM V.I. Global Health Care Fund July 1, 2007 April 30, 2009 AIM V.I. Global Real Estate Fund July 1, 2007 April 30, 2009 AIM V.I. Government Securities Fund July 1, 2007 April 30, 2009 AIM V.I. High Yield Fund July 1, 2007 April 30, 2009 AIM V.I. International Growth Fund July 1, 2007 April 30, 2009 AIM V.I. Large Cap Growth Fund July 1, 2007 April 30, 2009 AIM V.I. Leisure Fund July 1, 2007 April 30, 2009 AIM V.I. Mid Cap Core Equity Fund July 1, 2007 April 30, 2009 AIM V.I. Money Market Fund July 1, 2007 April 30, 2009 AIM V.I. Small Cap Equity Fund July 1, 2007 April 30, 2009 AIM V.I. Technology Fund July 1, 2007 April 30, 2009 AIM V.I. Utilities Fund July 1, 2007 April 30, 2009 |
SHORT-TERM INVESTMENTS TRUST
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- Government TaxAdvantage Portfolio July 1, 2007 June 30, 2008 STIC Prime Portfolio July 1, 2007 June 30, 2008 Treasury Portfolio July 1, 2007 June 30, 2008 |
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the reference to our firm under the caption "Investment Advisory and Other Services -- Other Service Providers -- Counsel to the Trust" in the Statement of Additional Information for the series portfolios of AIM Variable Insurance Funds, which is included in Post-Effective Amendment No. 34 to the Registration Statement under the Securities Act of 1933, as amended (No. 33-57340), and Amendment No. 33 to the Registration Statement under the Investment Company Act of 1940, as amended (No. 811-7452), on Form N-1A of AIM Variable Insurance Funds.
/s/ Ballard Spahr Andrews & Ingersoll, LLP
-------------------------------------------
Ballard Spahr Andrews & Ingersoll, LLP
Philadelphia, Pennsylvania
February 7, 2008
|
AMENDMENT NO. 13
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 statutory trust, is hereby amended as follows:
WHEREAS, the parties desire to amend the Agreement to remove AIM V.I. Small Cap Growth Fund;
NOW THEREFORE, 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. Basic Balanced Fund 0.25%
AIM V.I. Basic Value 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. Diversified Income Fund 0.25%
AIM V.I. Dynamics Fund 0.25%
AIM V.I. Financial Services Fund 0.25%
AIM V.I. Global Health Care Fund 0.25%
AIM V.I. Global Real Estate Fund 0.25%
AIM V.I. Government Securities Fund 0.25%
AIM V.I. High Yield Fund 0.25%
AIM V.I. International Growth Fund 0.25%
AIM V.I. Large Cap Growth Fund 0.25%
AIM V.I. Leisure Fund 0.25%
AIM V.I. Mid Cap Core Equity Fund 0.25%
AIM V.I. Money Market Fund 0.25%
AIM V.I. Small Cap Equity Fund 0.25%
AIM V.I. Technology Fund 0.25%
AIM V.I. Utilities Fund 0.25%"
|
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: May 1, 2007
AIM VARIABLE INSURANCE FUNDS
(on behalf of its Series II Shares)
Attest: /s/ P. Michelle Grace By: /s/ John M. Zerr
----------------------------- ------------------------------------
Assistant Secretary John M. Zerr
Senior Vice President
|
INVESCO Asset Management (Japan) Limited
Code of Ethics
Fundamental Liabilities and Social Responsibilities
1. We will recognize the importance of the basic liabilities and social responsibilities as an asset management company and acquire the trust of the investors by the sound business
In our Global Compliance Manual, there is a clear message that we will have to adhere to the fiduciary duties stipulated as a code of conduct. We consider that to fulfill the fiduciary duty ultimately results in the accomplishment of the fundamental liability as an asset management company. As a principle, we hereby stipulates in the manual for business operations as an investment trust management company that "In conducting the business operations, we will perform the fiduciary duties in compliance with the principle of the investment trust management company." And also in the manual for business operations as a discretionary investment management company that "In conducting the business operations, we will comply with the customer contracts and perform the fiduciary duties in compliance with the principle of the investment advisory company law." This idea reflects the specific articles of Investment
Trust Law (1) and Investment Advisory Law (2) as described below:
(1) "Funds of investors are pooled and managed as investments principally in
securities,~, by a person other than such investors through the use of an
investment trust~, the fruits thereof are distributed to such investors, ~"
(excerpt from Article 1 of ITM Law)
(2) "An investment advisor is entrusted with the whole or any part of the authority to make investment decisions based on an analysis of the value of securities, etc., and also with the authority necessary to invest clients' assets on behalf of such client based on such investment decisions"(Section 4 of Article 2 of Investment Advisory Law)
Social Responsibilities
An asset management company collects money from the investors in general and invests and returns the money with the yields based on the fiduciaries duties. We will have to recognize the sociability and public nature of an asset management company in the financial capital market and be requested to behave ourselves based on the rigid principle and self-responsibility. This will lead to the efficient investment of the funds and contribute to the sound development of the economic society and the protection of the investors.
INVESCO Asset Management (Japan) Limited
Compliance with the laws and regulations
2. We will comply with the related laws and regulations and fulfill the sincere and sound business operations.
COMPLIANCE
INVESVO is regulated by Investment Trust Law, Investment Advisory Law, Securities and Exchange Law, Financial Product Sales Law and other related laws and regulations. In the meanwhile as to the trades with the overseas counterparties, we are also requested to abide by the laws and regulations overseas. This is an asset management company will fulfill the social responsibilities by the compliance with the laws and regulations as well as the sound business operations.
SINCERE AND SOUND BUSINESS OPERATIONS
In compliance with not only the related laws and regulations but also the association rules and the internal rules, we will have to realize our business principle by conducting the daily operations sincerely and soundly. All directors and employees should conduct the daily operations in recognition of the above fact.
PRINCIPLE OF CONDUCT
It is important for each of us to recognize our own responsibilities and powers and understand completely the related laws and regulations as well as the internal rules and
INVESCO Asset Management (Japan) Limited
to implement the scheme which each of us makes the voluntary actions based on our own accord.
Every department makes the own check on a daily routines basis as the first checking function, by the independent internal auditor as the second checking function and the audit by the statutory auditor and the external accountants as the third checking function. This is the realistic checking scheme.
Violation of the laws is the most crucial risk(linked to the social responsibilities) that the management should pay attention in terms of risk management. Once the violation occurs, the management should try to grasp the issues swiftly and having the continuous contact with the related departments out of its responsibilities, and find out the reasons and settle as soon as possible and work out the countermeasures to prevent its recurrence.
Provision of the High Quality of the Asset Management Service
3 We will contribute to the development of the economic society by providing the high quality of the asset management service in compliance with the investment purpose of the investors.
PROVISION OF THE HIGH QUALITY OF THE ASSET MANAGEMENT SERVICE
The investment needs of investors are constantly increasing under the change of the current investment circumstance.
To comply with these needs, we will have to make efforts to increase investment efficiency and quality of the providing service. In terms of the investor protection, we will have to make efforts to strengthen the internal control scheme and risk management set up in line with the diversification and the complexity of the financial capital market.
INVESCO Asset Management (Japan) Limited
At the same time, we will have to make the correct disclosure and accountability to the investors in line with the profundity and complexity of the proposed products.
CONTRIBUTION TO THE ECONOMIC SOCIETY
One of the social roles of an asset management company is to support the economic activities of the investors. We will fulfill our social responsibilities to make best efforts to the efficient investment of the funds, the better performance to respond to the needs of the investors.
First Priority on the Customers' Interests
4 We will fulfill the fundamental responsibility to prioritize the customer's interests and conduct the proper business operations as an asset management company.
FIRST PRIORITY ON THE CUSTOMERS' INTERESTS
The high quality of the service provision is not always the better performance of the funds but the total service including other service, e.g., the efficient and correct operations, proper trade monitoring, etc. In principle, we should prioritize the customer's interests and effort to maximize their interest. We can realize the above service by the better performance of the invested funds, the efficient operations, the proper risk management, the better customer service as well as the compliance with the laws and regulations and the risk management.
PROTECTION OF CONFLICTS OF INTERESTS
As described above, for the better service provision, it is important to the better performance, the compliance with laws and regulations, the establishment of the risk management but in
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considering the maximization of the investors'interests, It is very vital to protect the conflicts of interests.
Transparent Business Operations
5. We will realize the transparent business operations by the appropriate disclosure.
IMPORTANCE OF DISCLOSURE
We can obtain the trust from the investors by the correct disclosure in order to fulfill the fundamental liabilities and the social responsibilities. We should pay attention to the sufficient and correct disclosure of the trusted assets and the corporate information which are vital for the investors' investment decision making. As to the disclosure content and method, etc., we are legally requested to be sound and correct, etc.
TRANSPARENT BUSINESS OPERATIONS
We are liable of the disclosure against the beneficiaries, Customers, investors, and the market and its accomplishment is one of our social responsibilities.
To clarify the content of the daily operations and the judgment base for the everyone, it is our responsibilities to realize the transparent business operations.
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EXCLUSION OF ANTI-SOCIAL FORCES
It is necessary to establish the pre-clearance set-up and the organization to accomplish the social responsibilities to ensure the compliance with the laws and regulations. We are exposed to the risk which we should stand firm against the anti-social forces during the daily operations. As a social member, it is very important for each of us to have the strong faith to stand firm against the anti-social forces which impairs the social order.
COUNTERMEASURES
It is very important for us to proceed the correct operations in the course of the daily operations to comply with the anti-social forces and keep the close communication with the related departments in terms of the protection of the troubles.
Just in case where we encounter the case, to make the swift contact with the related departments and recognize the alliance and cooperation with the other departments and consider the consultation to the outside police offices, etc.
ALLIANCE WITH THE OUTSIDE PARTIES
The most effective way is to stand firm against the anti-social forces. In this regard, we will have to consult with the police officers and outside legal counsels to comply with the swift
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handling. It is very important to have close communications with the police offices, legal counsels to exchange information and comply with this issue.
MONEY LAUNDERING
In accordance with Law concerning Anti-Organization Crimes to have been implemented effective February 1, 2000, the definition of the illegal earnings is more widely defined so that the regulatory reporting on the suspicious trades which used to be limited to the drug trafficking has been expanded substantially to all illegal trades(Criminal Codes, Commercial Codes, Securities and Exchange Law, Foreign Exchange Law, etc.).
It is very important for all directors and employees to recognize and pay attention that the identification of the principal and the report on the suspicious transactions are regulated and so be cautious about the money launderings.
Upon discovery of the money laundering or the case of involvement in the money laundering, immediate report to the person in charge of money laundering and regulatory report to be made accordingly dependent upon the case.
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10.1 FIDUCIARY DUTY
10.1.1 As a fiduciary, Invesco owes an undivided duty of loyalty to its clients. It is Invesco's policy that all employees conduct themselves so as to avoid not only actual conflicts of interest with Invesco clients, but also that they refrain from conduct which could give rise to the appearance of a conflict of interest that may compromise the trust that clients have placed in Invesco.
10.1.2 The personal securities transactions of all employees must be conducted in accordance with the following general principles:
(a) There is duty at all times to place the interests of Invesco clients first and foremost;
(b) All personal securities transactions be conducted in a manner consistent with these rules and in such a manner as to avoid any actual, potential or appearance of a conflict of interest or any abuse of an employee's position of trust and responsibility; and
(c) Employees should not take inappropriate advantage of their positions.
10.1.3 Invesco's policy is to avoid conflicts and, where they unavoidably occur, to resolve them in a manner that clearly places our clients' interests first.
10.1.4 A copy of the AMVESCAP Conflicts of Interest Policy is attached as Appendix 10.1.
10.1.5 The policy on personal securities transactions is set out under the following headings:
(i) Definitions
(ii) Prohibited Personal Transactions
(iii) Transactions Exempt from Personal Share Dealing Rules
(iv) Transactions Exempt from Authorisation but Requiring Reporting
(v) Permitted Transactions Requiring Authorisation and Reporting
(vi) Procedures for Authorisation and Placing Orders
(vii) Procedures for Reporting
(viii) Restrictions on Investing
(ix) Dealing in Invesco PLC
(x) Dealing in Invesco Funds/non Invesco Funds
10.2 DEFINITIONS
10.2.1 "Business Associate" shall mean any person or organisation that provides services to Invesco, that may do business or is being solicited to do business with Invesco or that is associated with an organisation that does or seeks to do business with Invesco.
10.2.2 "High Quality Short-Term Debt Instrument" means, but is not limited to, bankers' acceptances, bank certificates of deposit, commercial paper and repurchase agreements; and means any instrument having a maturity at issuance of less than 366 days and which is treated in one of the highest two rating categories by a recognised statistical rating organisation, or which is unrated but is of comparable quality.
10.2.3 "Security" includes stock, notes, bonds, debentures and other evidences of indebtedness (including loan participation's and assignments), limited partnership interests, investment contracts, and all derivative instruments, such as options and warrants.
10.2.4 "Related Accounts" means:
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(a) accounts held by (or for the benefit of) an employee's spouse, significant other, or any children or relatives who share his/her home;
(b) accounts for which the employee has or shares, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise;
(i) voting power (which includes power to vote, or to direct the voting of, a security), or
(ii) investment power (which includes the power to dispose, or to direct the disposition) of a security; or
(c) accounts held by any other person to whose support the employee materially contributes or in which, by reason of any agreement or arrangement, the employee has or shares benefits substantially equivalent to ownership, including, for example:
(i) arrangements (which may be informal) under which the employee has agreed to share the profits from an investment, and
(ii) accounts maintained or administered by the employee for a relative (such as children or parents) who do not share his/her home.
(d) Families include husbands and wives, significant other, sons and daughters and other immediate family only where those persons take part in discussion or passing on of investment information.
(e) All Invesco employees or members of his family only insofar as the Invesco employee controls or influences the investment decision are subject to the Invesco Code.
10.2.5 Non-Discretionary Account shall mean an account where an employee is deemed to have "no direct or indirect influence or control" over an account i.e.:
(a) investment discretion for such account has been delegated in writing to an independent fiduciary and such investment discretion is not shared with the employee, or decisions for the account are made by a family member or significant other and not by, or in connection with, the employee;
(b) the employee (and, where applicable, the family member or significant other) certifies in writing that he or she has not and will not discuss any potential investment decisions with such independent fiduciary or household member; and
(c) the Compliance Department has determined that the account satisfies the foregoing requirements.
10.2.6 "Pre-Clearance Officer" is the Head of Compliance.
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10.3 PROHIBITED PERSONAL TRANSACTIONS
10.3.1 Privately Issued Securities
(a) Employees may not purchase or permit a Related Account to purchase or acquire any privately-issued securities, other than in exceptional cases specifically approved by the local Chief Executive Officer (e.g., where such investment is part of a family-owned and operated business venture that would not be expected to involve an investment opportunity of interest to any Invesco client).
(b) Requests for exceptions should be made in the first instance to the local Head of Compliance.
10.3.2 Short Selling. An employee may not, sell short a security unless this is specifically related to personal taxation issues. Requests for exceptions should be made to the local Head of Compliance.
10.3.3 Futures. Employees may not write, sell or buy exchange-traded futures, synthetic futures, swaps and similar non-exchange traded instruments.
10.3.4 Deminimus transactions. An employee may request permission to buy or sell a security which would otherwise be the subject of the Blackout restrictions (10.10.1) if that security is so liquid that the transaction would not affect the price per share so that there is no disadvantage to any Invesco client transaction. Transaction unit size or cost should be considered by the local Head of Dealing and Chief Investment Officer.
10.3.4 THE LOCAL CHIEF EXECUTIVE OFFICER IN CONSULTATION WITH THE LOCAL HEAD OF COMPLIANCE MAY IN RARE INSTANCES GRANT EXCEPTIONS FROM THESE TRADING RESTRICTIONS UPON WRITTEN REQUEST. EMPLOYEES MUST DEMONSTRATE HARDSHIP OR EXTRAORDINARY CIRCUMSTANCES. ANY EXCEPTIONS GRANTED WILL BE REPORTED TO THE LOCAL BOARD OF DIRECTORS AT LEAST ANNUALLY.
10.4 TRANSACTIONS EXEMPT FROM PERSONAL DEALING RULES
The following types of share dealing transactions do not need to be approved or reported.
Non Invesco Funds
(a) authorised non- Invesco managed open-end investment schemes (including, mutual funds, open-ended investment companies or unit trusts but not closed-end funds);
Direct Government Obligations
(b) Securities which are direct obligations of the country in which the employee is a resident (e.g., US treasuries for US residents/UK treasuries for UK residents);
Short Term Debt
(c) High quality short-term debt instruments;
Retirement Fund
(d) member choice pension scheme;
Invesco Funds / Invesco Regular Investment Plan
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(e) authorized Invesco managed open-end investment schemes (including, mutual funds, open-ended investment companies or unit trusts but not closed-end funds) by lump sum payment or regular saving plan. For other details please refer to Section 10.12.
10.5 TRANSACTIONS EXEMPT FROM AUTHORISATION BUT REQUIRING REPORTING
10.5.1 The following types of personal share dealing transactions do not need to be approved but must be reported to the Compliance Department.
(a) Transactions in a Non-Discretionary Account.
(b) Investments in the debt obligations of Federal agencies or of state and municipal governments or agencies.
(c) Transactions which are non-intentional on the part of the employee (e.g., receipt of securities pursuant to a stock dividend or merger bonus issues).
(d) Purchases of the stock of a company pursuant to an automatic dividend reinvestment plan or an employee stock purchase plan sponsored by such company.
(e) Receipt or exercise of rights issued by a company on a pro rata basis to all holders of a class of security. Employees must, however, pre-clear transactions for the acquisition of such rights from a third party or the disposition of such rights.
(f) Interests in Securities comprising part of a broad-based, publicly traded market basket or index of stocks, e.g. S & P 500 Index, FTSE 100, DAX.
10.5.2 NOTE THAT ALL OF THESE TRANSACTIONS WHILE NOT SUBJECT TO PRE-CLEARANCE ARE NEVERTHELESS SUBJECT TO ALL OF THE REPORTING REQUIREMENTS BELOW.
10.6 PERMITTED TRANSACTIONS REQUIRING AUTHORISATION AND REPORTING
10.6.1 Transactions in any other Security not dealt with above for either an employee a Related Account are subject to the authorisation and reporting rules set out below.
10.6.2 IPOs. Where there are different amounts of an IPO specified for different investor types (e.g. private and institutional) investment is permitted with the consent of the local Head of Compliance after consultation with the local Chief Investment Officer or his designee.
10.6.3 Private Investment Funds. Employees may invest in interests in private investment funds (i.e., hedge funds) that are established to invest predominantly in public securities and instruments, subject to the pre-clearance procedures, trading restrictions and reporting requirements contained in this Code.
10.6.4 Clubs. Employees may also invest in residential co-operatives and private recreational clubs (such as sports clubs, country clubs, luncheon clubs and the like) for their personal use; such investments are not subject to the pre-clearance procedures, trading restrictions and reporting requirements unless the employee's investing is part of a business conducted by the employee.
10.7 PROCEDURES FOR AUTHORISATIONS
10.7.1 Prior to entering an order for a securities transaction either for the employee or in a Related Account, the employee must complete a Pre-Clearance of Personal Trade Authorisation Form (attached as
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Appendix 10.2) have it signed by the local Chief Investment Officer or his deputy in his absence and submit the completed form to the local Head of Compliance or his deputy in his absence (see Appendix 10.2).
10.7.2 (a) The employee must ensure that he answers all the questions on the Pre-Clearance of Personal Trade Authorisation Form honestly;
(b) In particular, he must check with the relevant dealing desk as to whether there are any client trades ongoing or outstanding in the same stock;
(c) If there are no such client orders he should note the time he checked this with the dealing desk and who reported back to him in writing on the form;
(d) If there are client orders in place or if the transaction would fall in one of the blackout periods specified in Section 10.10.1, he should not submit the form until the blackout period has ended as the authorisation may expire in accordance with Section 10.7.9.
10.7.3 Proposed securities transactions in a Related Account of the local Head of Compliance must be submitted to the local Chief Executive Officer.
10.7.4 After receiving the completed Pre-Clearance of Personal Trade Authorisation Form, the local Head of Compliance or his deputy in his absence will review the information in the form and, as soon as practicable, will decide whether to clear the proposed Personal Transaction, subject to local requirements.
10.7.5 No order for a Personal Transaction for which pre-clearance authorisation is sought may be placed prior to the receipt of written authorisation of the transaction by the Head of Compliance or his deputy in his absence.
10.7.6 The authorisation and date and time of the authorisation must be stated on the Pre-Clearance of Personal Trade Authorisation Form.
10.7.7 The original of the completed form will be kept as part of Invesco's books and records.
10.7.8 (a) If an employee receives permission to trade a security or instrument, the trade must be executed by the close of business on the next business day after the day on which authorisation is given.
(b) The Head of Compliance has the discretion to extend this period.
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10.8 PLACING PERSONAL SHARE DEALING ORDERS
10.8.1 Once a Pre-Clearance of Personal Trade Authorisation Form has been duly signed, a copy will be passed back to the employee and the original maintained by the local Head of Compliance.
10.8.2 The employee may then place his order to deal with an outside broker.
10.8.3 The employee must ensure that a copy of or duplicate contract note is provided to the Head of Compliance either directly from the broker or by the employee.
10.9 PROCEDURES FOR REPORTING
10.9.1 Initial certification and Schedules. Within 10 days of commencing employment at Invesco, each employee shall submit to the Compliance Department:
(a) a signed Initial Certification of Compliance with the Invesco Code (attached as Appendix 10.3); and
(b) a signed Initial Declaration of Personal Holding (attached as Appendix 10.4) listing
(i) all Related Accounts;
(ii) all public and private securities and instruments directly or indirectly held by any Related Account of such employee (other than exempt investments as set out in Section 10.4), with nonpublic securities plainly indicated; and
(iii) directorships (or similar positions) of for-profit, non-profit and other enterprises.
The Compliance Department will give these documents to each employee during the compliance briefing when commencing employment.
10.9.2 (a) Disclosure of Outside Brokerage Account. All employees must receive approval from the Head of Compliance prior to setting up personal share dealing accounts with brokers, either for themselves or Related Accounts.
(b) New employees must disclose existing broker accounts on joining Invesco in Appendix 10.4.
(c) Disciplinary action may be taken against employees who deal through a non-disclosed broker account.
10.9.3 Confirmation and Monthly Statements. Each employee must provide to the Compliance Department:
(a) Duplicate copies of contract notes or confirmations of all transactions for his own and each Related Account;
(b) If these are regularly provided by a broker or custodian, monthly statements for his own and each Related Account not later than 10 days after the end of each month.
10.9.4 Annual Certification. Each employee shall provide to the Compliance Department, not later than 10 days after the end of each calendar year, a signed Annual Certification of Compliance with the Invesco Code of Ethics (attached as Appendix 10.5) containing:
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(a) If the information is not provided in the monthly statement referred to in Section 10.9.2 (b)
(i) the date of each Personal transaction, the title and number of securities and the principal amount of each security involved;
(ii) the nature of the personal transaction (i.e., purchase, sale or any other type of acquisition or disposition);
(iii) the price at which the personal transaction was effected; and
(iv) the name of the broker, dealer or bank with or through which the personal transaction was effected.
(b) If the information is not provided in the monthly statements or any
change from the Initial Declaration of Personal Holding referred to in
Section 10.9.2 (b) a schedule listing:
(i) all Related Accounts;
(ii) all public and private securities and instruments directly or indirectly held by him or any Related Account of such employee (other than exempt investment as set out in Section 10.4), with nonpublic securities plainly indicated; and
(iii) directorships (or similar positions) of for-profit, non-profit and other enterprises.
(c) With respect to non-discretionary accounts, certifications that such employee does discuss any investment decisions with the person making investment decisions;
(d) With respect to any nonpublic security owned by such employee, a statement indicating whether the issuer has changed its name or publicly issued securities during such calendar quarter.
10.10 RESTRICTIONS ON PERSONAL INVESTING
10.10.1 Blackout Periods. An employee may not buy or sell for himself or permit any Related Account to buy or sell, a security or any instrument:
(a) on the same day as any client is trading in the stock;
(b) where he knows that the sale or purchase of the securities are being considered for a client account;
(c) if the employee is a portfolio manager, within 7 calendar days before or after the day on which any client account trades in the same security or instrument or in a security convertible into or exchangeable for such security or instrument (including options) on transactions other than those covered under the paragraph below, or
(d) if the employee is a portfolio manager, within two business days before or after the day on which a pro rata trade, which includes such security, is made for the purpose of rebalancing client accounts.
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10.10.2 (a) In the event there is a trade in a personal and a client account in the same security or instrument within a blackout period, the employee may be required to close out his personal position and to disgorge any profit to a charitable organisation chosen by the local Board of Directors;
(b) If an employee has obtained pre-clearance for a transaction and a subsequent client trade occurs within the blackout period, the Chief Executive Officer in consultation with the Head of Compliance, upon a demonstration of hardship or extraordinary circumstances, may review the application of the disgorgement policy to such transaction and may select to impose alternative restrictions on the employee's personal position.
10.10.3 Trades effected by Invesco for the account of an index fund it manages in the ordinary course of such fund's investment activity will not trigger the blackout period restrictions except where client activity occurs on the same day as the personal transaction pre-clearance request. However, the addition or removal of a security from an index, thereby triggering an index fund trade, would cause employee trades in such security to be blacked-out for the seven prior and subsequent calendar days, as described above.
10.10.4 Short Term Trading Profits.
(a) It is Invesco's policy to restrict the ability of employees to benefit from short-term trading in securities and instruments.
(b) Employees must disgorge profits made on the sale by an employee of any security or instrument held less than 60 days.
(c) Employees will not be permitted to purchase any security or instrument that has been sold by such employee within the prior 60 days.
(d) Employees may be required to disgorge profits made on the sale for his own account or in a Related Account within the 60 days period.
(d) This policy applies to trading in all types of securities and instruments, except where in a particular case the local Chief Executive Officer in consultation with the Head of Compliance has made a specific finding of hardship and it can be demonstrated that no potential abuse or conflict is present (for example, when an employee's request to sell a security purchased within 60 days prior to the request is prompted by a major corporate or market event, such as a tender offer, and the security was not held in client accounts).
10.11 DEALING IN INVESCO PLC
If you wish to purchase and/or sell Invesco PLC shares or ADRs, you must follow the dealing procedure outlined. The only difference is that in additon to the Pre-Clearance Personal Trade Authorisation Form (Appendix 10.2) a request for Authorisation to deal in Invesco shares or ADRs Form must be completed and signed by the requestor and approval will need to be obtained from the the local Chief Investment Officer (or his deputy in his absence) and local Head of Compliance (or his deputy in his absence).
You will not be permitted, however, to deal in these shares/ADRs/options where Invesco PLC is in a closed period. If you are uncertain whether Invesco PLC is in a closed period, you should speak to the local Head of Compliance before commencing the dealing process.
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10.12 DEALING IN Invesco FUNDS
10.12.1 Employees are not required to seek permission to deal in units/shares of Hong Kong authorized open-ended funds managed by Invesco.
10.12.2 Employees are not required to report deals in Invesco managed Hong Kong authorized open-ended funds. The Head of Compliance will monitor such dealing on a post-deal basis by reviewing dealing records obtained from the unitholder/shareholder registry.
10.12.3 Pre-clearance authorisation for dealing in close-ended funds and non-Hong Kong authorized funds managed by Invesco is required.
10.12.4 (a) Staff will be exempt from paying front end load, so long as the units/shares are held for a minimum period of 60 days;
(b) Employees are not prevented from redeeming within the 60 day period; however at the discretion of the local Head of Compliance FEL may be charged on the subscription and redemption orders if there is a redemption within this period;
(c) Full subcription payment must be made on application; no credit will be given in any circumstances; and
(d) Staff should follow the relevant procedures for dealing in Invesco Funds (including the placement of deals between the hours of 9:00am to 5:00pm (Hong Kong time)).
10.12.5 After the 60 day holding period, shares/units purchased may be transferred but only to family members previously nominated on the Relationship Declaration Form on commencement of employment, after marriage or on other notified changes of family relationships. Transfers to people not nominated on the Relationship Declaration Form will not be allowed.
10.12.6 Staff will be allocated "C" shares in Invesco Funds wherever "C" shares are offered. However, transfers will be switched into "A" shares, if the value of the switch is below the normal "C" share threshold (normally USD1,000,000 or as stated in the prospectus).
10.12.7 Subscribing for shares on behalf of other people to take advantage of staff FEL concessions is strictly against company policy and offender may be subject to disciplinary action.
10.13 DEALING IN NON Invesco FUNDS
10.13.1 Employees are not required to seek permission to deal in units/shares of open-ended funds managed by other fund managers.
10.13.2 Employees are not required to report deals in non- Invesco managed open-ended funds.
10.13.3 Pre-clearance authorisation for dealing in close-ended funds managed by other fund managers is required.
10.14 HONG KONG EMPLOYEE REFERRALS
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10.14.1 Invesco employees may invite friends or family to subscribe for units in Invesco Funds. Investors referred in this manner may, at the discretion of the Head of Investor Services, Pooled Products or his/her deputy, be offered a discount on the front end load.
10.14.2 For any subscriptions into Invesco Funds referred by an employee, the employee should put his/her name in the Agent's Stamp Box on the application form and sign the form.
10.14.3 The completed application form should be given to the Head of Investor Services, Pooled Products or his/her deputy who will decide how much discount on the FEL fee should be given to the referred investor and countersigned by the local Head of Compliance or his/her deputy.
10.14.4 The Head of Investor Services, Pooled Products or his/her deputy should write the FEL to be charged on the application form and sign to indicate his approval.
10.14.5 The approved application form should be given to the Retail Administration Department to complete the subscription.
10.15 GIFTS AND ENTERTAINMENT
10.15.1 It is required that all Invesco personnel adhere to the highest standards of ethical conduct, including sensitivity to actual or apparent conflicts of interest. The provision or receipt of gifts or entertainment can create, or can have the appearance of creating, conflicts of interest. In addition, Invesco's clients and their personnel may be subject to similar restrictions regarding the receipt of gifts or entertainment.
10.15.2 This Policy establishes minimum standards to protect our Company. If the laws or regulations establish higher standards, we must adhere to those standards.
10.15.3 For purposes of this Policy, a "Gift" is anything of value given (1) by the Company or its personnel to a Business Associate (as defined in 10.2.1), or to a member of such a person's immediate family, or (2) by a Business Associate to any Invesco personnel, or to a member of such a person's immediate family. Gifts may include, but are not limited to, personal items, office accessories and sporting equipment (e.g., golf clubs, tennis rackets, etc.). For purposes of this Policy, Gifts also include charitable contributions made to or at the request of a Business Associate. For purposes of this Policy, Gifts do not include promotional items of nominal value (e.g., golf balls, pens, etc.) that display the logo of Invesco, or of the Business Associate.
10.15.4 "Entertainment" involves attendance at activities, including but not limited to meals, sporting events, the theatre, parties or receptions, and similar functions. Entertainment requires the presence of both Invesco personnel and the Business Associate; unless personnel from both entities attend, the activity constitutes a Gift. The value of Entertainment includes the cost of the activity itself (for example, the cost of tickets or a meal), as well as the cost of any related activities or services provided (such as prizes, transportation, and lodging in connection with the event). Entertainment does not include research or analysts meetings provided by issuers and attended by investment personnel or industry educational events sponsored by industry groups, so long as such events are for educational or research purposes. All Invesco personnel also should keep in mind that regulators may attempt to treat entertainment as "gifts" for compliance purposes, particularly where the entertainment appears excessive in value or frequency.
10.15.5 The providing or receiving of any Gift or Entertainment that is conditioned upon the Company doing business or not doing business with the Business Associate or any other person are STRICTLY PROHIBITED.
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10.15.6 Gifts. An employee may not retain a gift received from a Business Associate without the approval of the Head of Department and the local Head of Compliance (see Approval Form in Appendix 10.6). Reporting and approval are required for gifts received during festive seasons, including Christmas dinner sponsor, mooncakes, hampers, and flower and fruit baskets
10.15.7 Under no circumstances, the value of gift given or received should exceed USD 200 OR HKD 1,600 PER INDIVIDUAL ANNUALLY. If the value of the gift received is not able to be determined, professional judgment should be used to determine the value of the gift. Should the value exceed USD 200 or HKD 1,600, it should be returned to the donor, passed to the Human Resources or donates to the charity. Approval from Head of Department is required for providing and receiving gift, however PRIOR APPROVAL from local Head of Compliance is not necessary. Post approval from local Head of Compliance is required. If the gift is not giving to any particular person, the gift shall be passed to Human Resources Department and distributed to the staff on a raffle basis. The gift limit is applied to each individual office.
10.15.8 Employees may not give, and must tactfully refuse, any gift of cash, a gift certificate or a gift that is substantially the same as cash. Notwithstanding this requirement, employees may give or receive Lai-See (red envelopes) at Lunar New Year of an amount not more than HK$200 each. In case the amount is more than HK$200, the case must be reported to the Head of Department and the local Head of Compliance. Due to Chinese custom, it may be difficult to return the Lai-See. Therefore, the full amount should be donated to a charitable organization in Hong Kong, and the Business Associate be informed of the donation.
10.15.9 Gifts should not be given to an employee of any securities firm which is making a public offering of a fund advised by Invesco nor given in connection with the acquisition of a new client by Invesco.
10.15.10 Each employee is required to report annually to his/her Department Head all gifts received and made each year. The Department Head is required to report annually to the Compliance Department all gifts received and made by the Department for the whole year. The relevant forms are attached as Appendix 10.7.
10.15.11 Entertainment. Each employee is expected to use professional judgment, subject to review by his or her supervisor, in entertaining and in being entertained by a Business Associate.
10.15.12 Provided that the employee and Business Associate both attend, an employee may accept from a single business partner, or provide to a single person or a Business Partner for Entertainment of value UP TO USD 1,200 OR HKD 9,300 IN A CALENDAR YEAR. Under no circumstances, the value of the entertainment should exceed USD 400 OR HKD 3,100 PER INDIVIDUAL PER EVENT. Approval from Head of Department is required for providing and receiving entertainment, however PRIOR APPROVAL from local Head of Compliance is not necessary. Post approval from local Head of Compliance is required. If the event of the entertainment such as movie tickets is not giving to any particular employee, the event of the entertainment shall be passed to the Human Resources Department and distributed to the staff on a raffle basis. The entertainment limit is applied to each individual office.
10.16 OUTSIDE ACTIVITIES
10.16.1 In order to reduce potential conflicts of interest arising from the participation of employees on the boards of directors of public, private, non-profit and other enterprises, all employees are subject to the following restrictions and guidelines.
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10.16.2 An employee may not serve as a director of a public company without the approval of the local Chief Executive Officer after consultation with the local Head of Compliance.
10.16.3 An employee may serve on the board of directors or participate as an adviser or otherwise, or advisers of a private company only if:
(a) client assets have been invested in such company; and
(b) service on a such board has been approved in writing by the local Chief Executive Officer. The employee must resign from such board of directors as soon as the company contemplates going public, except where the local Chief Executive Officer has determined that an employee may remain on a board. (In any event, an employee shall not accept any compensation for serving as a director (or in a similar capacity) of such company; except with the prior written approval of the local Chief Executive Officer.
(c) service on such a board is directly as a result of the employee position or status at Invesco. In this case any fees received for being a director must be reimbursed to Invesco.
10.16.4 An employee must receive prior written permission from the local Chief Executive Officer before serving as a director, trustee or member of an advisory board of either:
(a) any non-profit or charitable institution; or
(b) a private family-owned and -operated business.
10.16.5 If an employee serving on the board of directors or advisers of any entity comes into possession of material, nonpublic information through such service, he or she must immediately notify his or her local Head of Compliance.
10.17 ECONOMIC OPPORTUNITIES
10.17.1 An Invesco employee shall not take personal advantage of any economic opportunity properly belonging to a Invesco client or to Invesco itself. Such opportunities could arise, for example, from confidential information belonging to a client or the offer of a directorship. Employees must not disclose information relating to a client's intentions, activities or portfolios except:
(a) to fellow employees, or other agents of the client, who need to know it to discharge their duties; or
(b) to the client itself.
10.17.2 Employees may not cause or attempt to cause any client to purchase, sell or hold any Security in a manner calculated to create any personal benefit to the employee or Invesco.
10.17.3 If an employee or immediate family member stands to materially benefit from an investment decision for a Client that the employee is recommending or participating in, the employee must disclose that interest to persons with authority to make investment decisions or to the Head of Compliance. Based on the information given, a decision will be made on whether or not to restrict the employee's participation in causing a client to purchase or sell a Security in which the employee has an interest.
10.17.4 Employees must disclose to those persons with authority to make investment decisions for a client (or to the Head of Compliance if the employee in question is a person with authority to make investment decisions for the client), any beneficial interest that the employee (or immediate family member) has in that Security, or in the issuer thereof, where the decision could create a material benefit to the
APRIL 2007 12
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STAFF ETHICS AND PERSONAL SHARE DEALING
employee (or immediate family member) or the appearance of impropriety. The person to whom the employee reports the interest, in consultation with the Head of Compliance, must determine whether or not the employee will be restricted in making investment decisions.
10.18 SANCTIONS
10.18.1 These rules will be interpreted by the local Head of Compliance, as applicable. Questions of interpretation should be directed in the first instance to the local Head of Compliance or his/her designee or, if necessary, with the Head of Compliance of another Invesco entity.
10.18.2 If advised of a violation of these rules by an employee, the local Chief Executive Officer, (in the case of the local Chief Executive Officer, the local Board of Directors) may impose such sanctions as are deemed appropriate. Any violations of these Rules and sanctions therefore will be reported to the local Board of Directors at least annually.
10.19 ANNUAL REVIEW
A review will be performed at least once a year and a report will be prepared that:
(a) summarises existing procedures concerning personal investing and any changes in the procedures made during the past year;
(b) identifies any violations requiring significant remedied action during the past year; and
(c) identifies any recommended changes in existing restrictions or procedures based on the experience under the Code involving industry practices on developments in applicable laws or regulations .
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INVESCO PLC
CODE OF CONDUCT
INTRODUCTION
Our company's Core Purpose and Mission are a logical beginning point for our Code of Conduct:
INVESCO is committed to "Helping People Worldwide Build Their Financial Security". That Core Purpose underlies our Mission, which is to deliver superior investment performance worldwide. Over the years, INVESCO has developed a set of values that will continue to help us achieve our Core Purpose and Mission. Our values include:
- Working with integrity
- Respecting our employees and clients
- Empowering people
This Code of Conduct ("Code of Conduct" or "Code") has been created to assist us in accomplishing our Core Purpose and Mission. It contains a number of policies and standards which, when taken together, are designed to help define the essence of the conduct of an INVESCO representative. These policies and standards are also intended to provide guidance to INVESCO personnel in fulfilling their obligations to comply with applicable laws, rules and regulations. This Code of Conduct applies to all officers and other employees of INVESCO and its subsidiaries (collectively, "Covered Persons"). These standards are neither exclusive nor complete. Additional company policies and rules can be found in the company's Intranet site, and others may be published to company personnel from time to time. Covered Persons are required to comply with all applicable laws, rules and regulations, whether or not specifically addressed in these policies. For additional guidance, or if you have questions regarding the existence, interpretation or application of any law, rule or regulation, please contact your supervisor, the General Counsel of your business unit or division, or the INVESCO General Counsel.
Our culture is based upon a set of shared values and principles. These include working with integrity and commitment to our clients, colleagues and communities. In practice, this means that our clients' interests must always come first, that Covered Persons should treat each other with respect and consideration, and that INVESCO should
participate as a responsible corporate citizen in every community in which it operates. This commitment is a vital part of our achieving our principal responsibility as a publicly-held company: producing a fair return on our shareholders' capital.
This Code of Conduct contains broad and general principles that supplement the specific policies, procedures and training within each business unit of INVESCO.
YOUR RESPONSIBLITIES
One person's misconduct can damage our entire company's hard-earned reputation and compromise the public's trust in the company. Every Covered Person should therefore become familiar with this Code and abide strictly by its provisions. In brief:
- It is your responsibility at all times to comply with the law and behave in an ethical manner.
- This Code cannot anticipate every possible situation or cover every topic in detail. The company has established special policies to address specific subjects and will update this Code and those specific policies from time-to-time. If you are unclear about a situation, stop and ask for guidance before taking action.
- Failure to obey laws and regulations violates this Code and may expose both you and the company to criminal or civil sanctions. Any violation of this Code or other company policies may result in disciplinary action, up to and including termination of employment. The company may also seek civil remedies from you and even refer criminal misconduct to law enforcement agencies.
- You are responsible for reporting possible violations of this Code to the company (see below).
- If you have a question about a topic covered in this Code or a concern regarding any conduct, please speak with your supervisor or with an appropriate member of the Legal & Compliance Department.
- If you are aware of a violation and are uncomfortable speaking with any of these people or wish to remain anonymous, you may call the toll-free INVESCO Compliance Reporting Line (the "Compliance Reporting Line"). If you are calling from a U.S. or Canadian location dial 1-866-7-3627. For calls from all other locations, dial an international operator and request a collect call to 1-704-943-1136. When asked for your name use "INVESCO." (See further details below.)
- If you are an attorney or an executive officer of the company, you may have additional reporting or other obligations under specific rules applicable to you, such as the POLICY FOR REPORTING BY ATTORNEYS EMPLOYED BY INVESCO PLC AND ITS SUBSIDIARIES, and you should also comply with such rules.
STATEMENT OF GENERAL PRINCIPLES
INVESCO with its subsidiaries and various divisions operates in a highly-regulated and complex environment. There are numerous layers of overlapping, and occasionally conflicting, laws, customs and local practices. This Code of Conduct was designed to provide all of us who are part of the INVESCO group with a clear statement of our firm's ethical and cultural standards.
We operate in major countries and securities markets throughout the world. Generally, we serve our clients as fiduciaries.
Fiduciary businesses are generally held to a higher standard of conduct than other businesses, and as such there are special obligations that apply. The following key duties and principles govern our conduct as fiduciaries:
- Best interests of clients - As fiduciaries, we have a duty to act with reasonable care, skill and caution in the best interests of our clients, and to avoid conflicts of interest.
- Global fiduciary standards - INVESCO seeks to maintain the same high fiduciary standards throughout the world, even though those standards may not be legally required, or even recognized, in some countries.
- Compliance with applicable laws, rules and regulations - We have a duty to comply with the laws, rules and regulations of the jurisdictions in which we operate, and to comply with the terms of our agreements with our clients.
- Client confidentiality - We must maintain the confidentiality of information relating to the client, and comply with the data protection requirements imposed by many jurisdictions.
- Information - Clients must be provided with timely and accurate information regarding their accounts.
- Segregation and protection of assets - Processes must be established for the proper maintenance, control and protection of client assets. Fiduciary assets must be segregated from INVESCO assets and property.
- Delegation of duties - Fiduciary duties should be delegated only when the client consents and where permitted by applicable law. Reasonable care, skill and caution must be exercised in the selection of agents and review of their performance.
- Client guidelines - INVESCO is responsible for making investment decisions on behalf of clients that are consistent with the prospectus, contract, or other controlling document relating to the client's account.
- Relations with regulators - We seek relationships with regulators that are open and responsive in nature.
1. Compliance with Laws, Rules and Regulations
INVESCO strives to ensure that all activity by or on behalf of INVESCO is in compliance with applicable laws, rules and regulations ("applicable laws"). Many of these applicable laws are specifically described in this Code of Conduct and in other INVESCO and business unit policies and procedures. In the conduct of our business, all Covered Persons are required to comply with all applicable laws.
2. Fair and Honest Dealing
Covered Persons shall deal fairly and honestly with INVESCO's shareholders, customers, suppliers, competitors and employees. Covered Persons shall behave in an ethical manner and shall not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing practice.
3. Conflicts of Interest
INVESCO and its Covered Persons must adhere to the highest standards of honest and ethical conduct. These include, but are not limited to, sensitivity to the existence of a conflict of interest or the appearance of a conflict of interest. Conflicts of interest can arise in many ways, and we must all be sensitive to those situations in which they are most likely to be present. A conflict of interest exists when a Covered Person's personal interest interferes, or appears to interfere, in any way with the interests of INVESCO or its clients, or when a Covered Person otherwise takes actions or has interests that may make it difficult to perform his or her company work objectively and effectively. For example, a conflict of interest would arise if a Covered Person, or a member of his or her family, receives improper personal benefits as a result of his or her position with INVESCO.
All Covered Persons owe a duty of undivided and unqualified loyalty to INVESCO and may not use their positions improperly to profit personally or to assist others in profiting at the expense of the company. All Covered Persons are therefore expected and
required to regulate their activities so as to avoid conflicts of interest. In addition, Covered Persons shall promptly communicate to the applicable member of the Legal & Compliance Department any material transaction or relationship that reasonably could be expected to give rise to a conflict of interest so that the company and the Covered Person may take steps to minimize the conflict.
Covered Persons shall not take for personal use (or for use by a family member) any business opportunity learned of during the course of serving INVESCO, using INVESCO property or as a result of such individual's position with INVESCO. To the extent that an employee or officer learns of a business opportunity that is within INVESCO's existing or proposed lines of business, the employee or officer should inform his or her supervisor, the divisional or business unit General Counsel, or the Board of Directors, as appropriate, of the business opportunity and refrain from personally pursuing the matter until such time as INVESCO decides to forego the business opportunity. At no time may any employee or officer utilize any INVESCO property, information or position to generate personal gain or engage or participate in any business that directly competes with INVESCO.
While not all-inclusive, the following examples of outside financial interests will serve to illustrate some of the types of activities that might cause conflicts of interest:
- Ownership or other interest in or employment by any outside concern which does business with INVESCO. This does not apply to stock or other investments in a publicly-held company, provided that the stock and other investments do not, in the aggregate, exceed 5% of the outstanding ownership interests of such company. INVESCO may, following a review of the relevant facts, permit ownership interests which exceed these amounts if management or the Board of Directors, as appropriate, concludes that such ownership interests will not adversely affect INVESCO's business interests or the judgment of the affected Covered Person.
- Conducting business, not on behalf of INVESCO, with any INVESCO vendor, supplier, contractor, agency, or any of their directors, officers or employees.
- Representation of INVESCO by a Covered Person in any transaction in which he or she, or a family member, has a substantial personal interest.
- Disclosure or use of confidential, special or inside information of or about INVESCO, particularly for personal profit or advantage of the Covered Person or a family member of such person.
- Competition with INVESCO by a Covered Person, directly or indirectly, in the purchase, sale or ownership of property or services or business investment opportunities.
As described in more detail in Sections 4, 5 and 6 below, acting as an officer or director of an outside organization, personal share dealing, and the use of material non-public information represent additional areas where conflicts can arise and are of particular sensitivity.
In addition to conflicts of interest between the company and its Covered Persons, conflicts of interest may arise between the company and its clients, including investment funds. Where a Covered Person is trading in securities owned by client accounts, or where a portfolio management team for a hedge fund also manages mutual funds that invest in the same securities, are each examples of situations that may give rise to real or apparent conflicts of interest. All Covered Persons must follow the procedures in place within their respective divisions and business units and must also be sensitive to the types of situations that can give rise to such conflicts or apparent conflicts.
4. Outside Activities and Compensation
No Covered Person shall perform work or render services for any competitor of INVESCO or for any organization with which INVESCO does business or which seeks to do business with INVESCO, outside of the normal course of his or her employment with INVESCO, without the prior written approval of the company. Nor shall any such person be a director, officer, or consultant of such an organization, or permit his or her name to be used in any fashion that would tend to indicate a business connection with such organization, without such approval. Outside organizations can include public or private corporations, partnerships, charitable foundations and other not-for-profit institutions. With the above approval, Covered Persons may receive compensation for such activities.
Service with organizations outside of INVESCO can, however, raise serious regulatory issues, including conflicts of interest and access to material non-public information.
As an outside board member or officer, a Covered Person may come into possession of material non-public information about the outside company or other public companies. It is critical that a proper information barrier be in place between INVESCO and the outside organization, and that the Covered Person does not communicate such information to other Covered Persons in violation of the information barrier.
Similarly, INVESCO may have a business relationship with the outside organization or may seek a relationship in the future. In those circumstances, the Covered Person must not be involved in any way in the business relationship between INVESCO and the outside organization.
INVESCO retains the right to prohibit membership by Covered Persons on any board of directors/trustees or as an officer of an outside organization where such membership might conflict with the best interests of the company. Approval will be granted on a
case-by-case basis, subject to proper resolution of potential conflicts of interest. Outside activities will be approved only if these issues can be satisfactorily resolved.
5. Personal Share Dealing
Purchasing and selling securities in a Covered Person's own account, or accounts over which the Covered Person has access or control, can give rise to potential conflicts of interest. As fiduciaries, we are held to the highest standards of conduct. Improperly gaining advance knowledge of portfolio transactions, or conducting securities transactions based upon information obtained at INVESCO, can be a violation of those standards.
All personal securities transactions must be pre-cleared unless an exemption is obtained. Generally, an exemption will be granted only for Covered Persons whose duties do not give them access to information regarding the sale or purchase of, or the recommendation to sell or purchase, securities in any portfolio. Transactions in certain retirement benefit plans, such as 401(k)s and Money Purchase Plans, and in specified categories of securities, are exempt from pre-clearance. Every Covered Person must also comply with the specific rules in effect in this area for the Covered Person's division or business unit.
INVESCO also has policies that specifically cover personal transactions in the shares and American Depositary Shares of the company. All Covered Persons are obligated to follow those procedures whenever they conduct such transactions.
6. Information Barriers and Material Non-Public Information
In the conduct of our business, Covered Persons may come into possession of material non-public information. This information could concern an issuer, a client, a portfolio, the market for a particular security, or INVESCO itself. The purchase or sale of INVESCO's securities or the securities of other publicly-traded companies while aware of material nonpublic information about such company, or the disclosure of material nonpublic information to others who then trade in such company's securities, is prohibited by this Code of Conduct and by United States and other jurisdictions' securities laws. INVESCO and its subsidiaries have adopted insider trading policies that apply to all Covered Persons. All Covered Persons should review the insider trading policies carefully and follow the policies and procedures described therein. The failure of a Covered Person to comply with the company's insider trading policy may subject him or her to company-imposed sanctions, up to and including termination for cause, whether or not the failure to comply results in a violation of law. You should seek the advice of the applicable divisional or business unit General Counsel on any questions regarding this subject and the company's insider trading policy. All Covered Persons are prohibited from using such information in ways that violate the law, including for personal gain. Non-public information must be kept confidential, which may include keeping it confidential from other Covered Persons.
7. Anti-Bribery and Dealings with Governmental Officials
Special care must be taken when dealing with government customers. Activities that might be appropriate when working with private sector customers may be improper and even illegal when dealing with government employees, or when providing goods and services to another customer who, in turn, will deliver the company's product to a government end user. Many of the countries in which INVESCO conducts its business prohibit the improper influencing of governmental officials or other persons by the payment of bribes, gifts, political contributions, lavish hospitality or by other means. Our policy requires adherence to those restrictions.
Do not directly or indirectly promise, offer or make payment in money or anything of value to anyone, including a government official, agent or employee of a government, political party, labor organization or business entity or a candidate of a political party, or their families, with the intent to induce favorable business treatment or to improperly affect business or government decisions. This policy prohibits actions intended either to influence a specific decision or merely to enhance future relationships. In general, all travel and entertainment that Covered Persons provide to governmental officials must be pre-approved within the appropriate business unit. If approved, a written confirmation that such expenses do not violate local law must be obtained from an appropriate third party (e.g., the business unit's legal counsel or the government official's supervisor).
Covered Persons shall comply with all laws, rules and regulations governing political campaign finance and lobbying activities and shall not engage in any conduct that is intended to avoid the application of such laws to activities undertaken on INVESCO's behalf. In addition, appropriate executive officers shall monitor compliance with lobbyist registration and disclosure requirements by all individuals who act on behalf of INVESCO.
These prohibitions extend to any consultants or agents we may retain on behalf
of INVESCO.
8. Anti-Discrimination and Harassment
INVESCO is committed to providing a work environment that is free of discrimination and harassment. Such conduct, whether overt or subtle, is demeaning, may be illegal, and undermines the integrity of the employment relationship.
Sexual harassment can include unwelcome sexual advances, requests for sexual favors, pressure to engage in a sexual relationship as a condition of employment or promotion, or conduct which creates a hostile or offensive work environment.
Discrimination can take many forms including actions, words, jokes, or comments based upon an individual's race, citizenship, ethnicity, color, religion, sex, veteran status, national origin, age, disability, sexual orientation, marital status or other legally protected characteristic. Any Covered Person who engages in harassment or discrimination will be subject to disciplinary action, up to and including termination of employment.
9. Anti-Money Laundering
In the global marketplace, the attempted use of financial institutions and instruments to launder money is a significant problem that has resulted in the passage of strict laws in many countries. Money laundering is the attempt to disguise money derived from or intended to finance illegal activity including drug trafficking, terrorism, organized crime, fraud, and many other crimes. Money launderers go to great lengths to hide the sources of their funds. Among the most common stratagems are placing cash in legitimate financial institutions, layering between numerous financial institutions, and integrating the laundered proceeds back into the economy as apparently legitimate funds.
All Covered Persons must be vigilant in the fight against money laundering, and must not allow INVESCO to be used for money laundering. Each business unit has developed an anti-money laundering program that is consistent with INVESCO's group-wide policy. Each Covered Person must comply with the applicable program.
10. Antitrust
The laws of many countries are designed to protect consumers from illegal competitive actions such as price fixing and dividing markets. It is INVESCO's policy and practice to compete based on the merits of our products and services. In order to further that policy, Covered Persons must not fix or control prices with competitors, divide up territories or markets, limit the production or sale of products, boycott certain suppliers or customers, unfairly control or restrict trade in any way, restrict a competitor's marketing practices, or disparage a competitor. Covered Persons must never discuss products, pricing or markets with competitors with the intent to fix prices or divide markets.
11. Data Privacy
Data privacy, as it relates both to our clients and our employees, has become a major political and legal issue in many jurisdictions in which we do business. A variety of laws in each of those jurisdictions governs the collection, storage, dissemination, transfer, use, access to and confidentiality of personal information and patient health information. These laws can work to limit transfers of such data across borders and even among affiliated entities in the INVESCO group of companies. INVESCO and its Covered Persons will comply with all provisions of these laws that relate to its business, including
the privacy, security and electronic transmission of financial, health and other personal information. The company expects its Covered Persons to keep all such data confidential and to protect, use and disclose information in the conduct of our business only in compliance with these laws. The company will consider and may release personal information to third parties to comply with law or to protect the rights, property or safety of INVESCO and its customers. In accordance with INVESCO policies, each business unit has developed required disclosures and data security procedures applicable to that business unit. All Covered Persons must comply with the applicable procedures.
With respect to INVESCO Covered Persons, all salary, benefit, medical and other personal information relating to Covered Persons shall generally be treated as confidential. Personnel files, payroll information, disciplinary matters, and similar information are to be maintained in a manner designed to protect confidentiality in accordance with applicable laws. All Covered Persons shall exercise due care to prevent the release or sharing of such information beyond those persons who may need such information to fulfill their job functions. Notwithstanding the foregoing, all personnel information belongs solely to INVESCO and may be reviewed or used by the company as needed to conduct its business.
12. Communications with the Media and Analysts
INVESCO has a long-standing policy of co-operating with the news media and the financial community. This policy is intended to enhance respect for the company, provide accurate information, and achieve our business goals.
INVESCO employs media relations professionals who are responsible for handling all contacts with the news media. INVESCO's Communications and Corporate Affairs Department is responsible for formulating and directing our media relations policy worldwide. Other INVESCO employees may not speak to or disseminate information to the news media unless such contact has been requested and arranged by or coordinated with an INVESCO media relations professional in accordance with the company's media relations policy. Any contact from the news media should be referred promptly and without comment to an INVESCO media relations professional. If you do not know the appropriate media relations professional for your unit, you can refer the contact to the INVESCO Communications and Corporate Affairs Department.
Many countries have detailed rules with regard to the dissemination of information about public companies. In particular, a public company must have procedures for controlling the release of information that may have a material impact on its share price. The Chief Executive Officer and the Chief Financial Officer are responsible for INVESCO's relationships with the financial community, including the release of price sensitive information. Other INVESCO employees may not speak to or disseminate information regarding the company to the financial community (including analysts, investors, shareholders, Company lenders, and rating agencies) unless such contact has been
requested and arranged by the Chief Executive Officer, the Chief Financial Officer or the Investor Relations Group within the Finance Department.
13. Electronic Communications
The use of electronic mail, the Internet and other technology assets is an important part of our work at INVESCO. Used improperly, this technology presents legal and business risks for the company and for individual employees. There are also important privacy issues associated with the use of technology, and related regulations are evolving.
In accordance with INVESCO's Electronic Communications policies, all Covered Persons are required to use information technology for proper business purposes and in a manner that does not compromise the confidentiality of sensitive or proprietary information. All communications with the public, clients, prospects and fellow employees must be conducted with dignity, integrity, and competence and in an ethical and professional manner.
We must not use information technology to: transmit or store materials which are obscene, pornographic, or otherwise offensive; engage in criminal activity; obtain unauthorized access to data or files; commit copyright violations; install personal software without permission; or make Internet statements, without permission, that suggest that the user is speaking on behalf of INVESCO or its affiliates.
14. Gifts and Relationships with Customers and Suppliers
INVESCO seeks to do business with clients and suppliers on a fair and equitable basis. We may not accept gifts of other than nominal value, or lavish entertainment, or other valuable benefits or special favors from customers or suppliers. We must observe any limits imposed by our business unit's policies, local laws, or regulations with respect to the acceptance of gifts or gratuities.
15. International Issues
If you conduct business for INVESCO outside of the U.S., in addition to being familiar with the local laws of the other countries involved, be sure you are familiar with the following U.S. laws and regulations. Violations of these laws can result in substantial fines, imprisonment and severe restrictions on the company's ability to do business.
FOREIGN CORRUPT PRACTICES ACT
The United States Foreign Corrupt Practices Act (FCPA) and similar laws in many other countries have a variety of provisions that regulate business in other countries and with foreign citizens. In essence, these laws make it a crime to promise or give anything of value to a foreign official or political party in order to obtain or keep business or obtain any improper advantage. It is also illegal to make payments to agents, sales
representatives or other third parties if you have reason to believe your gift will be used illegally. Seek advice from the appropriate member of the Legal & Compliance Department for interpretation of the FCPA or similar laws if you are involved in any business dealings that involve foreign countries.
ANTI-BOYCOTT LAWS
From time to time, various countries may impose restrictions upon the ability of businesses in their jurisdiction to engage in commerce with designated individuals, countries or companies. These laws are commonly referred to as boycotts or trade embargoes. It may be against the law to cooperate in any boycotts between foreign countries not sanctioned by the laws of the place where your office is located. All requests for boycott support or boycott-related information must be reported to your supervisor and the member of the Legal & Compliance Department with responsibility for your office.
Similarly, many countries contribute the names of criminal or terrorist organizations or individuals to a common database and require financial institutions to screen customer lists against the database as part of their "Know Your Customer" obligations. We must be aware of, and where appropriate, adhere to any such restrictions.
EMBARGO SANCTIONS
The United States Treasury Department's Office of Foreign Assets Control prohibits U.S. companies and their foreign subsidiaries from doing business with certain countries and agencies and certain individuals. The laws of other countries may have similar types of prohibitions. The regulations vary depending on the country and the type of transaction and often change as countries' foreign policies change. If you are aware of any sensitive political issues with a country in which INVESCO is doing or considering doing business, seek advice from the appropriate member of the Legal & Compliance Department.
16. Political Activities and Lobbying
Covered Persons are encouraged to vote in elections for which they are eligible, and to make contributions supporting candidates or parties of their choice. Covered Persons are also encouraged to express their views on government, legislation and other matters of local or national interest.
Many jurisdictions have imposed severe and complex restrictions on the ability of individuals and companies to make political contributions. You should assume that INVESCO and its Covered Persons are generally prohibited from certain types of political activities, and you must be familiar with the rules in effect for your business unit. No Covered Person may, under any circumstances, use company funds to make political contributions without the prior written approval of a member of the Legal &
Compliance Department, nor may you represent your personal political views as being those of the company.
17. Retention of Books and Records
INVESCO corporate records are important assets. Corporate records include essentially everything you produce as a Covered Person, regardless of its format. A corporate record may be in the form of paper, computer tapes, microfilm, e-mail, or voice mail. It may be something as obvious as a memorandum or a contract or something not as obvious, such as a desk calendar, an appointment book, or an expense record.
INVESCO is required by law to maintain certain types of corporate records, usually for a specified period of time. Failure to retain such documents for such minimum periods could subject INVESCO to penalties and fines, cause the loss of rights, obstruct justice, place INVESCO in contempt of court, or place INVESCO at a serious disadvantage in litigation. However, storage of voluminous records over time is costly. Therefore, INVESCO has established controls to assure retention for required periods and timely destruction of retrievable records, such as paper copies and records on computers, electronic systems, microfiche, and microfilm. Even if a document is retained for the legally required period, liability could still result if a document is destroyed before its scheduled destruction date.
INVESCO and its affiliates are subject to the regulatory requirements of numerous countries and regulatory agencies. Virtually all of them have specific requirements concerning the creation, maintenance and storage of business records. INVESCO expects all Covered Persons to become familiar with and fully comply with the records retention/destruction schedule for the departments and office locations for which they work. If you believe documents should be retained beyond the applicable retention period, consult with the Legal & Compliance Department.
18. Sales and Marketing Materials
INVESCO is committed to building sustained, open, and honest relationships with our customers, and to complying with all relevant regulatory requirements. This requires that all marketing and sales-related materials be prepared under standards approved by the Legal & Compliance Department and, prior to use, reviewed and approved by the appropriate supervisor within a business unit. Covered materials include requests for proposals, client presentations, performance summaries, advertisements, and published market commentaries.
19. Substance Abuse
INVESCO is committed to providing a safe and healthy work place for all employees. The use, possession, sale, transfer, purchase, or being "under the influence" of drugs at
any time while on company premises or on company business is prohibited. The term "drug" includes alcoholic beverages (other than in connection with entertainment events, or in other appropriate settings), prescriptions not authorized by your doctor, inhalants, marijuana, cocaine, heroin and other illegal substances.
20. Confidential Information
Confidential information includes all non-public information that might be of use to competitors, or harmful to the company or its customers, if disclosed. All information (in any form, including electronic information) that is created or used in support of company business activities is the property of INVESCO. This company information is a valuable asset and Covered Persons are expected to protect it from unauthorized disclosure. This includes INVESCO customer, supplier, business partner and employee data. United Kingdom, United States (federal and state) and other jurisdictions' laws may restrict the use of such information and impose penalties for impermissible use or disclosure.
Covered Persons must maintain the confidentiality of information entrusted to them by the company or its customers, vendors or consultants except when disclosure is properly authorized by the company or legally mandated. Covered Persons shall take all reasonable efforts to safeguard such confidential information that is in their possession against inadvertent disclosure and shall comply with any non-disclosure obligations imposed on INVESCO in its agreements with third parties.
Information pertaining to INVESCO's competitive position or business strategies, and information relating to negotiations with Covered Persons or third parties, should be protected and shared only with Covered Persons having a need to know such information in order to perform their job responsibilities.
21. Protection and Proper Use of Company Assets
All Covered Persons shall strive to preserve and protect the company's assets and resources and to promote their efficient use. The standards set forth below are intended to guide Covered Persons by articulating INVESCO's expectations as they relate to activities or behaviors that may affect the company's assets.
Personal Use of Corporate Assets
Theft, carelessness and waste have a direct impact on INVESCO's profitability. Covered Persons are not to convert assets of the company to personal use. Company property should be used for the company's legitimate business purposes and the business of the company shall be conducted in a manner designed to further INVESCO's interest rather than the personal interest of an individual Covered Person. Covered Persons are prohibited from the unauthorized use or taking of INVESCO's equipment, supplies, materials or services. Prior to engaging in any activity on
company time which will result in remuneration to the Covered Person or the use of INVESCO's equipment, supplies, materials or services for personal or non-work related purposes, officers and other Covered Persons shall obtain the approval of the supervisor of the appropriate business unit.
Use of Company Software
Covered Persons use software programs for word processing, spreadsheets, data management, and many other applications. Software products purchased by the company are covered by some form of licensing agreement that describes the terms, conditions and allowed uses. It is the company's policy to respect copyright laws and observe the terms and conditions of any license agreements. Copyright laws in the United States and other countries impose civil and criminal penalties for illegal reproductions and use of licensed software. You must be aware of the restrictions on the use of software and abide by those restrictions. INVESCO business equipment may not be used to reproduce commercial software. In addition, you may not use personal software on company equipment without prior written approval.
Computer Resources/E-mail
The company's computer resources, which include the electronic mail system, belong to INVESCO and not to the Covered Person. They are not intended to be used for amusement, solicitation, or other non-business purposes. While it is recognized that Covered Persons will occasionally use the system for personal communications, it is expected that such uses will be kept to a minimum and that Covered Persons will be responsible and professional in their use of e-mail. The use of the computer systems to make or forward derogatory or offensive remarks about other people or groups is prohibited. E-mail messages should be treated as any other written business communication.
22. INVESCO Intellectual Property
Employees and officers must carefully maintain and manage the intellectual property rights of INVESCO, including patents, trademarks, copyrights and trade secrets, to preserve and protect their value. Information, ideas and intellectual property assets of INVESCO are important to the company's success.
INVESCO's name, logo, trademarks, inventions, processes and innovations are intellectual property assets and their protection is vital to the success of the company's business. The company's and any of its subsidiaries' names, logos and other trademarks and service marks are to be used only for authorized company business and never in connection with personal or other activities unless appropriately approved and in accordance with company policy. In addition, our Covered Persons must respect the intellectual property rights of third parties. Violation of these rights can subject both you and the company to substantial liability, including criminal penalties.
Any work product produced in the course of performing your job shall be deemed to be a "work made for hire" and shall belong to INVESCO and is to be used only for the benefit of INVESCO. This includes such items as marketing plans, product development plans, computer programs, software, hardware and similar materials. You must share any innovations or inventions you create with your supervisor so that the company can take steps to protect these valuable assets.
23. Integrity and Accuracy of Financial Records
The preparation and maintenance of accurate books, records and accounts is required by law and essential to the proper discharge of financial, legal and reporting obligations. All Covered Persons are prohibited from directly or indirectly falsifying or causing to be false or misleading any financial or accounting book, record or account. In addition, all financial data must be completely and accurately recorded in compliance with applicable law and INVESCO's accounting policies and procedures. A Covered Person may violate this section by acting or by failing to act when he or she becomes aware of a violation or potential violation of this section.
24. Disclosure in Reports and Documents.
Filings and Public Materials. As a public company, it is important that the company's filings with UK authorities, the United States Securities and Exchange Commission (the "SEC") and other U.S. federal, state, domestic and international regulatory agencies are full, fair, accurate, timely and understandable. The company also makes many other filings with the SEC and other UK, U.S. and international regulatory agencies on behalf of the funds that its subsidiaries and affiliates manage. Further, the company prepares mutual fund account statements, client investment performance information, prospectuses and advertising materials that are sent out to its mutual fund shareholders and clients.
Disclosure and Reporting Policy. The company's policy is to comply with all applicable disclosure, financial reporting and accounting regulations applicable to the company. The company maintains the highest commitment to its disclosure and reporting requirements, and expects and requires all Covered Persons to record information accurately and truthfully in the books and records of the company.
Information for Filings. Depending on his or her position with the company, a Covered Person may be called upon to provide necessary information to assure that the company's public reports and regulatory filings are full, fair, accurate, timely and understandable. The company expects all Covered Persons to be diligent in providing accurate information to the inquiries that are made related to the company's public disclosure requirements.
Disclosure Controls and Procedures and Internal Control Over Financial Reporting. Covered Persons are required to cooperate and comply with the company's disclosure controls and procedures and internal controls over financial reporting so that the company's reports and documents filed with the UK authorities, the SEC and other U.S. federal, state, domestic and international regulatory agencies comply in all material respects with applicable laws, and rules and regulations, and provide full, fair, accurate, timely and understandable disclosure.
25. Improper Influence on the Conduct of Audits
Every Covered Person must deal fairly and honestly with outside accountants performing audits, reviews or examinations of INVESCO's and its subsidiaries' financial statements. To that end, no Covered Person of INVESCO may make or cause to be made a materially false or misleading statement (or omit facts necessary to make the statements made not misleading) in connection with an audit, review or examination of financial statements by independent accountants or the preparation of any document or report required to be filed with a governmental or regulatory authority. Covered Persons of INVESCO also are prohibited from coercing, manipulating, misleading or fraudulently inducing any independent public or certified public accountant engaged in the performance or review of financial statements that are required to be filed with a governmental or regulatory authority if he or she knows or should have known that his or her actions could result in making those financial statements materially misleading.
26. Standards for INVESCO's Financial Officers
INVESCO's Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer (the "Financial Officers") are required to take all reasonable steps to provide full, fair, accurate, timely and understandable disclosures in the reports and documents that INVESCO files with or submits to the SEC and other regulatory bodies and in other public communications made by INVESCO. In the event that a Financial Officer learns that any such report, document or communication does not meet this standard and such deviation is material, then the Financial Officers are required to review and investigate such deviation, advise the Board of Directors or the Audit Committee of the Board of Directors regarding the deviation and, where necessary, revise the relevant report, document or communication.
Although a particular accounting treatment for one or more of INVESCO's operations may be permitted under applicable accounting standards, the Financial Officers may not authorize or permit the use of such an accounting treatment if the effect is to distort or conceal INVESCO's true financial condition. The accounting standards and treatments utilized by INVESCO must, in all instances, be determined on an objective and uniform basis and without reference to a single transaction or series of transactions and their impact on INVESCO's financial results for a particular time period. Any new or novel accounting treatment or standard that is to be utilized in the preparation of INVESCO's
financial statements must be discussed with INVESCO's Audit Committee and its independent auditors.
27. Policy and Procedures on Reporting Potential Material Violations
INVESCO's Audit Committee has adopted the following statement of policy with respect to the reporting by employees of potential material violations of this Code of Conduct, laws or regulations and our related non-retaliation policy:
"INVESCO strives to ensure that all activity by or on behalf of INVESCO is in compliance with applicable laws, rules and regulations. INVESCO and its employees must adhere to the highest standards of honest and ethical conduct. Employees of INVESCO and its subsidiaries are affirmatively required to report possible violations of the INVESCO Code of Conduct, laws or regulations promptly to their manager, a Human Resources Director at the employee's site, the employee's Legal and Compliance Department representative, or via the 24-hour toll-free, anonymous INVESCO Compliance Reporting Line.
INVESCO will not permit retribution, harassment, or intimidation of any employee who in good faith reports a possible violation. Specifically, INVESCO policy prevents any employee from being subject to disciplinary or retaliatory action by INVESCO or any of its employees or agents as a result of the employee's good faith:
- Disclosing information to a government or law enforcement agency, where the employee has reasonable cause to believe that the information discloses a violation or possible violation of federal or state law or regulation; or
- Providing information, causing information to be provided, filing, causing to be filed, testifying, participating in a proceeding filed or about to be filed, or otherwise assisting in an investigation or proceeding regarding any conduct that the employee reasonably believes involves a violation of: (1) any criminal law relating to securities fraud, mail fraud, bank fraud, or wire, radio, television or internet fraud; (2) any rule or regulation of the United States Securities and Exchange Commission or any other national, state or provincial securities regulatory authority; or any provision of applicable law relating to fraud against shareholders, where, with respect to investigations, such information or assistance is provided to or the investigation is being conducted by a national, state or provincial regulatory agency, a member of any parliamentary body, or a person at INVESCO with supervisory or similar authority over the employee.
However, employees who file reports or provide evidence which they know to be false or without a reasonable belief in the truth and accuracy of such information will not be protected by the above policy statement and may be subject to disciplinary action, including termination of their employment."
If you are a Covered Person with complaints or concerns regarding:
(i) violations of this Code of Conduct or the rules mentioned herein;
(ii) violations of laws or regulations generally involving INVESCO; or
(iii) questionable accounting matters, internal accounting controls, auditing matters, breaches of fiduciary duty or violations of United States or foreign securities laws or rules (collectively "Accounting Matters"), including:
- fraud or deliberate error in the preparation, evaluation, review or audit of any financial statement of INVESCO;
- fraud or deliberate error in the recording and maintaining of financial records of INVESCO;
- deficiencies in or non-compliance with INVESCO's internal accounting controls;
- misrepresentation or false statements to or by a senior officer or accountant regarding a matter contained in the financial records, financial reports or audit reports of INVESCO;
- deviation from full and fair reporting of INVESCO's financial condition; or
- fraudulent or criminal activities engaged in by officers, directors or employees of INVESCO;
you may report your concerns in any of three ways:
YOU CAN SPEAK WITH YOUR SUPERVISOR. We encourage you to first contact your immediate supervisor, who is in turn responsible for informing INVESCO's Compliance Reporting Line (described below) of any concerns raised.
YOU CAN SPEAK DIRECTLY WITH THE BUSINESS UNIT OR DIVISIONAL GENERAL COUNSEL. If you prefer not to discuss a concern with your own supervisor, you may instead contact the General Counsel of your business unit or division directly. You are also free to e-mail the business unit or divisional General Counsel at the appropriate e-mail address. Such person will then likewise be responsible for informing INVESCO's Compliance Reporting Line (described below) of any concerns raised.
YOU CAN CALL OUR COMPLIANCE REPORTING LINE. You may also call the INVESCO Compliance Reporting Line. If you are calling from a U.S. or Canadian location dial 1-866-7-3627. For calls from all other locations, dial an international operator and request a collect call to 1-704-943-1136. When asked for your name use "INVESCO." You can
use the Compliance Reporting Line to report possible violations or to check on the status of a previously filed report. You can also report to the Compliance Reporting Line if you believe that a report previously made to company management, your supervisor, other management personnel or the applicable business unit or divisional General Counsel has not been addressed.
The Compliance Reporting Line is administered by an outside vendor. The telephone operators for the Compliance Reporting Line have been trained to receive your call. The Compliance Reporting Line is available 24 hours a day, seven days a week. All calls will be answered by a live person. Calls are not recorded and are not able to be traced. You have the option to remain anonymous. If you remain anonymous, you will be given a numeric code so that you may call back and ask for follow up. You will be guided through the call and prompted by appropriate questions from the operator. You will be given a date on which you can call back and receive a follow up report. Once the call is completed, a report will be generated and sent to the appropriate departments within INVESCO based on the subject matter of your call. You are urged to call back for follow up, because in the event more information is required, this will be an opportunity for you to provide those details.
If you report a possible violation, regardless of the method that you use to make the report, it is important that you provide as much detail as possible, including names, dates, times, locations and the specific conduct in question. Only with sufficient specific information can INVESCO adequately investigate the reported action.
Your submission of information will be treated in a confidential manner to the extent reasonably possible. Please note, however, that if an investigation by INVESCO of the activities you have reported takes place, it may be impossible for INVESCO to maintain the confidentiality of the fact of the report or the information reported.
Complaints relating to Accounting Matters will be reviewed under Audit Committee direction and oversight by such persons as the Audit Committee determines to be appropriate. All other matters will be reviewed under the direction and oversight of the appropriate departments within INVESCO, usually also including the Legal & Compliance Department. Prompt and appropriate corrective action will be taken when and as warranted in the judgment of the Audit Committee or other reviewing department.
28. Disclosure; Amendments
To the extent required by law, the company shall publicly (e.g., in its Annual Report on Form 20-F and/or on its website) disclose this Code of Conduct and its application to all of the company's Covered Persons.
This Code may only be amended by INVESCO's Board of Directors or a duly authorized committee thereof. To the extent required by law, amendments to the Code of Conduct shall be disclosed publicly. As set forth in Item 16B of the company's Annual Report on Form 20-F for 2005 filed with the SEC, the company has elected to disclose certain amendments to the Code that affect, and any waivers of the Code granted to, Financial Officers on the company's Web site in accordance with the requirements of Instruction 4 to Item 16B.
29. Waivers of the Code.
a. Waivers for Executive Officers. Any change in or waiver of this Code for executive officers (as defined in Rule 3b-7 under the Securities Exchange Act of 1934, "Executive Officers") of the company may be made only by the Board of Directors or a committee thereof in the manner described in Section 29(d) below, and any such waiver (including any implicit waiver) shall be promptly disclosed to shareholders as required by the corporate governance listing standards of the New York Stock Exchange and other applicable laws, rules and regulations.
b. Waivers for Other Covered Persons. Any requests for waivers of this Code for Covered Persons other than Executive Officers of the company may be made to the Legal and Compliance Department in the manner described in Section 29(e) below.
c. Definition of Waiver. For the purposes of the Code, the term "waiver" shall mean a material departure from a provision of the Code. An "implicit waiver" shall mean the failure of the company to take action within a reasonable period of time regarding a material departure from a provision of the Code that has been made known to an Executive Officer.
d. Manner for Requesting Executive Officer Waivers.
i. Request and Criteria. If an Executive Officer wishes to request a waiver of this Code, the Executive Officer may submit to the Global Compliance Director or the Legal and Compliance Department a written request for a waiver of the Code only if he/she can demonstrate that such a waiver:
A. is necessary to alleviate undue hardship or in view of unforeseen circumstances or is otherwise appropriate under all the relevant facts and circumstances;
B. will not be inconsistent with the purposes and objectives of the Code;
C. will not adversely affect the interests of clients of the company or the interests of the company; and
D. will not result in a transaction or conduct that would violate provisions of applicable laws or regulations.
ii. Discretionary Waiver and Response. The Legal and Compliance Department will forward the waiver request to the Board of Directors or a committee thereof for consideration. Any decision to grant a waiver from the Code shall be at the sole and absolute discretion of the Board of Directors or committee thereof, as appropriate. The Company Secretary will advise the Legal and Compliance Department in writing of the Board of Director's decision regarding the waiver, including the grounds for granting or denying the waiver request. The Legal and Compliance Department shall promptly advise the Executive Officer in writing of the Board of Director's decision.
e. Manner for Requesting Other Covered Person Waivers.
i. Request and Criteria. If a Covered Person who is a non-Executive Officer wishes to request a waiver of this Code, such Covered Person may submit to the Legal and Compliance Department a written request for a waiver of the Code only if he/she can demonstrate that such a waiver would satisfy the same criteria set forth in Section 29(d).
ii. Discretionary Waiver and Response. The Legal and Compliance Department shall forward the waiver request to the General Counsel of the company for consideration. The decision to grant a waiver shall be at the sole and absolute discretion of the General Counsel of the company. The General Counsel will advise the Legal and Compliance Department in writing of his/her decision regarding the waiver, including the grounds for granting or denying the waiver request. The Legal and Compliance Department shall promptly advise the Covered Person in writing of the General Counsel's decision.
30. Internal Use. This Code is intended solely for the internal use by the company and does not constitute an admission, by or on behalf of the company, as to any fact, circumstance, or legal conclusion.
CONCLUSION
As Covered Persons, each of us is obligated to read and understand this Code of Conduct and our relevant business unit's policies and procedures. No code of conduct, however, can address every situation for which guidance may be necessary. If you are unclear about a situation, stop and ask for guidance before taking action. All Covered
Persons are expected to abide by both the letter and spirit of this Code. Covered Persons are also expected to perform their work with honesty and integrity in any areas not specifically addressed by the Code. INVESCO will investigate reported violations of the Code and, if violations are found, may take disciplinary action, if appropriate, against the individuals involved, and may make reports, if appropriate, to civil, criminal or regulatory authorities. Nothing in this Code restricts the company from taking any disciplinary action on any matters pertaining to the conduct of a Covered Person, whether or not expressly set forth in the Code. Any questions regarding the scope or interpretation of this Code should be referred to the appropriate Compliance or Legal officer.
Revised: July 2006
AIM TRIMARK INVESTMENTS
ADDENDUM TO THE
AMVESCAP CODE OF CONDUCT
EFFECTIVE DATE: OCTOBER 1, 2006 REVISED DATE: APRIL 2, 2007
1. INTRODUCTION
Every employee of AIM Trimark Investments ("AIM Trimark") is considered an employee of AMVESCAP PLC and is subject to the AMVESCAP Code of Conduct ("AMVESCAP Code"). All officers, directors and employees of AIM Trimark, including temporary, part-time, contract, and seasonal personnel, are expected to be familiar with the AMVESCAP Code and this Addendum and are required to provide an annual certificate accepting the AMVESCAP Code and this Addendum and acknowledging the obligation to abide by their terms.
The AMVESCAP Code has general application globally. It cannot address specific circumstances which may be required by local regulation or custom. This Addendum, together with the other Policies referred to below, is intended to provide supplementary guidance and more detailed procedures where needed to give effect to the AMVESCAP Code for AIM Trimark employees. The other AIM Trimark policies which deal directly and in a general manner with employee conduct include:
- AIM Trimark Personal Trading Policy -- Policy D-7
- Personal Conflicts and Self-Dealing- Policy B-10
- Gifts and Entertainment - Policy D-6
- Corporate Systems Policies
2. FIDUCIARY OBLIGATIONS
In AIM Trimark's capacity as a money manager, AIM Trimark stands in a fiduciary relationship to its clients. Those clients to whom the fiduciary obligations are owed are the mutual funds and investment accounts that we manage, and the holders of fund securities or the clients in the investment accounts, as applicable. (For purposes of this Addendum, the terms "clients" and "client accounts" always refers to the investment funds that we manage or sub-advise or other accounts in respect of which AIM Trimark has been engaged to provide money management services, and do not refer to business partners who distribute our products.)
In carrying out our investment management responsibilities, AIM Trimark must at all times act honestly, in good faith and in the best interests of our clients. This means that the interests of our clients must always and in every instance come ahead of the interests of AIM Trimark or AMVESCAP or of any personal interest of an employee.
The fiduciary nature of our business means that our actions and our policies are governed by the principles of:
- TRANSPARENCY: it is not enough that AIM Trimark put client interests ahead of our own interests; but rather, we must be seen to do so, and the appearance of conflicts is to be avoided where possible
- ACCOUNTABILITY: AIM Trimark must account to our clients as to how we manage their money, through appropriate and clear reporting and disclosure
- COMPETENCE: AIM Trimark must act competently and with the appropriate level of care, skill and diligence in the management of client funds.
Regard shall be had to these principles in the interpretation and application of the AMVESCAP Code, this Addendum and related policies and procedures.
3. AIM TRIMARK PERSONAL TRADING POLICY
Policy D-7, AIM Trimark Personal Trading Policy, covers the following topics in detail and should be referred to for the definitive rules in this regard.
3.1 RESTRICTION ON THE PERSONAL TRADING ACTIVITY OF AIM TRIMARK EMPLOYEES
Employees of AIM Trimark may not engage in a personal securities transaction unless it has been pre-cleared by the AIM Trimark Compliance department following a determination that the transaction does not give rise to an actual or potential conflict of interest with activity by a client account in the same security. Employees are required to report transactions and holdings to the AIM Trimark Compliance department on a regular basis. The pre-clearance and reporting requirements also apply to Covered Accounts. Covered Accounts are accounts which an Employee is financially interested in or controls, and may include (but are not limited to) accounts of a spouse, minor child, relative, friend or personal business associate.
4. PERSONAL CONFLICTS OF INTEREST
4.1 UNDERLYING PRINCIPLE
Employees must avoid taking any actions or placing themselves in circumstances that result in an actual or potential conflict between their own personal interests and the interests of AIM Trimark, AMVESCAP or client accounts. Employees must never profit personally at the expense of AIM Trimark, AMVESCAP or client accounts, and they must refrain from deliberately or knowingly doing things which may be otherwise detrimental to the interests of AIM Trimark, AMVESCAP or client accounts.
Policy D-7, AIM Trimark Personal Trading Policy, and Policy B-10, Personal Conflicts and Self-Dealing, cover certain of the following topics in detail and should be referred to for the definitive rules in that regard.
4.2 POSSESSION OF INSIDE INFORMATION
Any director, officer or employee who possesses or believes that he or she may possess material undisclosed or non-public information about any issuer of securities which could put such person in a conflict of interest with AIM Trimark or any of our client accounts must report the matter immediately to the AIM Trimark Chief Compliance Officer (or designee), who will review the matter and provide further instructions as to the appropriate handling of the information.
4.3 INSIDER TRADING & TIPPING
Trading on or communicating, other than to persons with a need to know, 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. AIM Trimark forbids its directors and employees from trading, either personally or on behalf of others (including client accounts managed by AIM Trimark), on material non-public information or communicating material non-public information to others in violation of the law. The communicating or passing on of this type of information is sometimes known as "tipping" and trading on such information is "insider trading".
4.4 PERSONAL TRADING
Personal securities transactions of all Employees of AIM Trimark are subject to restrictions and pre-clearance, as discussed above. Personal securities transactions of independent directors of AIM Trimark's corporate funds and members of the AIM Trimark Fund Advisory Boards are not subject to the pre-clearance or reporting requirements, except with respect to trading in the securities of AMVESCAP or shares of any closed-end investment company or investment trust on which such independent director may serve in a director or trustee capacity.
4.5 SHORT TERM TRADING IN MUTUAL FUNDS AND SEG FUNDS
Employees are prohibited from engaging in excessive short-term trading in any investment fund or similar investment vehicle (including segregated funds and variable annuity products) for which AIM Trimark is the manager or investment advisor or in which an AIM Trimark fund is an ingredient, in the case of fund-of-fund products. Determination of behaviour constituting "excessive short-term trading" will be as set out in Policy D-4, Market Timing.
4.6 PERSONAL BORROWING AND LENDING
Except with the prior written approval of the AIM Trimark Compliance department, employees may not borrow from or lend personal funds or other personal property to any customer of AIM Trimark or third party vendor who has a business relationship or potential business relationship with AIM Trimark. This prohibition does not operate to prohibit employees borrowing from recognized financial institutions such as banks, trust companies and credit card companies with whom AIM Trimark does or may do business.
4.7 OUTSIDE ACTIVITIES
Employees may not undertake or engage in a business activity that is in competition or in conflict with AIM Trimark's business unless they have received the written consent of the employee's manager and the approval of the AIM Trimark Compliance department. For this purpose, "undertaking or engaging in a business activity" includes any direct or indirect involvement with an enterprise for which the employee
may receive financial compensation or return. A business will be deemed to be in competition or conflict with AIM Trimark if the business offers or provides products or services of a type similar to products or services offered by AIM Trimark or AMVESCAP. This prohibition does not operate to prohibit employees from making personal investments in public issuers that are in a similar business to AIM Trimark or AMVESCAP.
In addition, all Employees of AIM Trimark are prohibited from serving as directors/trustees of organizations (including charitable organizations) except with the prior written approval of AIM Trimark's President and Chief Executive Officer. All such requests must be submitted to the AIM Trimark Compliance department for consideration prior to submission to AIM Trimark's President and Chief Executive Officer.
4.8 DUAL REGISTRATION
Employees who are registered with a securities regulatory authority as a representative or officer of both AIM Funds Management Inc. and AIM Mutual Fund Dealer Inc. have duties and responsibilities equally to both registered entities. Dually registered employees must allocate sufficient time to support each entity and take into consideration the impact on both entities when making policy decisions. Dually registered employees must disclose in writing to their clients, at account opening and on an annual basis, the fact that the employee is registered with both AIM Funds Management Inc. and AIM Mutual Fund Dealer Inc. and that there are policies and procedures in place to minimize the potential for conflicts of interest resulting from the dual registration.
Employees licensed by any regulatory or professional body, are expected to adhere to any requirements imposed by those entities. Except with the prior written consent of the Chief Compliance Officer, no employee may be licensed or registered with, or as a representative of, any entity other than AIM Funds Management Inc. and AIM Mutual Fund Dealer Inc. This includes but is not limited to securities dealers, scholarship plan dealers, insurance agents, real estate agents, mortgage brokers and other similar entities.
5. POLITICAL CONTRIBUTIONS AND ACTIVITY
Employees, as private citizens, should feel free to exercise their rights and duties in any political or civic process.
AIM Trimark however, does not make political contributions nor does AIM Trimark participate in political activities, at any level of government. AIM Trimark does not make corporate donations to any political party or cause. For example:
- no purchases of seats or tables at fundraising events
- no contributions to political parties or candidate campaigns (includes local or municipal politics)
- no use of AIM Trimark resources (e.g. photocopying, printing, use of office space) in aid of political activity
No employee may make any such political contributions on behalf of AIM Trimark. Employees should be careful not to give the impression that personal political views and beliefs are those of AIM Trimark.
Any departure from the foregoing must receive the prior approval of the AIM Trimark Compliance department.
6 LOCAL ADMINISTRATION
6.1 CODE OF ETHICS COMMITTEE
Administration of the AMVESCAP Code, this Addendum, and related policies to employees of AIM Trimark is overseen by AIM Trimark's Code of Ethics Committee.
6.2 CODE OF ETHICS OFFICER
The AIM Trimark Chief Compliance Officer is the AIM Trimark designated Code of Ethics Officer.
6.3 AMENDMENTS AND MODIFICATIONS
Any amendments or modifications to this Addendum are effective upon approval of the Chief Compliance Officer and the Chief Executive Officer.
Gifts and Entertainment
Policy Number: D-6 Effective Date: March 2006 Revision Date: April 2007
OVERVIEW
AMVESCAP has in place the AMVESCAP Gifts and Entertainment Policy which is applicable to AMVESCAP and its individual business units worldwide. This AIM Trimark Gifts and Entertainment Policy ("Policy") is intended to work with the AMVESCAP Policy and supplement it with local rules.
All AIM Trimark employees, including temporary, part-time, contract, and seasonal personnel, must refrain from conduct that could give rise to the appearance of a conflict of interest. The provision or receipt of gifts or entertainment can create, or can have the appearance of creating, conflicts of interest.
Employees also need to take into consideration the firm's policy on corporate expenses, which can be found on Total Access Point ("TAP") under travel and entertainment guidelines, and the firm's policy on Sales Practices, which can be found in the AIM Trimark compliance manual under section D-2.
DEFINITIONS
For purposes of this Policy, a GIFT is anything of value given or received involving AIM Trimark personnel, and a person or entity that has a direct or indirect, existing or potential business relationship with AIM Trimark (a "Business Partner"). This Policy also applies to gifts given by AIM Trimark to family members of a Business Partner and gifts received from a Business Partner by a family member of an employee of AIM Trimark. Business Partners specifically include broker dealers and financial advisors. Gifts may include, but are not limited to, personal items, air miles, services, office accessories, electronic equipment (e.g., iPods, MP3s, etc.), tickets (e.g., theatre, concerts, sporting events, etc.) and sporting equipment (e.g., golf clubs, tennis rackets, etc.). For purposes of this Policy, gifts also include charitable contributions and sponsorship requests (e.g., sponsoring a minor hockey team) made to or at the request of a Business Partner. For purposes of this Policy, gifts do not include promotional items of nominal value (approximately $20 - e.g., golf balls, pens, etc.) that display the logo of AIM Trimark or its AMVESCAP business units, or of its Business Partners.
ENTERTAINMENT involves attendance at activities, including but not limited to meals, sporting events, the theatre, parties or receptions, and similar functions. Entertainment requires the presence of both AIM Trimark personnel and Business Partner personnel;
unless personnel from both entities attend, the activity constitutes a gift. The value of entertainment includes the cost of the activity itself (for example, the cost of tickets or a meal), as well as the cost of any related activities or services provided (such as prizes). The value of entertainment does not include the cost of overhead (such as rent or equipment rentals).
THRESHOLDS
Employees are prohibited from giving or receiving gifts with a value of more than $250.
Entertainment should not exceed $450 per business partner.
FREQUENCY
Gifts and entertainment cannot be so extensive or so frequent as to cause a reasonable person to question whether the provision of the items or activity improperly influences the employee or Business Partner.
The maximum total value of gifts received by, or given to, a business partner is $250 annually.
Entertainment is limited to three times per year per business partner.
PROHIBITED ACTIVITIES
Employees are prohibited from providing or receiving any gift or entertainment that is conditioned upon AIM Trimark doing business with the entity or person involved.
Employees are prohibited from soliciting gifts and entertainment. Employees are to immediately advise the AIM Trimark Compliance department if a Business Partner solicits the employee for gifts and entertainment other than a charitable donation or request for sponsorship.
Except with the prior approval of the AIM Trimark Compliance department, employees cannot pay for, or accept, any travel and/or accommodation to or from a Business Partner.
With respect to approved co-operative marketing practices, such as sales communications and investor seminars, where AIM Trimark pays a portion of the cost, AIM Trimark cannot provide gifts, other than nominal valued promotional items, to the dealer's clients. Nominal speaker gifts would be co-op eligible at approved dealer-sponsored events for financial advisors.
REPORTING/RECORD KEEPING
Each department or employee is responsible for keeping a record of all gifts and entertainment given or received. Minimum required information includes: date, employee name(s), business partner firm name, business partner representative name(s), description of gift or entertainment, approximate dollar value, and required approval where applicable. Promotional items of nominal value (approximately $20) and department breakfasts or lunches do not need to be recorded. Where the value of the activity or item is not readily known, the employee should record the estimated cost.
REVIEW AND MONITORING
This Policy shall be overseen and administered by AIM Trimark's Code of Ethics Committee, which has responsibility for the overall scope, application, and enforcement of this Policy. AIM Trimark's Code of Ethics Committee shall receive the reports and recommendations of the AIM Trimark Compliance department and of management from time to time and periodically update or revise this Policy as may be desirable.
Each department head is expected to review the gifts and entertainment log on a regular basis in order to identify any concerns or trends. Any concerns or issues are to be brought to the attention of the AIM Trimark Compliance department.
The AIM Trimark Compliance department will conduct a quarterly review of the gifts and entertainment log. A summary of such review, together with other relevant observations and recommendations, shall be reported to the AIM Trimark Code of Ethics Committee.
Evidence of reviews must be maintained for a minimum of seven years.
D7. AIM TRIMARK PERSONAL TRADING POLICY
Policy Number: D-7 Effective Date: October 2006 Revision Date: March 2007
1. PURPOSE AND APPLICATION
The AIM Trimark Personal Trading Policy applies to all officers, directors and employees of AIM Trimark Investments, including temporary, part-time, contract, and seasonal personnel (collectively referred to as "Employee"). For purposes of this Policy, the terms "clients" and "client accounts" always refers to the investment funds that AIM Trimark manages or sub-advises or other accounts in respect of which AIM Trimark has been engaged to provide money management services.
The purpose of this Policy is to ensure the fair treatment of client accounts through the highest standard of integrity and ethical business conduct by Employees. The Policy is designed to ensure, among other things, that the personal securities transactions of all Employees are conducted in accordance with the following general principles:
- A duty at all times to place the interests of client accounts first.
- The requirement that all personal securities transactions be conducted in a manner that avoids any actual or potential conflict of interest or the appearance of a conflict of interest.
- That Employees should not take otherwise inappropriate advantage of their positions.
Employees must not use any non-public information about client accounts for their direct or indirect personal benefit or in a manner that would not be in the best interests of client accounts. Employees also must not use their position to obtain special treatment or investment opportunities not generally available to client accounts or the public.
The personal trading requirements pertaining to pre-clearance, reporting and investment restrictions contained in this Policy apply to both Employees and their Covered Accounts.
AIM Trimark recognizes that certain relationships with non-employees may, from time to time, present particular risks that inappropriate trading could occur. Those risks may be present, for example, through certain arrangements with consultants or independent contractors who have entered into long-term services arrangements with AIM Trimark pursuant to which they are expected to have access to non-public information in connection with those arrangements (such information may relate to AIM Trimark or some outside source, and may be obtained from AIM Trimark or some outside source). Accordingly, as part of the process for engaging the services of consultants or other independent contractors, the AIM Trimark Chief Compliance Officer shall take such
steps as may be reasonably determined to be necessary or appropriate. Those steps may or may not include requiring a non-employee to agree to be bound by these procedures as if he or she were an Employee.
2. DEFINITIONS
2.1 EMPLOYEE
For the purposes of this Policy the term Employee includes all officers, directors and employees of AIM Trimark Investments including temporary, part-time, contract, and seasonal personnel
2.2 COVERED ACCOUNTS
A Covered Account is defined for purposes of this Policy as any account:
- In which an Employee has a direct or indirect financial interest;
- Over which such Employee has direct or indirect control over the purchase or sale of securities; or
- In which securities are held for an Employee's direct or indirect benefit.
Such Covered Accounts may include, but are not limited to, accounts of a spouse, minor child, relative, friend or personal business associate.
3. PRE-CLEARANCE REQUIREMENTS
3.1 SUBMITTING THE REQUEST TO TRADE
Except where noted below, an Employee must receive the prior approval using the automated review system (Star Compliance) or from the AIM Trimark Compliance department in order to engage in a personal securities transaction. The Star Compliance system will review the trade request to determine whether or not the proposed transaction gives rise to an actual or potential conflict of interest with activity in a client account in the same security. Upon completion of the review process, the Employee will receive a time stamped response indicating whether the trade is authorized or denied.
Pre-clearance will not be given if there has been a transaction by a subject client account in the same, or equivalent, security within seven (7) calendar days of the proposed personal securities transaction (the "7-Day Rule"). An equivalent security means a security that (1) is convertible into another security or (2) gives its holder the right to purchase another security of the same issuer. For example, a bond or preferred stock may be convertible into another security of the same issuer, or an option or warrant may give the holder the right to purchase stock of the same issuer. ADR and EDR shares are considered equivalent to their corresponding foreign shares.
The trade approval process involves the following steps:
- A trade must be entered into the Star Compliance system.
- The Star Compliance system will confirm that there is no activity currently on the trading desk for the security involved in the proposed personal transaction and check the portfolio accounting system to verify that there have been no transactions for the requested security within seven calendar days.
- The Star Compliance system will provide an automated response on a timely basis for all pre-approval requests indicating whether the transaction has been approved or denied.
3.2 EXECUTING APPROVED TRANSACTIONS
Except as may be authorized by the Chief Compliance Officer or designate in the case of certain securities or classes of securities, all authorized personal securities transactions must be executed by the next business day. If the trade is not executed within this time period, a new pre-clearance request must be submitted.
Employees will be requested to reverse any trades processed without the required pre-approval. Any costs or losses associated with the reversal are the responsibility of the Employee.
3.3 EXCEPTIONS TO PRE-CLEARANCE REQUIREMENTS
Employees may trade in the following types of securities without regard to the pre-clearance procedures:
- Open-end mutual funds, open-end unit investment trusts and pooled trust funds (whether or not managed or distributed by an AMVESCAP Company).
- Variable annuities, variable life products, segregated funds, and other similar unit-based insurance products issued by insurance companies and insurance company separate accounts.
- Securities issued or guaranteed by the Government of Canada, or the government of any province in Canada.
- Securities issued or guaranteed by the Governments of the United States, United Kingdom, Germany, Japan, France and Italy.
- Guaranteed Investment certificates, bank certificates of deposit other deposits with financial institutions, bankers acceptances, commercial paper and high quality short-term instruments, including repurchase agreements.
- Short-term debt securities maturing in less than 91 days from their date of issue.
- Physical commodities or securities relating to those commodities.
- Other securities or classes of securities as the Committee may from time to time designate.
Employee accounts excluded from the pre-clearance requirement are the following:
- Employee share purchase plans except for the sale of the securities.
- Employee stock option purchase plans except for the sale of the securities.
- Accounts capable of holding only deposits or GIC's issued by a financial institution and/or mutual funds.
- Fully-managed discretionary accounts subject to the conditions in 3.4 below.
3.4 MANAGED ACCOUNTS
To qualify as a fully-managed discretionary account, the account must be fully "discretionary", without any influence by the Employee over individual transactions. This means that full investment discretion has been granted to an investment manager or trustee and that neither the Employee nor Covered Account person participates in the investment decisions or is informed in advance of transactions in the account. Pre-clearance is not required for transactions in a Covered Account in which an Employee is not exercising power over investment discretion including a managed account, provided that:
- The account is the subject of a written contract providing for the delegation by the Employee of substantially all investment discretion to another party.
- The Employee has provided the AIM Trimark Compliance department with a copy of such written agreement.
- The Employee certifies in writing that he or she has not discussed, and will not discuss, potential investment decisions with the party to whom investment discretion has been delegated.
- The Employee otherwise complies with the annual reporting requirement contained herein, and also provides or makes provision for the delivery to the AIM Trimark Compliance department of periodic statements of discretionary account holdings.
- The foregoing exception from the pre-clearance requirement does not apply to transactions by a delegated discretionary account in shares of AMVESCAP. All employees are required to notify parties to whom they have delegated investment discretion that such discretion may not be exercised to purchase shares of AMVESCAP and that any sales of AMVESCAP shares by a Covered Account that is the subject of delegated investment discretion are subject to the pre-clearance and reporting requirements.
- Discretionary managed accounts for which this exemption is available would not include ones where the accountholder has given a power of attorney (POA) to another person such as a broker for occasional discretionary trading. Discretionary accounts would include blind trusts.
4. OPTIONS TRADING
In the case of personal securities transactions involving the purchase or sale of an option on an equity security, the Star Compliance system will determine whether to authorize the transaction by matching the pre-clearance request against activity in client accounts in both the option and the underlying security. This determination will not be made, and pre-clearance will not be given, if there has been a client account transaction in either the option or the underlying security within 7 calendar days of the proposed personal securities transaction. Pre-clearance is required for both the opening and closing transaction.
It is the responsibility of the employee to be aware of the additional risks that can result from engaging in certain transactions. For example, if an opening options transaction is approved, the closing options transaction may not be approved or may be delayed in certain cases due to actual or apparent conflicts of interest or competing obligations that arise after the time the employee's opening transaction was approved. An employee is prohibited from purchasing or selling options on shares of AMVESCAP.
5. SHORT SALES
Short sales of securities are permissible subject to the following conditions:
- No short sales on AMVESCAP
- No short sales on securities where there has been a trade in the same security within the last 7 days in one of the client accounts
- Employees are prohibited from short-term trading; therefore, the Employee is restricted from buying back the position within 60 days.
- Portfolio managers are prohibited from short selling a security if the client account the Portfolio Manager manages are long the security.
- If a Portfolio Manager is selling a stock there should generally be no "short selling" allowed until that position is completely sold. This provision includes the situation where the Portfolio Manager stops selling the security for a short period, for example to let the market absorb what has been sold, and then resumes selling the position. If other client accounts hold the same security, the AIM Trimark Compliance department will review the other client accounts to determine if the other client accounts are active in the security or are going to be active.
6. RESTRICTIONS ON CERTAIN ACTIVITIES
In order to avoid even the appearance of conduct that might be deemed contrary to a client's best interests, Employees are subject to the following additional restrictions and prohibitions relating to certain investment activities and related conduct as set out herein.
6.1 PROHIBITION AGAINST TRADING IN SECURITIES ON "RESTRICTED LISTS"
It is recognized that there may be occasions when AMVESCAP, an AMVESCAP Company, or an Employee who is a key executive of AMVESCAP or an AMVESCAP Company, may have a special relationship with an issuer of securities. In such occasions the Board of Directors of AMVESCAP or the Code of Ethics Committee may decide to place the securities of such issuer on a "restricted list", to be maintained by the Chief Compliance Officer. Employees are prohibited from engaging in any personal securities transactions in a security on a "restricted list".
6.2 PROHIBITION AGAINST SHORT-TERM TRADING ACTIVITIES
Employees are prohibited from profiting from a trade in an "opposite transaction" in the same, or equivalent, security within 60 days of its purchase or sale. This short-term trading prohibition may be waived by the AIM Trimark Compliance department in certain instances including where an employee wishes to limit his or her losses on a security with rapidly depreciating market value. Such circumstances must be disclosed at the time pre-clearance is requested.
6.3 PROHIBITION AGAINST PURCHASES IN INITIAL PUBLIC OFFERINGS
Employees generally are prohibited from purchasing securities in IPOs. Employees who are not investment personnel and whose proposed IPO trade is through discretionary accounts may acquire shares in an IPO. Investment personnel are prohibited from purchases in Initial Public Offerings, even if the proposed IPO trade would be through a discretionary account, unless the person has obtained pre-clearance by the Chief Compliance Officer and Chief Investment Officer.
6.4 RESTRICTED SECURITIES ISSUED BY PUBLIC COMPANIES
Generally, Employees are discouraged from investing in restricted securities of public companies including special warrant deals. Restricted securities are securities acquired in an unregistered, private sale from an issuer. An Employee may purchase such securities, however, if such purchase has been pre-cleared by the AIM Trimark Compliance
department following a determination that the proposed transaction does not present any actual or potential conflict of interest.
6.5 RESTRICTIONS ON PRIVATE PLACEMENTS (INCLUDING HEDGE FUNDS)
An Employee may not purchase or sell any security (e.g., stock, bond or limited partnership interest) obtained through a private placement (including the purchase or sale of an interest in a so-called "hedge fund") unless such transaction has been pre-cleared by the AIM Trimark Compliance department following a determination that the proposed transaction does not (i) present any actual or potential conflict of interest, (ii) that the issuer is a "private issuer" under securities legislation and (iii) the Employee has no reason to believe that the issuer or a related subsidiary company (whether or not such securities are of the same class as the securities held by such Employee) will make a public offering of its securities within the next twelve months. The AIM Trimark Compliance department will also review the request with the Chief Investment Officer before granting pre-clearance. The AIM Trimark Compliance department will maintain a record of the approval and the rationale supporting the purchase of the Private Placement. If pre-clearance is provided, the security will then be added to the restricted list. Further, Employees who have been authorized to acquire securities in a private placement must disclose such investment when he/she plays a part in any client account's subsequent consideration of an investment in the issuer. In such circumstances, the client account's decision to purchase securities of the issuer is subject to an independent review by investment personnel with no personal interest in the issuer.
6.6 INVESTMENT CLUBS
An Employee is prohibited from participating in an investment club unless such participation has been approved by the AIM Trimark Compliance department following a determination that the following conditions have been satisfied:
- The Employee's participation does not create any actual or potential conflict of interest.
- The Employee does not control investment decision-making for the investment club.
- The Employee has made satisfactory arrangements to ensure that duplicate trade confirmations of investment club activity and quarterly statements of investment club holdings are provided to the AIM Trimark Compliance department by brokers acting on behalf of the investment club.
If participation in an investment club has been approved, all future trades will be subject to pre-clearance.
6.7 TRADING IN AMVESCAP
Employees are prohibited from trading in AMVESCAP during the "Close Periods". Details of the "Close Periods" are circulated to all employees by way of the internal e-
mail system and can also be found via the attached link:
http://atlas.amvescap.com/ags/amv_groupservices/sec_closed.html
A "Close Period" is defined by the rules as the period of 60 days prior to the announcement of the year end results and the period of 30 days prior to the announcement of the interim and quarterly results. The close period may be shorter depending on when the results are announced but cannot start until the end of the relevant reporting period.
Short term trading (i.e. buying and selling within a 60 day period) in AMVESCAP, where the intention is to make a quick profit, is prohibited.
7. REPORTING REQUIREMENTS
7.1 INITIAL REPORTS
Within 10 days of becoming an Employee, each Employee, using the Star Compliance system, must submit a statement containing the following information: (i) a complete list of all of his or her Covered Accounts (including the name of the broker, dealer or bank with which the Employee maintained the Account); (ii) a list of each Reportable Security (whether held through a Covered Account, in certificate form, or otherwise) in which he or she has direct or indirect beneficial ownership (e.g., that he or she owns); and (iii) the date the Employee submits the report. The statement must be current as of a date no more than 45 days prior to the date of becoming an Employee.
7.2 REPORTS OF TRADE CONFIRMATIONS AND QUARTERLY REPORTS
Within 10 calendar days of settlement of each personal securities transaction involving a Reportable Security, whether the transactions had to be pre-cleared or not, the Employee engaging in the transaction must file or cause to be filed with the AIM Trimark Compliance department a duplicate copy of the broker/dealer confirmation, or such other confirmations as are available, for such transaction. In addition, except to the extent that such report would duplicate information contained in such confirmations, within 30 calendar days after the end of each calendar quarter, the Employee must submit a statement: (i) with respect to each personal securities transaction during the quarter in a Reportable Security in which the Employee had any direct or indirect beneficial ownership; (ii) with respect to any Covered Account established during the quarter, the name of the broker, dealer or bank with which the account was established, the date the account was established, and (iii) the date that the statement is submitted by the Employee.
Notwithstanding the reporting requirements set forth in the previous paragraph, transactions effected pursuant to an automatic investment plan need not be reported in the quarterly statement (nor in trade confirmations in lieu of the quarterly statement). An "automatic investment plan" means any program in which regular periodic purchases (or withdrawals) are made automatically in (or from) investment accounts in accordance with a predetermined schedule and allocation. An automatic investment plan includes a dividend reinvestment plan.
7.3 ANNUAL REPORTS
By January 30 of each year, each Employee must file with the AIM Trimark Compliance department an annual account statement as of December 31 of each year, (i) all Covered Accounts of such Employee (including the name of the broker, dealer or bank with which the Employee maintained the account) (ii) each Reportable Security (whether held through a Covered Account, in certificate form, or otherwise) in which he or she has direct or indirect beneficial ownership; and (iii) the date the Employee submits the account statements.
Employees are encouraged to request their broker or dealer to automatically send the AIM Trimark Compliance department copies of trade confirmations and monthly account statements. By doing so, the Employee does not have to make arrangements every time to meet the ongoing quarterly and annual reporting requirements.
The AIM Trimark Compliance department will review all reports submitted and report any irregularity to the Code of Ethics Committee.
7.4 REPORTABLE SECURITY
For purposes of this Policy, the term "Reportable Security" means any security except the following:
- Unit investment trusts (i.e., variable insurance contracts funded by insurance company separate accounts organized as unit investment trusts) invested exclusively in open-end U.S. mutual funds that are not managed or distributed by AIM Trimark or any AMVESCAP Company.
- Open-end U.S. mutual funds that are not managed or distributed by AIM Trimark or any AMVESCAP Company.
- Open-end Canadian mutual funds that are not managed or distributed by AIM Trimark.
- Securities issued or guaranteed by (i.e., securities that are the direct obligations of) the government of the United States.
- Money market funds.
- Money market instruments. a money market instrument is a debt
instrument that has a maturity at issuance of less than 366 days and
(i) is rated in one of the two highest ratings categories by a
statistical rating organization that is nationally recognized in the
United States or a rating organization not affiliated with AIM Trimark
and of comparable status in Canada or (ii) if not rated, is determined
by AIM Trimark in good faith to be of equivalent quality such that it
presents a comparable (or better) degree of safety of principal. For
example, a short-term debt instrument with a rating of AA or AAA by
Moody's Investors Service or AA or AAA
by Standard & Poor's Corporation meets this definition of money market instrument. Typical examples of money market instruments include bankers' acceptances, bank certificates of deposit, commercial paper and repurchase agreements.
8. INDEPENDENT DIRECTORS
Except as otherwise provided in the special procedures for independent directors of US Funds, personal securities transactions of independent directors of AIM Trimark or of AIM Trimark's corporate funds and members of the Fund's Advisory Boards are not subject to either the pre-clearance or reporting requirements set forth in this Policy, except with respect to personal securities transactions in the shares of AMVESCAP or shares of any closed-end investment company or investment trust served by such independent director in a director or trustee capacity.
8.1 FOR PURPOSES OF THIS EXCEPTION THE TERM "INDEPENDENT DIRECTOR" MEANS
a) any director of AIM Trimark's corporate funds or members of the AIM Trimark Fund Advisory Board
i) who is neither an officer nor employee of AMVESCAP or of any AMVESCAP Company, or
ii) who is not otherwise "connected with" AMVESCAP or any AMVESCAP Company within the meaning of the London Stock Exchange Yellow Book; and
b) any director of AIM Trimark who
i) is neither an officer nor employee of AMVESCAP or of any AMVESCAP Company,
ii) is not otherwise "connected with" AMVESCAP or any AMVESCAP Company within the meaning of the London Stock Exchange Yellow Book,
iii) is not an interested person of a US Fund under Section 2(a)(19) of the Investment Company Act (1940) and would otherwise be required to submit a pre-clearance request or make a report solely by reason of being an AIM director and
iv) does not regularly obtain information concerning the investment recommendations or decisions made by AIM Trimark on behalf of the US Funds.
8.2 SPECIAL PROCEDURES FOR INDEPENDENT DIRECTORS OF US FUNDS
While an "independent director" of AIM Trimark is not deemed to be an "Employee" and consequently is not subject to most of the procedures specified in this Policy with respect
to securities transactions, independent directors of AIM Trimark are subject to all of the following provisions. For purposes of this Policy, a "US Fund" is an investment fund whose activities are governed by the laws of the United States.
- An independent director is expected to adhere to the insider trading requirements.
- An independent director is expected to avoid engaging in any of the following actions:
- Employ any device, scheme or artifice to defraud a US Fund.
- Make any untrue statement of a material fact to directors, officers or agents of a US Fund or with respect to the securities or investment operations of a US Fund, or omit to state a material fact necessary in order to make such statements in light of the circumstances under which they were made, not misleading.
- Engage in any act, practice or course of business that operates or would operate as a fraud or deceit on a US Fund.
- Engage in any manipulative practice with respect to a US Fund.
- Prior to engaging in a personal securities transaction in a security (other than in a security excluded from pre-clearance), if an independent director knows, or in the ordinary course of fulfilling his or her official duties as an independent director to AIM Trimark, should have known, that during the 15-day period immediately before the date of his or her prospective transaction in the security, (i) a US Fund purchased or sold the security or (ii) a US Fund or its adviser or sub-adviser considered purchasing or selling the security, he or she is required to do the following: not purchase or sell such security until the day next following the completion by the Fund of its transaction, unless the director has submitted a pre-clearance request and the AIM Trimark Compliance department reasonably determines that, in view of the nature of the security and the market for the security, the director's transaction is not likely to affect the price paid for or received by the Fund. Absent such a finding, if such a transaction nonetheless is placed, the transaction is considered prohibited and any profits related thereto must be disgorged (to the Fund or an appropriate charity).
- If an independent director knows, or in the ordinary course of fulfilling his or her official duties as an independent director to AIM Trimark should have known, that during the 15-day period immediately before or after the date of the director's transaction in a security (other than those excluded from reporting), (i) a US Fund purchased or sold the security or (ii) a US Fund or its adviser or sub-adviser considered purchasing or selling the
security, he or she is required, whether or not he or she has pre-cleared the transaction, to follow the reporting requirements as if he or she were an Employee.
9. CERTIFICATION OF COMPLIANCE
By signing off on the AMVESCAP Code of Conduct and the AIM Trimark Addendum to the Code on an annual basis, Employees are also confirming adherence to this Policy.
10. OVERSIGHT
This Policy shall be overseen and administered by AIM Trimark's Code of Ethics Committee, while administration of this Policy is the responsibility of the Chief Compliance Officer.
10.1 CODE OF ETHICS COMMITTEE
This Policy shall be overseen and administered by AIM Trimark's Code of Ethics Committee, which has responsibility for the overall scope, application, and enforcement of this Policy. AIM Trimark's Code of Ethics Committee shall receive the reports and recommendations of the AIM Trimark Compliance department from time to time and periodically update or revise this Policy as may be desirable.
Members of the Code of Ethics Committee include:
- President and Chief Executive Officer
- Chief Investment Officer
- Executive Vice President, Sales
- General Counsel
- Senior Vice President, Investment Operations and Analytics
- Chief Compliance Officer
- Assistant Vice President, Operations Compliance
- Such other members as the President and CEO may designate
The Committee meets no less frequently than annually to review the Chief Compliance Officer's report and the provisions of the AMVESCAP Code of Conduct and this Policy. The Chief Compliance Officer calls other meetings of the Committee when she or he believes that a possible violation of the Code or these Procedures has occurred or that the Committee should meet for other purposes, such as to consider changes to the AIM Trimark Addendum to the AMVESCAP Code of Conduct or to this Policy. A majority of
the members of the Committee will constitute a quorum, provided that the President and Chief Executive Officer are present in order to have a quorum. A majority of the members present at a meeting constitutes the vote required for any action taken by the Committee. Special meetings of the Committee may be called by any member of the Committee to discuss matters that are deemed to warrant immediate attention.
10.2 AIM TRIMARK COMPLIANCE DEPARTMENT
The AIM Trimark Compliance department administers all aspects of the Policy including informing new Employees of the requirements, reviewing pre-approval requests, monitoring personal trading activity, monitoring client account activity in the same security of an approved trade for the following seven (7) calendar days to determine whether the appearance of a conflict is present, following up on reporting requirements, and record keeping.
The Chief Compliance Officer or designate will provide a written report, at least annually to the Committee summarizing:
- Compliance with the Policy for the period under review.
- Violations of the Policy for the period under review.
- Sanctions imposed under the Policy by AIM Trimark during the period under review.
- Whether AIM Trimark's external investment advisors have confirmed that they have complied with the basic principles set out in this Policy in providing investment advisory services to the funds during the period under review.
- Changes in procedures recommended for the Policy.
- Any other information requested by the Committee.
(INVESCO LOGO)
CODE OF ETHICS
This revised Code of Ethics ('the Code') regarding ethnic behaviour and conflicts of interest applies to all employees of all entities of INVESCO Continental Europe ("INVESCO"). It covers the following topics:
- Prohibitions related to material, non-public information;
- Personal securities investing;
- Service as a director and other business opportunities; and
- Gift and entertainment policy.
This Code also imposes on employees certain restrictions and reporting obligations which are specified below. Adherence to this Code, once adopted, both letter and spirit, is a fundamental and absolute condition of employment with INVESCO. It is appreciated that no Code of Ethics can address every circumstance that may give rise to a conflict, a potential conflict or an appearance of a conflict of interest. Every employee should be alert to any actual, potential or appearance of a conflict of interest with INVESCO's clients and to conduct himself or herself with good judgment. Failure to exercise good judgment, as well as violations of this Code, may result in the imposition of sanctions on the employee, including suspension or dismissal.
1 STATEMENT OF GENERAL PRINCIPLES
1.1 As a fiduciary, INVESCO owes an undivided duty of loyalty to its clients. It is INVESCO's policy that all employees conduct themselves so as to avoid not only actual conflicts of interest with INVESCO clients, but also that they refrain from conduct which could give rise to the appearance of a conflict of interest that may compromise the trust our clients have placed in us.
1.2 The Code is designed to ensure, among other things, that the personal securities transactions of all employees are conducted in accordance with the following general principles:
1.2.1 A duty at all times to place the interests of INVESCO's clients first and foremost;
1.2.2 The requirement that all personal securities transactions be conducted in a manner consistent with this Code and national legal & regulatory requirements and in such a manner as to avoid any actual, potential or appearance of a conflict of interest or any abuse of an employee's position of trust and responsibility; and
1.2.3 The requirement that employees should not take inappropriate advantage of their positions.
1.3 INVESCO's policy is to avoid conflicts of interest and, where they unavoidably occur, to resolve them in a manner that clearly places our clients' interests first.
1.4 No employee should have ownership in or other interest in or employment by any outside concern which does business with AMVESCAP. This does not apply to stock or other investments in a publicly held company, provided that the stock and other investments do not, in the aggregate, exceed 5% of the outstanding ownership interests of such company. AMVESCAP may, following a review of the relevant facts, permit ownership interests which exceed these amounts if management or the Board of Directors, as appropriate, concludes that such ownership interests will not adversely affect AMVESCAP's business interests or the judgment of the affected staff. (Please see AMVESCAP Code of Conduct).
(INVESCO LOGO)
2 MATERIAL, NONPUBLIC INFORMATION
2.1 RESTRICTION ON TRADING OR RECOMMENDING TRADING Each employee is reminded that it constitutes a violation of law and/or Market Abuse regulations for any person to trade in or recommend trading in the securities of a company while in possession of material, non-public information concerning that company, or to disclose such information to any person not entitled to receive it if there is reason to believe that such information will be used in connection with a trade in the securities of that company. Violations of law and regulations may give rise to civil as well as criminal liability, including the imposition of monetary penalties or prison sentences upon the individuals involved. Tippees (i.e., persons who receive material, nonpublic information) also may be held liable if they trade or if they do not trade but pass along such information to others who will most likely trade on such information.
2.2 WHAT IS MATERIAL, NONPUBLIC INFORMATION? 'MATERIAL INFORMATION' is any information about a company which, if disclosed, is likely to affect the market price of the company's securities or to be considered important by an average investor in deciding whether to purchase or sell those securities. Examples of information which should be presumed to be "material" are matters such as dividend increases or decreases, earnings estimates by the company, changes in the company's previously released earnings estimates, significant new products or discoveries, major litigation by or against the company, liquidity or solvency problems, extraordinary management developments, significant merger or acquisition proposals, or similar major events which would be viewed as having materially altered the "total mix" of information available regarding the company or the market for any of its securities.
2.3 'NONPUBLIC INFORMATION', often referred to as 'inside information,' is information that has not yet been publicly disclosed. Information about a company is considered to be nonpublic information if it is received under circumstances which indicate that it is not yet in general circulation and that such information may be attributable, directly or indirectly, to the company or its insiders, or that the recipient knows to have been furnished by someone in breach of a fiduciary obligation. Courts have held that fiduciary relationships exist between a company and another party in a broad variety of situations involving a relationship between a company and its lawyers, investment bankers, financial printers, employees, technical advisors and others.
2.4 Information should not be considered to have been publicly disclosed until a reasonable time after it has been made public (for example, by a press release). Someone with access to inside information may not "beat the market" by trading simultaneously with, or immediately after, the official release of material information.
2.5 The responsibility of ensuring that the proposed transaction does not constitute insider dealing or a conflict with the interests of a client remains with the relevant employee and obtaining pre-clearance to enter into a transaction under Section 3.3 below does not absolve that responsibility.
2.6 INVESCO is in a unique position, being privy to market research and rumours and being privy also to information about its clients which may be public companies. INVESCO employees must be aware and vigilant to ensure that they cannot be accused of being a party of any 'insider dealing' or market abuse situations.
2.7 In particular, the following investment activities must not be entered into without carefully ensuring that there are no implications of insider trading:
2.7.1 Trading in shares for a client in any other client of INVESCO which is quoted on a recognised stock exchange.
2.7.2 Trading in shares for a client in a quoted company where INVESCO:
i) obtains information in any official capacity which may be price sensitive and has not been made available to the general public.
ii) obtains any other information which can be substantiated in connection with a quoted company which is also both price sensitive and has not been made available to the general public.
2.7.3 Manipulation of the market through the release of information to regular market users which is false or misleading about a company.
2.7.4 Release of information about a company that would have the effect of distorting the market in such a way to be considered market abuse.
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2.8 REPORTING REQUIREMENT. Whenever an employee believes that he or she may have come into possession of material, non-public information about a public company, he or she personally must immediately notify the Compliance Department and should not discuss such information with anyone else including INVESCO employees and should not engage in transactions for himself or others, including INVESCO clients.
2.9 Upon receipt of such information the Compliance Department will include the company name on a 'Black list' or 'Restricted list' of which no transactions may be entered into. This list will be advised to the Equity dealing desk and no discussion will be entered into.
2.10 CONFIDENTIALITY. No information regarding the affairs of any client of INVESCO may be passed to anyone outside INVESCO unless specifically requested by law, regulation or court order. In any event, the Compliance and Legal Department must be consulted prior to furnishing such information.
2.11 SANCTIONS. Any employee who knowingly trades or recommends trading while in possession of material, non-public information may be subject to civil and criminal penalties, as well as to immediate suspension and/or dismissal from INVESCO.
3 PERSONAL INVESTING ACTIVITIES, PRE-CLEARANCE AND PRE-NOTIFICATION REQUIREMENTS
3.1 Transactions covered by this Code
All transactions by employees in investments made for Covered Accounts are subject to the pre- clearance procedures, trading restrictions, pre-notification and reporting requirements described below, unless otherwise indicated. For a listing of the employee and other accounts subject to these restrictions and requirements ("Covered Accounts"), see Appendix A.
3.2 Transactions in the following investments ("Exempt Investments") are not subject to the trading restrictions or other requirements of this Code and need not be pre-cleared, pre-notified or reported:
3.2.1 Registered UNAFFILIATED (e.g. Schroders) open ended Collective Investment Schemes [CIS] including; mutual funds, open-ended investment companies/ICVCs or unit trusts - but not closed-end funds, e.g. Investment Trusts; and
3.2.2 Securities which are direct obligations of an OECD country (e.g.
US Treasury Bills).
3.3 Pre-Clearance
3.3.1 Prior to entering an order for a Securities Transaction in a Covered Account, the employee must complete a Trade Authorisation Form set forth in Appendix C (also found on the Compliance intranet site) and submit the completed form electronically to the Local compliance officer.
3.3.2 The Trade Authorisation Form requires employees to provide certain information and to make certain representations in connection with the specific securities transaction(s).
3.3.3 If satisfactory, then the Form will be authorised by Compliance and confirmation returned by e-mail to the individual, who will then be at liberty to deal through his or her broker within the designated timescales.
3.3.4 No order for a Securities Transaction for which pre-clearance authorisation is sought may be placed prior to the receipt of authorisation from Compliance. The authorisation and date and time of the authorisation must be reflected on the Trade Authorisation Form (see Appendix C). The original of the completed form will be kept as part of INVESCO's books and records, and matched to the copy contract or note that the member of staff must ensure is sent by their broker to INVESCO, or provided by the employee to INVESCO.
3.3.5 If an employee receives permission to trade a security or instrument, the trade must be executed by the close of business on the next business day, unless the local Compliance Officer's authorisation to extend this period has been obtained. Permission may be granted to place "Stop loss" and limit orders but only in cases where express clearance for this type of transaction has been granted by Compliance.
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3.4 Pre-Notification
3.4.1 Transactions to buy, sell, switch or transfer holdings in INVESCO funds, or investment products or other affiliated schemes are subject to pre-notification directly to the Compliance Department regardless of whether the order is placed directly or through a broker/adviser. The employee must complete the relevant sections of the Trade Authorisation Form which can be found in Appendix C (and on the Compliance intranet site) and send it by e-mail to the local Compliance Officer. Transactions are subject to the 60 day holding period requirements.
3.4.2 It will be necessary to send copies of contract notes to the Compliance Department.
3.5 Transactions that do not need to be pre-cleared but must be reported. The pre-clearance requirements (and the trading restrictions on personal investing described below) do not apply to the following transactions:
3.5.1 Discretionary Accounts
Transactions effected in any Covered Account over which the employee has no direct or indirect influence or control (a "Discretionary Account"). An employee shall be deemed to have "no direct or indirect influence or control" over an account only if all of the following conditions are met:
i) investment discretion for such account has been delegated in writing to an independent fiduciary and such investment discretion is not shared with the employee, or decisions for the account are made by a family member or significant other and not by, or in connection with, the employee;
ii) the employee (and, where applicable, the family member or significant other) certifies in writing that he or she has not and will not discuss any potential investment decisions with such independent fiduciary or household member; and
iii) the Compliance Department has determined that the account satisfies the foregoing requirements.
3.5.2 Governmental Issues
Investments in the debt obligations of Federal agencies or of state and municipal governments or agencies, (e.g. Essex Council Electricity Bond).
3.5.3 Non-Volitional Trades Transactions which are non-volitional on the part of the employee (such as the receipt of securities pursuant to a stock dividend or merger).
3.5.4 Automatic Transactions Purchases of the stock of a company pursuant to an automatic dividend reinvestment plan or an employee stock purchase plan sponsored by such company.
3.5.5 Rights Offerings Receipt or exercise of rights issued by a company on a pro rata basis to all holders of a class of security. Employees must, however, pre-clear transactions for the acquisition of such rights from a third party or the disposition of such rights.
3.5.6 Interests in Securities comprising part of a broad-based, publicly traded market basket or index of stocks, e.g. S & P 500 Index, FTSE 100, DAX.
3.5.7 Non-Executive Director's transactions Transactions in securities, except for AMVESCAP PLC shares and/or UK Investment Trusts managed by INVESCO, by non-executive Directors.
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3.5.8 Note that all of the transactions described in paragraphs 3.4.1. to 3.4.8 while not subject to pre-clearance are nevertheless subject to all of the reporting requirements set forth below in paragraph 7.3.
3.6 Director's dealings
As of October 30, 2004, an obligation to immediately notify INVESCO (the local compliance officer) and the Financial Market Authority (Bundesanstalt fur Finanzdienstleistungsaufsicht, "BaFin") exists, among other things, for
- members of the Supervisory Board or the board of directors,
- any employees in leading positions,
- any employees who can access material nonpublic information on a regular basis,
- their spouses and/or (in accordance with foreign legal orders) registered life companions,
- dependent children,
- other family members that lived in a household with the member of the Supervisory Board for at least 1 year prior to the transaction,
- legal entities, associations operating as trusts or partnerships
- regarding all transactions made by them on their own account, as to
- trading in shares and share-equivalent securities (or related derivatives) of AMVESCAP PLC listed on regulated exchanges
- trading in shares and share-equivalent securities (or
related derivatives) listed on regulated exchanges of
enterprises connected with AMVESCAP PLC (at the beginning of
January 2005, the following enterprises are affected:
AMVESCAP, AIM, INVESCO)
The notification must contain:
- Name of the person subject to notification
- Reason for the obligation to notify
- Identification of the issuer
- Description of the financial instrument
- Type of transaction (e.g. purchase or sale)
- Closing date and place at which the transaction occurred
- Price and volume of transaction
The notification to the BaFin must take place within 5 business days after the date of the closing; however, this can be postponed until the aggregate sum of transactions reaches the amount of 5,000 euros. If this amount has not been reached at the end of the calendar year, the notification may be disregarded. For the determination of any aggregate sum, the transactions of the member of the Supervisory Board are to be added to the transactions of all persons that stand in a close relationship with such member (those natural and legal entities specified above). The obligation to notify the BaFin is to be undertaken by the persons subject to notification THEMSELVES and in writing. The form to be used can be found under www.bafin.de > fur Anbieter > borsennotierte Unternehmen > Director's Dealings. It has to be send to the BaFin by fax to: + 49 228/4108-62963, by email to paragraph15a@bafin.de or by post to BaFin, Postfach 50 01 54, 30391 Frankfurt.
In addition to the obligation to notify, there is also a publication obligation, which can be effected in the form of a publication on the homepage of AMVESCAP PLC.
Therefore, we ask for a simultaneous notification to AMVESCAP. Please provide notification of all information to the Compliance Department at INVESCO Asset Management, Bleichstrasse 60-62, 60313 Frankfurt.
For further inquiries, Julia Happel is gladly at your disposal at any time.
4 TRADE RESTRICTIONS ON PERSONAL INVESTING
4.1 All transactions in Covered Accounts which are subject to the preclearance requirements specified in this Code are also subject to the following trading restrictions:
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4.1.1 Blackout Restrictions
Transactions in Covered Accounts generally will not be permitted during a specific period before and after a client account trades in the same security or instrument.
4.1.2 Blackout Periods
An employee may not buy or sell, or permit any Covered Account to buy or sell, a security or any instrument:
i) within SEVEN calendar days before or after the day on which any client account trades in the same security or instrument or in a security convertible into or exchangeable for such security or instrument (including options) on transactions other than those covered under the paragraph below, or
ii) within TWO business days before or after the day on which a pro rata "strip" trade, which includes such security, is made for the purpose of rebalancing client accounts.
4.1.3 Blackout periods will no longer apply to equity transactions in "main index" constituents, i.e. FTSE 100, Dow Jones, etc, subject to a cost and proceeds limit of (euro) 35.000 per transaction. Normal blackout conditions will apply to transactions outside of these criteria. If in any doubt please consult your local Compliance Officer. On a case by case basis and at the discretion of the Compliance Officer in consultation with the Chief Investment Officer, this limit may be relaxed.
4.1.4 Trades effected by INVESCO for the account of an index fund it manages in the ordinary course of such fund's investment activity will not trigger the blackout period. However, the addition or removal of a security from an index, thereby triggering an index fund trade, would cause employee trades in such security to be blacked-out for the seven prior and subsequent calendar days, as described above.
4.1.5 In the event there is a trade in a client account in the same security or instrument within a blackout period, the employee may be required to close out the position and to disgorge any profit to a charitable organisation chosen by the local Board of Directors; provided, however, that if an employee has obtained preclearance for a transaction and a subsequent client trade occurs within the blackout period, the Chief Executive Officer in consultation with the Compliance Officer, upon a demonstration of hardship or extraordinary circumstances, may determine to review the application of the disgorgement policy to such transaction and may select to impose alternative restrictions on the employee's position. The disgorgement of profits will only apply if the total profit exceeds (euro)150 within the blackout period.
4.1.6 AMVESCAP PLC. SHARES
Pre-clearance is also required to buy or sell AMVESCAP PLC
Shares. Permission will not be given during a' closed period'
i.e., two months before the half year and year end results, one
month before the first and third quarters results, are
announced.
A "closed period" is defined by the rules as the period of two months prior to the announcement of the year end results and the period of one month prior to the announcement of the interim and quarterly results. The closed period may be shorter depending on when the results are announced but cannot start until the end of the relevant reporting period.
Full details of the AMVESCAP stock transaction Pre-Clearance Guide and restrictions for all employees of AMVESCAP can be found in Appendix F.
4.1.9 Short Term Trading Profits
It is INVESCO's policy to restrict the ability of employees to benefit from short-term trading in securities and instruments. Employees must disgorge profits made on the sale by an employee of any security or instrument held less than 60 days and will not be permitted to purchase any security or instrument that has been sold by such employee within the prior 60 days. Employees are required to disgorge profits made on the sale in a Covered Account within the 60 days period. Exceptions may be granted by the Compliance Department on a
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case by case basis. This policy applies to trading in all types of securities and instruments, except where in a particular case the local Chief Executive Officer in consultation with the Compliance Officer has made a specific finding of hardship and it can be demonstrated that no potential abuse or conflict is presented (for example, when an employee's request to sell a security purchased within 60 days prior to the request is prompted by a major corporate or market event, such as a tender offer, and the security was not held in client accounts). To clarify this also applies to non affiliated mutual funds.
4.1.10 Initial Public Offerings
No employee may purchase or permit any Covered Account to purchase a security offered pursuant to an initial public offering, wherever such offering is made. However where the public offering is made by a Government of where the employee is resident and different amounts of the offering are specified for different investor types eg private and institutional, the local Compliance Officer may allow such purchases after consultation with the local Chief Executive Officer or his designee.
4.1.11 Privately-Issued Securities
Employees may not purchase or permit a Covered Account to purchase or acquire any privately-issued securities, other than in exceptional cases specifically approved by the local Chief Executive Officer (e.g., where such investment is part of a family-owned and operated business venture that would not be expected to involve an investment opportunity of interest to any INVESCO client). Requests for exceptions should be made in the first instance to the local Compliance Officer.
4.1.12 Employees, however, may invest in interests in private investment funds (i.e., hedge funds) that are established to invest predominantly in public securities and instruments, subject to the pre-clearance procedures, trading restrictions and reporting requirements contained in this Code. Employees may also invest in residential co-operatives and private recreational clubs (such as sports clubs, country clubs, luncheon clubs and the like) for their personal use; such investments are not subject to the pre-clearance procedures, trading restrictions and reporting requirements unless the employee's investing is part of a business conducted by the employee. Such ownership should be reported to the Compliance Officer.
4.1.13 Short Sales
An employee may not sell short a security unless this is specifically related to personal taxation issues. Requests for exceptions should be made to the local Compliance Officer.
4.1.14 Financial Spread Betting
Employees may not enter into Financial Spread betting arrangements. The potential problematical issues to both the employee and INVESCO that could arise if the market were to move in the wrong direction are considered unacceptable and therefore prohibited.
4.1.15 Futures
Employees may not write, sell or buy exchange-traded futures, synthetic futures, swaps and similar non-exchange traded instruments.
4.1.16 Exceptions
The Chief Executive Officer or his designee in consultation with the Compliance Officer may in rare instances grant exceptions from these trading restrictions upon written request. Employees must demonstrate hardship or extraordinary circumstances. Any exceptions granted will be reported to the local Board of Directors at least annually. Additionally if a local Board or its designee wish to impose additional restrictions these should be included in Appendix B.
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5 ECONOMIC OPPORTUNITIES, CONFIDENTIALITY AND OUTSIDE DIRECTORSHIPS
5.1 Monitoring the use of the name of INVESCO
To be able to fully monitor the appearance of the name of INVESCO, any employee's activities on behalf of INVESCO such as the participation in an industry body or an external consulting group need to be pre-cleared to the local compliance officer and the local CEO.
5.2 Avoiding conflicts of interests
In order to reduce potential conflicts of interest arising from the participation of employees on the boards of directors of public, private, non-profit and other enterprises, all employees are subject to the following restrictions and guidelines:
5.2.1 An employee may not serve as a director of a public company without the approval of the local Chief Executive Officer after consultation with the local Compliance Officer.
5.2.2 An employee may serve on the board of directors or participate as an adviser or otherwise, or advisers of a private company only if:
(i) client assets have been invested in such company and having a seat on the board would be considered beneficial to our clients interest; and
(ii) service on such board has been approved in writing by the local Chief Executive Officer. The employee must resign from such board of directors as soon as the company contemplates going public, except where the local Chief Executive Officer has determined that an employee may remain on a board. In any event, an employee shall not accept any compensation for serving as a director (or in a similar capacity) of such company; any compensation offered shall either be refused or, if unable to be refused, distributed pro rata to the relevant client accounts.
5.2.3 An employee must receive prior written permission from the Chief Executive Officer or his designee before serving as a director, trustee or member of an advisory board of either:
(i) any non-profit or charitable institution; or
(ii) a private family-owned and operated business.
5.2.4 An employee may serve as an officer or director of a residential co-operative, but must receive prior written permission from the local Chief Executive Officer and the local Compliance Department before serving as a director if, in the course of such service, he or she gives advice with respect to the management of the co-operative's funds.
5.2.5 If an employee serving on the board of directors or advisers of any entity comes into possession of material, non-public information through such service, he or she must immediately notify his or her local Compliance Officer.
5.2.6 An INVESCO employee shall not take personal advantage of any economic opportunity properly belonging to an INVESCO Client or to INVESCO itself. Such opportunities could arise, for example, from confidential information belonging to a client or the offer of a directorship. Employees must not disclose information relating to a client's intentions, activities or portfolios except:
i) to fellow employees, or other agents of the client, who need to know it to discharge their duties; or
ii) to the client itself.
5.2.7 Employees may not cause or attempt to cause any Client to purchase, sell or hold any Security in a manner calculated to create any personal benefit to the employee or INVESCO.
5.2.8 If an employee or immediate family member stands to materially benefit from an investment decision for an Advisory Client that the employee is recommending or participating in, the employee must disclose that interest to persons with authority to make investment decisions or to the Compliance Officer. Based on the information given, a decision will be made on
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whether or not to restrict the employee's participation in causing a client to purchase or sell a Security in which the employee has an interest.
5.2.9 An employee must disclose to those persons with authority to make investment decisions for a Client (or to the Compliance Officer if the employee in question is a person with authority to make investment decisions for the Client), any Beneficial Interest that the employee (or immediate family) has in that Security or an Equivalent Security, or in the issuer thereof, where the decision could create a material benefit to the employee (or immediate family) or the appearance of impropriety. The person to whom the employee reports the interest, in consultation with the Compliance Officer, must determine whether or not the employee will be restricted in making investment decisions.
6 CLIENT INVESTMENTS IN SECURITIES OWNED BY INVESCO EMPLOYEES
6.1 GENERAL PRINCIPLES
In addition to the specific prohibitions on certain personal securities transactions as set forth herein, all employees are prohibited from:
6.1.1 Employing any device, scheme or artifice to defraud any prospect or client;
6.1.2 Making any untrue statement of a material fact or omitting to state to a client or a prospective client, a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading;
6.1.3 Engaging in any act, practice or course of business which operates or would operate as a fraud or deceit upon any prospect or client;
6.1.4 Engaging in any manipulative practice with respect to any prospect or client; or
6.1.5 Revealing to any other person (except in the normal course of his or her duties on behalf of a client) any information regarding securities transactions by any client or the consideration of any client or INVESCO of any securities transactions.
7 REPORTS
7.1 In order to implement the general principles, restrictions and prohibitions contained in this Code, each Employee is required to file the following periodic reports:
7.2 Initial Certification and Schedules. Within 10 business days of commencing employment at INVESCO, each new employee shall submit to the Compliance Department:
7.2.1 a signed Initial Certification of Compliance with the INVESCO Code (See Appendix D); and
7.2.2 schedules listing
(i) all Covered Accounts; and
(ii) directorships (or similar positions) of for-profit, non-profit and other enterprises.
7.3 Confirmations and Monthly Statements Each employee shall cause to be provided to the Human Resources Department where an outside broker undertakes the transaction:
7.3.1 Duplicate copies of confirmations of all transactions in each Covered Account; or
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7.3.2 Not later than 10 days after the end of each month, monthly statements (if any are regularly prepared) for each Covered Account.
7.4 Annual Certification
Each employee shall provide, or cause to be provided, to the Compliance
Department, not later than 10 days after the end of each annual period, a
signed annual Certification of Compliance with the INVESCO Code (Appendix
E) containing:
7.4.1 To the extent not included in the foregoing monthly statements, a schedule listing:
i) all Covered Accounts and any other transactions not included in the monthly statements; and
ii) directorships (or similar positions) of for-profit, non-profit and other enterprises.
iii) A copy of an annual statement of the custody account.
7.4.2 A schedule listing directorships (or similar positions) of for-profit, non-profit and other enterprises;
7.4.3 With respect to Discretionary Accounts, if any, certifications that such employee does not discuss any investment decisions with the person making investment decisions; and
7.4.4 With respect to any non-public security owned by such employee, a statement indicating whether the issuer has changed its name or publicly issued securities during such calendar year.
7.5 Exempt Investments
Confirmations and periodic reports need not be provided with respect to Exempt Investments, (see 3.2).
7.6 Disclaimer of Beneficial Ownership
Any report required under this Code may contain a statement that such report is not to be construed as an admission by the person making the report that he or she has any direct and indirect beneficial ownership of the security to which the report relates.
7.7 Annual Review
The Director of European Compliance will review the Code as necessary, in light of legal and business developments and experience in implementing the Code, and will prepare a report to the relevant management committee that:
7.7.1 summarizes existing procedures concerning personal investing and any changes in the procedures made during the past year,
7.7.2 identifies any violations requiring significant remedial action during the past year, and
7.7.3 identifies any recommended changes in existing restrictions or procedures based on the experience under the Code, evolving industry practices, or developments in applicable laws or regulations.
8. TRAINING REQUIREMENTS
In order to make sure that every employee is fully aware of the current rules and guidelines as well as changes in the local regulatory environment, he has to participate in compliance and anti money laundering training at least once a year. Several of these trainings will be provided in the local offices by the Compliance officer and the AML officer.
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9. GIFTS AND ENTERTAINMENT
In order to minimize any conflict, potential conflict or appearance of conflict of interest, employees are subject to the restrictions and guidelines with respect to gifts made to or received from, and entertainment with, a person that does business with or provides services to INVESCO, that may do business or is being solicited to do business with INVESCO or that is associated with an organisation that does or seeks to do business with INVESCO (a "Business Associate"). Restrictions are set out in Appendix G.
10. MISCELLANEOUS
10.1 INTERPRETATION The provisions of this Code will be interpreted by the local Compliance Officer, as applicable. Questions of interpretation should be directed in the first instance to the local Compliance Officer or his/her designee or, if necessary, with the Compliance Officer of another INVESCO entity. The interpretation of the local Compliance Officer is final.
10.2 SANCTIONS If advised of a violation of this Code by an employee, the local Chief Executive Officer (or, in the case of the local Chief Executive Officer, the local Board of Directors) may impose such sanctions as are deemed appropriate. Any violations of this Code and sanctions therefore will be reported to the local Board of Directors at least annually.
10.3 EFFECTIVE DATE: This revised Code shall become effective as of 1 September 2005.
Specific Provisions for EMPLOYEES OF INVESCO REAL ESTATE GMBH and EMPLOYEES
ASSOCIATED WITH REAL ESTATE TRANSACTIONS undertaken by INVESCO:
10 GUIDELINES FOR COMPLIANCE IN REAL ESTATE INVESTMENTS
10.1 The purpose of this section is to ensure all personal real estate transactions of employees are conducted
- to place the interests of INVESCO's clients first,
- to avoid any actual, potential or appearance of a conflict of interest,
- to avoid any abuse of an employee's position of trust and responsibility and
- to avoid the possibility that employees would take inappropriate advantage of their positions.
10.2 THE REQUIREMENTS IN THESE SECTIONS ARE AN ADDITION TO RATHER THAN A SUBSTITUTE OF ALL OTHER REQUIREMENTS MADE IN THE CODE OF ETHICS.
RESTRICTIONS
Any employee who:
- knowingly invests in real estate or recommends investments in real estate while in possession of material, non-public information,
- informs somebody (outside of INVESCO or the client) about a real estate investment or about a client using information he has received through his employment with INVESCO
may be subject to civil and criminal penalties, as well as to immediate suspension and/or dismissal from INVESCO.
These restrictions also apply to investments undertaken by third parties on the employee's account or by the employee for another person.
DEFINITION
'Material information' is any information about a real estate investment which, if disclosed, is likely to affect the market price of a real estate investment. Examples of information which should be presumed to be "material" are matters such as income from property, pollution of the premises, earnings estimates of a real estate project development plans or changes of such estimates, or forthcoming transformation of land into building land prior to public planning.
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'Non-public information' is information that is not provided by publicly available sources. Information about a real estate investment is considered to be non-public if it is received under circumstances which indicate that such information may be attributable, directly or indirectly, to any party involved in the real estate project or its insiders, or that the recipient knows to have been furnished by someone in breach of a fiduciary duty. An example of non-public information related to real estate investments is the desire or need of a client to sell a real estate investment.
In particular, the following activities must not be entered into without carefully ensuring that there are no implications of insider trading and no appearance of a conflict of interest:
1. Personally investing in real estate for a client when another client or a business partner of INVESCO is involved in setting up and selling the investment. I.e. as an intermediary or a financier.
2. Entering into a private real estate transaction when any cost or fees brought forth by it are other than at arm's length.
3. Taking personal advantage of any economic opportunity properly belonging to an INVESCO Client or to INVESCO itself.
4. Investing in real estate for a client where INVESCO has access to information which may be price sensitive.
5. Manipulation of the market through the release of information to regular market users which is false or misleading about a company or a real estate investment.
6. Release of any information (except in the normal course of his or her duties as an employee of INVESCO) about a client's considerations of a real estate investment.
7. Personally engaging in real estate investments and thereby using information received through the employment with INVESCO.
PERSONAL INVESTING ACTIVITIES, PRE-CLEARANCE AND PRE-NOTIFICATION
Prior to engaging in any private real estate transaction the employee must fully disclose the transaction to the local compliance officer along with details of any non-public information held by the employee. Further detail may be requested by Compliance including an independent valuation or confirmation of purchase price.
It will only be permitted if it is not contrary to the interests of INVESCO or the clients of INVESCO. In the event that such an engagement was entered into before the employee has joined INVESCO and it is a commercial investment (not inhabited by the employee or family members), it must be disclosed upon employment.
Disclosure of the transaction is also required if the employee acts as an authorised agent or if the transaction is undertaken by a third party for the account of the employee.
Compliance will without delay inform the employee about the decision. If the permission for a particular investment is given, a time limit of one year applies to the actual engagement in this specific investment.
EXEMPTIONS
If investment discretion for an investment has been delegated in writing to an independent fiduciary and such investment discretion is not shared with the employee, or decisions for the account are made by a family member or significant other and not by, or in connection with, the employee.
MEMORANDUM
TO: All UK & Ireland Staff Members
FROM: Nick Styman
Director of European Compliance
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INVESCO UK & IRELAND --CODE OF ETHICS AND CONFLICTS OF INTEREST POLICY
Please find attached a revised copy of the INVESCO UK & Ireland Code of Ethics and Conflicts of Interest Policy ('The Code') which is being distributed to all UK & Ireland employees.
BACKGROUND
INVESCO has a regulatory requirement to avoid conflicts of interest or where they cannot be avoided to manage and disclose them. This Code sets out the framework by which we demonstrate to both our customers and the Regulators that we are mindful that in certain circumstances conflicts may exist and that we have in place procedures to mitigate these conflicts.
As with all policies, it is necessary to review and update them to take into account new practices both from a Company and an industry perspective.
This revised Code does not include the Gifts, Benefits & Entertainment Policy which is being issued under separate cover to reflect the new AMVESCAP-wide policy.
THE REVISED CODE
The Code is applicable to all employees within the INVESCO UK & Ireland business units subject to the application of sound common sense and practicable business judgement.
This Code cannot anticipate every possible situation or cover every topic in detail. The Company has established special policies to address specific subjects and will update this Code and those specific policies from time to time. If you are unclear about any situation, please stop and ask for guidance before taking action.
Failure to obey laws and regulations violates this Code and may expose both you and the Company to criminal or civil sanctions. Any violation of this Code or other company policies may result in disciplinary action, up to and including termination of employment. The Company may also seek civil remedies from you and even refer criminal misconduct to law enforcement agencies.
You are responsible for reporting possible violations of this Code to the Director of European Compliance, the Head of Dublin Compliance or their designees. The UK and Ireland business has put in place whistleblowing procedures as required under the regulations. If you wish to discuss any issues you feel uncomfortable with, please call the Director of European Compliance, the Head of Dublin Compliance or the Head of Human Resources as appropriate.
If you are aware of a violation and are uncomfortable speaking with the Director of European Compliance or Head of Dublin Compliance or wish to remain anonymous, you may call the toll free AMVESCAP Compliance Reporting Line (the "Compliance Reporting Line"). For calls, dial an international operator and request a collect call to 1-704-943-1136. When asked for your name use "AMVESCAP".
PLEASE READ THE CODE THOROUGHLY AND SIGN OFF THAT YOU HAVE READ AND UNDERSTOOD THE CODE, AS SOON AS POSSIBLE BUT NO LATER THAN 31 MARCH, 2007. FAILURE TO COMPLY WITH THE CODE COULD LEAD TO DISGORGEMENT OF PROFITS FROM DEALING OR POTENTIAL DISCIPLINARY ACTION BEING TAKEN AGAINST THE INDIVIDUAL CONCERNED.
If you have any queries regarding any aspect of the revised Code please call the Compliance Department.
Nick Styman
Director of European Compliance
INVESCO UK & IRELAND
CODE OF ETHICS AND CONFLICTS OF INTEREST POLICY
THIS REVISED CODE OF ETHICS AND CONFLICTS OF INTEREST POLICY ('THE CODE') APPLIES TO ALL EMPLOYEES OF ALL ENTITIES OF INVESCO UK AND IRELAND ("INVESCO"). IT COVERS THE FOLLOWING TOPICS:
- PROHIBITIONS RELATED TO MATERIAL, NON-PUBLIC INFORMATION;
- PERSONAL SECURITIES INVESTING; AND
- SERVICE AS A DIRECTOR AND OTHER BUSINESS OPPORTUNITIES.
THIS CODE ALSO IMPOSES ON EMPLOYEES CERTAIN RESTRICTIONS AND REPORTING OBLIGATIONS WHICH ARE SPECIFIED BELOW. ADHERENCE TO THIS CODE, BOTH LETTER AND SPIRIT, IS A FUNDAMENTAL AND ABSOLUTE CONDITION OF EMPLOYMENT WITH INVESCO.
It is appreciated that no Code of Ethics can address every circumstance that may give rise to a conflict, a potential conflict or an appearance of a conflict of interest. Every employee should be alert to any actual, potential or appearance of a conflict of interest with INVESCO's clients and to conduct himself or herself with good judgment. Failure to exercise good judgment, as well as violations of this Code, may result in the imposition of sanctions on the employee, including suspension or dismissal.
1 STATEMENT OF GENERAL PRINCIPLES
1.1 As a fiduciary, INVESCO owes an undivided duty of loyalty to its clients. It is INVESCO's policy that all employees conduct themselves so as to avoid not only actual conflicts of interest with INVESCO clients, but also that they refrain from conduct which could give rise to the appearance of a conflict of interest that may compromise the trust our clients have placed in us.
1.2 The Code is designed to ensure, among other things, that the personal securities transactions of all employees are conducted in accordance with the following general principles:
1.2.1 A duty at all times to place the interests of
INVESCO's clients first and foremost;
1.2.2 The requirement that all personal securities
transactions be conducted in a manner consistent with
this Code and in such a manner as to avoid any
actual, potential or appearance of a conflict of
interest or any abuse of an employee's position of
trust and responsibility; and
1.2.3 The requirement that employees should not take
inappropriate advantage of their positions.
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1.3 INVESCO's policy is to avoid conflicts of interest and, where they unavoidably occur, to resolve them in a manner that clearly places our clients' interests first.
1.4 No employee should have ownership in or other interest in or employment by any outside concern which does business with AMVESCAP. This does not apply to stock or other investments in a publicly held company, provided that the stock and other investments do not, in the aggregate, exceed 5% of the outstanding ownership interests of such company. AMVESCAP may, following a review of the relevant facts, permit ownership interests which exceed these amounts if management or the Board of Directors, as appropriate, concludes that such ownership interests will not adversely affect AMVESCAP's business interests or the judgment of the affected staff. (Please see AMVESCAP Code of Conduct).
2 MATERIAL, NONPUBLIC INFORMATION
2.1 RESTRICTION ON TRADING OR RECOMMENDING TRADING Each employee is reminded that it constitutes a violation of law and/or Market Abuse regulations for any person to trade in or recommend trading in the securities of a company while in possession of material, non-public information concerning that company, or to disclose such information to any person not entitled to receive it if there is reason to believe that such information will be used in connection with a trade in the securities of that company. Violations of law and regulations may give rise to civil as well as criminal liability, including the imposition of monetary penalties or prison sentences upon the individuals involved. Tippees (ie, persons who receive material, nonpublic information) also may be held liable if they trade or if they do not trade but pass along such information to others who will most likely trade on such information.
2.2 WHAT IS MATERIAL, NONPUBLIC INFORMATION? 'MATERIAL INFORMATION' is any information about a company which, if disclosed, is likely to affect the market price of the company's securities or to be considered important by an average investor in deciding whether to purchase or sell those securities. Examples of information which should be presumed to be "material" are matters such as dividend increases or decreases, earnings estimates by the company, changes in the company's previously released earnings estimates, significant new products or discoveries, major litigation by or against the company, liquidity or solvency problems, extraordinary management developments, significant merger or acquisition proposals, or similar major events which would be viewed as having materially altered the "total mix" of information available regarding the company or the market for any of its securities. Further examples can be found in the FSA Market Abuse Handbook.
2.3 'NONPUBLIC INFORMATION', often referred to as 'inside information,' is information that has not yet been publicly disclosed. Information about a company is considered to be nonpublic information if it is received under circumstances which indicate that it is not yet in general circulation and that such information may be attributable, directly or indirectly, to the company or its insiders, or that the recipient knows to have been furnished by someone in breach of a fiduciary obligation. Courts have held that fiduciary relationships exist between a company and another party in a broad variety of situations involving a relationship between a company and its lawyers, investment bankers, financial printers, employees, technical advisors and others.
2.4 Information should not be considered to have been publicly disclosed until a reasonable time after it has been made public (for example, by a press release). Someone with access to inside information may not "beat the market" by trading simultaneously with, or immediately after, the official release of material information.
2.5 The responsibility of ensuring that the proposed transaction
does not constitute insider dealing or a conflict with the
interests of a client remains with the relevant employee and
obtaining pre-clearance to enter into a transaction under
Section 3.3 below does not absolve that responsibility.
2.6 INVESCO is in a unique position, being privy to market research and rumours and being privy also to information about its clients which may be public companies. INVESCO employees must be aware and vigilant to ensure that they cannot be accused of being a party of any 'insider dealing' or market abuse situations.
2.7 In particular, the following investment activities must not be entered into without carefully ensuring that there are no implications of insider trading:
2.7.1 Trading in shares for a client in any other client of
INVESCO which is quoted on a recognised stock
exchange.
2.7.2 Trading in shares for a client in a quoted company
where INVESCO:
i) obtains information in any official capacity
which may be price sensitive and has not
been made available to the general public.
ii) obtains any other information which can be
substantiated in connection with a quoted
company which is also both price sensitive
and has not been made available to the
general public.
2.7.3 Manipulation of the market through the release of
information to regular market users which is false or
misleading about a company.
2.7.4 Release of information about a company that would
have the effect of distorting the market in such a
way to be considered market abuse.
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2.8 REPORTING REQUIREMENT. Whenever an employee believes that he or she may have come into possession of material, non-public information about a public company, he or she personally must immediately notify the Compliance Department and should not discuss such information with anyone else including INVESCO employees and should not engage in transactions for himself or others, including INVESCO clients.
2.9 Upon receipt of such information the Compliance Department will include the company name on a 'Black list' or 'Restricted list' of which no transactions may be entered into. This list will be advised to the Equity dealing desk and no discussion will be entered into.
2.10 CONFIDENTIALITY. No information regarding the affairs of any client of INVESCO may be passed to anyone outside INVESCO unless specifically requested by law, regulation or court order. In any event, the Compliance and Legal Department must be consulted prior to furnishing such information.
2.11 SANCTIONS. Any employee who knowingly trades or recommends trading while in possession of material, non-public information may be subject to civil and criminal penalties, as well as to immediate suspension and/or dismissal from INVESCO.
3 PERSONAL INVESTING ACTIVITIES, PRE-CLEARANCE AND PRE-NOTIFICATION
REQUIREMENTS
3.1 TRANSACTIONS COVERED BY THIS CODE All transactions by
employees in investments made for Covered Accounts are subject
to the pre-clearance procedures, trading restrictions,
pre-notification and reporting requirements described below,
unless otherwise indicated. For a listing of the employee and
other accounts subject to these restrictions and requirements
("Covered Accounts"), see Appendix A.
3.2 TRANSACTIONS IN THE FOLLOWING INVESTMENTS ("EXEMPT
INVESTMENTS") ARE NOT SUBJECT TO THE TRADING RESTRICTIONS OR
OTHER REQUIREMENTS OF THIS CODE AND NEED NOT BE PRE-CLEARED,
PRE-NOTIFIED OR REPORTED:
3.2.1 Registered UNAFFILIATED (e.g. Schroders) open ended
Collective Investment Schemes [CIS] including; mutual
funds, open-ended investment companies/ICVCs or unit
trusts - but not closed-end funds, e.g. Investment
Trusts; and
3.2.2 Securities which are direct obligations of an OECD
country (eg US Treasury's).
TRANSACTIONS WHICH REQUIRE PRE CLEARANCE OR PRE NOTIFICATION.
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3.3 PRE-CLEARANCE
3.3.1 Prior to entering an order for a Securities
Transaction in a Covered Account, the employee must
complete a Trade Authorisation Form set forth in
Appendix C (also found on the Compliance intranet
site) and submit the completed form electronically to
the UK Equity Dealers by e-mail to Investment
Dealers.
The Trade Authorisation Form requires employees to
provide certain information and to make certain
representations in connection with the specific
securities transaction(s).
3.3.2 After receiving the completed Trade Authorisation
Form, UK Equity Dealers will review the information
set forth in the form and, as soon as practicable,
will determine whether to clear the proposed
Securities Transaction, subject to local
requirements.
3.3.3 Once UK Equity Dealers have authorised the
transaction, it is passed electronically to
Compliance to complete the authorisation process --
again this is conducted electronically by e-mail. UK
Equity Dealers will forward the authorised Form to
*UK- Compliance Personal Share Dealing, who will then
check the proposed transaction against the
significant holdings/block list to ascertain whether
or not the security in question has been blocked.
3.3.4 If satisfactory, then the Form will be authorised by
Compliance and confirmation returned by e-mail to the
individual, who will then be at liberty to deal
through his or her broker within the designated
timescales.
3.3.5 No order for a Securities Transaction for which
pre-clearance authorisation is sought may be placed
prior to the receipt of authorisation of the
transaction by both the UK Equity Dealers and
Compliance. The authorisation and date and time of
the authorisation must be reflected on the Trade
Authorisation Form (see Appendix C). The original of
the completed form will be kept as part of INVESCO's
books and records, and matched to the copy contract
note that the member of staff must ensure is sent by
their broker to INVESCO. Please be advised that it is
the individuals responsibility to ensure that a
contract note is sent to the UK Compliance Department
to be matched against the Permission to Deal Form.
This must be sent within 10 working days. Failure to
supply a trade confirmation is a breach of the Code.
Further personal securities transactions will not be
approved where contract notes/trade confirmations are
outstanding.
3.3.6 If an employee receives permission to trade a
security or instrument, the trade must be executed by
the close of business on the next business day,
unless the local Compliance Officer's authorisation
to extend this period has been obtained.
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3.4 PRE-NOTIFICATION
3.4.1 Transactions to buy or sell Venture Capital Trust
ordinary securities or to buy, sell, switch or
transfer holdings in AMVESCAP ordinary shares or in
the INVESCO UK ICVCs, the INVESCO Global Product
Range or other affiliated schemes are subject to
pre-notification directly to the Compliance
Department regardless of whether the order is placed
directly or through a broker/adviser. The employee
must complete the relevant sections of the Trade
Authorisation Form which can be found in Appendix C
(and on the Compliance intranet site) and send it by
e-mail to *UK- Compliance Personal Share Dealing.
Transactions are subject to the 60 day holding period
requirements.
3.4.2 It will be necessary to send copies of contract notes
to the Compliance Department.
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3.5 TRANSACTIONS THAT DO NOT NEED TO BE PRE-CLEARED BUT MUST BE REPORTED. The pre-clearance requirements (and the trading restrictions on personal investing described below) do not apply to the following transactions:
3.5.1 Discretionary Accounts. Transactions effected in any
Covered Account over which the employee has no direct
or indirect influence or control (a "Discretionary
Account"). An employee shall be deemed to have "no
direct or indirect influence or control" over an
account only if all of the following conditions are
met:
i) investment discretion for such account has
been delegated in writing to an independent
fiduciary and such investment discretion is
not shared with the employee, or decisions
for the account are made by a family member
or significant other and not by, or in
connection with, the employee;
ii) the employee (and, where applicable, the
family member or significant other)
certifies in writing that he or she has not
and will not discuss any potential
investment decisions with such independent
fiduciary or household member; and
iii) the Compliance Department has determined
that the account satisfies the foregoing
requirements.
3.5.2 Governmental Issues Investments in the debt
obligations of Federal agencies or of state and
municipal governments or agencies, (eg Essex Council
Electricity Bond).
3.5.3 Non-Volitional Trades Transactions which are
non-volitional on the part of the employee (such as
the receipt of securities pursuant to a stock
dividend or merger).
3.5.4 Automatic Transactions Purchases of the stock of a
company pursuant to an automatic dividend
reinvestment plan or an employee stock purchase plan
sponsored by such company.
3.5.5 Rights Offerings Receipt or exercise of rights issued
by a company on a pro rata basis to all holders of a
class of security. Employees must, however, pre-clear
transactions for the acquisition of such rights from
a third party or the disposition of such rights.
3.5.6 Interests in Securities comprising part of a
broad-based, publicly traded market basket or index
of stocks, eg S & P 500 Index, FTSE 100, DAX.
3.5.7 Non-Executive Director's transactions Transactions in
securities, except for AMVESCAP PLC shares and/or UK
Investment Trusts managed by INVESCO, by
non-executive Directors.
3.5.8 Note that all of the transactions described in
paragraphs 3.4.1. to 3.4.8 while not subject to
pre-clearance are nevertheless subject to all of the
reporting requirements set forth below in paragraph
7.3.
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4 TRADE RESTRICTIONS ON PERSONAL INVESTING
4.1 All transactions in Covered Accounts which are subject to the preclearance requirements specified in this Code are also subject to the following trading restrictions:
4.1.1 BLACKOUT RESTRICTIONS Transactions in Covered
Accounts generally will not be permitted during a
specific period before and after a client account
trades in the same security or instrument.
4.1.2 BLACKOUT PERIODS An employee may not buy or sell, or
permit any Covered Account to buy or sell, a security
or any instrument:
i) within SEVEN calendar days before or after
the day on which any client account trades
in the same security or instrument or in a
security convertible into or exchangeable
for such security or instrument (including
options) on transactions other than those
covered under the paragraph below, or
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ii) within TWO business days before or after the
day on which a pro rata "strip" trade, which
includes such security, is made for the
purpose of rebalancing client accounts.
4.1.3 Blackout periods will no longer apply to equity
transactions in "main index" constituents, i.e. FTSE
100, Dow Jones, etc, subject to a cost and proceeds
limit of Pound Sterling 25,000 per transaction.
Normal blackout conditions will apply to transactions
outside of these criteria. If in any doubt please
consult your local Compliance Officer. On a case by
case basis and at the discretion of the Compliance
Officer in consultation with the Chief Investment
Officer, this limit may be relaxed.
4.1.4 Trades effected by INVESCO for the account of an
index fund it manages in the ordinary course of such
fund's investment activity will not trigger the
blackout period. However, the addition or removal of
a security from an index, thereby triggering an index
fund trade, would cause employee trades in such
security to be blacked-out for the seven prior and
subsequent calendar days, as described above.
4.1.5 In the event there is a trade in a client account in
the same security or instrument within a blackout
period, the employee may be required to close out the
position and to disgorge any profit to a charitable
organisation chosen by the local Board of Directors;
provided, however, that if an employee has obtained
preclearance for a transaction and a subsequent
client trade occurs within the blackout period, the
Chief Executive Officer in consultation with the
Compliance Officer, upon a demonstration of hardship
or extraordinary circumstances, may determine to
review the application of the disgorgement policy to
such transaction and may select to impose alternative
restrictions on the employee's position. The
disgorgement of profits will only apply if the total
profit exceeds Pound Sterling 100 within the blackout
period.
4.1.6 AMVESCAP PLC SHARES Pre-clearance is also required to
buy or sell AMVESCAP PLC Shares. Permission will not
be given during a' closed period' i.e., two months
before the half year and year end results, one month
before the first and third quarters results, are
announced.
A "closed period" is defined by the rules as the
period of two months prior to the announcement of the
year end results and the period of one month prior to
the announcement of the interim and quarterly
results. The closed period may be shorter depending
on when the results are announced but cannot start
until the end of the relevant reporting period.
Full details of the AMVESCAP stock transaction
Pre-Clearance Guide and restrictions for all
employees of AMVESCAP can be found in Appendix F.
4.1.7 INVESCO INVESTMENT TRUSTS Staff dealing in INVESCO
Investment Trusts will also be subject to closed
periods as dictated by each of the Trusts.
4.1.8 UK ICVCS, THE OFFSHORE GLOBAL PRODUCT RANGE (GPR) and
other affiliated schemes will be subject to the Short
Term Trading restrictions (60 day rule - see 4.1.9).
The preferential rate of sales commission allowed to
staff will be withdrawn in circumstances where it is
apparent that the employee has traded on a short term
basis in those shares/units i.e. where previous
transactions by that person have resulted in the
short term holding of those investments. Shares/Units
of UK ICVCs, the GPR and affiliated schemes will not
be accepted for redemption if the funds themselves
are closed for redemption due to the effects of
subsequent market or currency movements.
4.1.9 SHORT TERM TRADING PROFITS It is INVESCO's policy to
restrict the ability of employees to benefit from
short-term trading in securities and instruments.
Employees must disgorge profits made on the sale by
an employee of any security or instrument held less
than 60 days and will not be permitted to purchase
any security or instrument that has been sold by such
employee within the prior 60 days. Employees are
required to disgorge profits made on the sale in a
Covered Account within the 60 days period. Exceptions
may be granted by the Compliance Department on a case
by case basis. This policy applies to trading in all
types of securities and instruments, except where in
a particular case the local Chief Executive Officer
in consultation with the Compliance Officer has made
a specific finding of hardship and it can be
demonstrated that no potential abuse or conflict is
presented (for example, when an employee's request to
sell a security purchased within 60 days prior to the
request is prompted by a major corporate or market
event, such as a tender offer, and the security was
not held in client accounts). To clarify this also
applies to non affiliated mutual funds.
4.1.10 INITIAL PUBLIC OFFERINGS ("IPO") No employee may
purchase or permit any Covered Account to purchase a
security offered pursuant to an initial public
offering, except in a Venture Capital Trust, wherever
such offering is made. However, in certain
circumstances an employee may be permitted to buy an
IPO for example where the public offering is made by
a Government of where the employee is resident and
different amounts of the offering are specified for
different investor types eg private and
institutional, the local Compliance Officer may allow
such purchases after consultation with the local
Chief Executive Officer or his designee.
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4.1.11 PRIVATELY-ISSUED SECURITIES Employees may not
purchase or permit a Covered Account to purchase or
acquire any privately-issued securities, other than
in exceptional cases specifically approved by the
local Chief Executive Officer and Compliance Officer
(e.g., where such investment is part of a
family-owned and operated business venture that
would not be expected to involve an investment
opportunity of interest to any INVESCO client).
Requests for exceptions should be made in the first
instance to the local Compliance Officer.
4.1.12 Employees, however, may invest in interests in
private investment funds (i.e., hedge funds) that are
established to invest predominantly in public
securities and instruments, subject to the
pre-clearance procedures, trading restrictions and
reporting requirements contained in this Code.
Employees may also invest in residential
co-operatives and private recreational clubs (such as
sports clubs, country clubs, luncheon clubs and the
like) for their personal use; such investments are
not subject to the pre-clearance procedures, trading
restrictions and reporting requirements unless the
employee's investing is part of a business conducted
by the employee. Such ownership should be reported to
the Compliance Officer.
4.1.13 SHORT SALES An employee may not sell short a security
unless this is specifically related to personal
taxation issues. Requests for exceptions should be
made to the local Compliance Officer.
4.1.14 FINANCIAL SPREAD BETTING Employees may not enter into
Financial Spread betting arrangements. The potential
problematical issues to both the employee and INVESCO
that could arise if the market were to move in the
wrong direction are considered unacceptable and
therefore prohibited.
4.1.15 FUTURES Employees may not write, sell or buy
exchange-traded futures, synthetic futures, swaps and
similar non-exchange traded instruments.
4.1.16 EXCEPTIONS The Chief Executive Officer or his
designee in consultation with the Compliance Officer
may in rare instances grant exceptions from these
trading restrictions upon written request. Employees
must demonstrate hardship or extraordinary
circumstances. Any exceptions granted will be
reported to the local Board of Directors at least
annually. Additionally if a local Board or its
designee wish to impose additional restrictions these
should be included in Appendix B.
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5 ECONOMIC OPPORTUNITIES, CONFIDENTIALITY AND OUTSIDE DIRECTORSHIPS
5.1 In order to reduce potential conflicts of interest arising from the participation of employees on the boards of directors of public, private, non-profit and other enterprises, all employees are subject to the following restrictions and guidelines:
5.1.1 An employee may not serve as a director of a public
company without the approval of the local Chief
Executive Officer after consultation with the local
Compliance Officer.
5.1.2 An employee may serve on the board of directors or
participate as an adviser or otherwise, or advisers
of a private company only if:
(i) client assets have been invested in such
company and having a seat on the board would
be considered beneficial to our clients
interest; and
(ii) service on such board has been approved in
writing by the local Chief Executive
Officer. The employee must resign from such
board of directors as soon as the company
contemplates going public, except where the
local Chief Executive Officer in
consultation with the Compliance Officer has
determined that an employee may remain on a
board. In any event, an employee shall not
accept any compensation for serving as a
director (or in a similar capacity) of such
company; any compensation offered shall
either be refused or, if unable to be
refused, distributed pro rata to the
relevant client accounts.
5.1.3 An employee must receive prior written permission
from the Chief Executive Officer or his designee
before serving as a director, trustee or member of an
advisory board of either:
(i) any non-profit or charitable institution; or
(ii) a private family-owned and operated
business.
5.1.4 An employee may serve as an officer or director of a
residential co-operative, but must receive prior
written permission from the local Chief Executive
Officer and the local Compliance Department before
serving as a director if, in the course of such
service, he or she gives advice with respect to the
management of the co-operative's funds.
5.1.5 If an employee serving on the board of directors or
advisers of any entity comes into possession of
material, non-public information through such
service, he or she must immediately notify the local
Compliance Officer.
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5.1.6 An INVESCO employee shall not take personal advantage
of any economic opportunity properly belonging to an
INVESCO Client or to INVESCO itself. Such
opportunities could arise, for example, from
confidential information belonging to a client or the
offer of a directorship. Employees must not disclose
information relating to a client's intentions,
activities or portfolios except:
i) to fellow employees, or other agents of the
client, who need to know it to discharge
their duties; or
ii) to the client itself.
5.1.7 Employees may not cause or attempt to cause any
Client to purchase, sell or hold any Security in a
manner calculated to create any personal benefit to
the employee or INVESCO.
5.1.8 If an employee or immediate family member stands to
materially benefit from an investment decision for an
Advisory Client that the employee is recommending or
participating in, the employee must disclose that
interest to persons with authority to make investment
decisions or to the Compliance Officer. Based on the
information given, a decision will be made on whether
or not to restrict the employee's participation in
causing a client to purchase or sell a Security in
which the employee has an interest.
5.1.9 An employee must disclose to those persons with
authority to make investment decisions for a Client
(or to the Compliance Officer if the employee in
question is a person with authority to make
investment decisions for the Client), any Beneficial
Interest that the employee (or immediate family) has
in that Security or an Equivalent Security, or in the
issuer thereof, where the decision could create a
material benefit to the employee (or immediate
family) or the appearance of impropriety. The person
to whom the employee reports the interest, in
consultation with the Compliance Officer, must
determine whether or not the employee will be
restricted in making investment decisions.
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6 CLIENT INVESTMENTS IN SECURITIES OWNED BY INVESCO EMPLOYEES
6.1 GENERAL PRINCIPLES In addition to the specific prohibitions on certain personal securities transactions as set forth herein, all employees are prohibited from:
6.1.1 Employing any device, scheme or artifice to defraud
any prospect or client;
6.1.2 Making any untrue statement of a material fact or
omitting to state to a client or a prospective
client, a material fact necessary in order to make
the statements made, in light of the circumstances
under which they are made, not misleading;
6.1.3 Engaging in any act, practice or course of business
which operates or would operate as a fraud or deceit
upon any prospect or client;
6.1.4 Engaging in any manipulative practice with respect to
any prospect or client; or
6.1.5 Revealing to any other person (except in the normal
course of his or her duties on behalf of a client)
any information regarding securities transactions by
any client or the consideration of any client or
INVESCO of any securities transactions.
7 REPORTS
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7.1 IN ORDER TO IMPLEMENT THE GENERAL PRINCIPLES, RESTRICTIONS AND PROHIBITIONS CONTAINED IN THIS CODE, EACH EMPLOYEE IS REQUIRED TO FILE THE FOLLOWING PERIODIC REPORTS:
7.2 INITIAL CERTIFICATION AND SCHEDULES. Within 10 business days of commencing employment at INVESCO, each new employee shall submit to the Compliance Department:
7.2.1 a signed Initial Certification of Compliance with the
INVESCO Code (See Appendix D); and
7.2.2 schedules listing
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(i) all Covered Accounts; and
(ii) directorships (or similar positions) of for-profit, non-profit and other enterprises.
7.3 CONFIRMATIONS AND MONTHLY STATEMENTS Each employee shall cause to be provided to the Compliance Department where an outside broker undertakes the transaction:
7.3.1 Duplicate copies of confirmations of all transactions
in each Covered Account within 10 business days; or
7.3.2 Not later than 10 days after the end of each month,
monthly statements (if any are regularly prepared)
for each Covered Account.
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7.4 ANNUAL CERTIFICATION Each employee shall provide, or cause to be provided, as requested, to the Compliance Department, not later than 10 days after the end of each annual period (or as specified in the electronic request), a signed annual Certification of Compliance with the INVESCO Code (Appendix E) containing:
7.4.1 To the extent not included in the foregoing monthly
statements, a schedule listing:
i) all Covered Accounts/securities and any
other transactions not included in the
monthly statements; and
ii) directorships (or similar positions) of
for-profit, non-profit and other
enterprises.
7.4.2 A schedule listing directorships (or similar
positions) of for-profit, non-profit and other
enterprises;
7.4.3 With respect to Discretionary Accounts, if any,
certifications that such employee does not discuss
any investment decisions with the person making
investment decisions; and
7.4.4 With respect to any non-public security owned by such
employee, a statement indicating whether the issuer
has changed its name or publicly issued securities
during such calendar year.
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7.5 EXEMPT INVESTMENTS Confirmations and periodic reports need not be provided with respect to Exempt Investments, (see 3.2).
7.6 DISCLAIMER OF BENEFICIAL OWNERSHIP Any report required under this Code may contain a statement that such report is not to be construed as an admission by the person making the report that he or she has any direct and indirect beneficial ownership of the security to which the report relates.
7.7 ANNUAL REVIEW The European Director of Compliance in consultation with the local Compliance Officers will review the Code as necessary, in light of legal and business developments and experience in implementing the Code, and will prepare a report to the Board of Directors that:
7.7.1 summarizes existing procedures concerning personal
investing and any changes in the procedures made
during the past year,
7.7.2 identifies any violations requiring significant
remedial action during the past year, and
7.7.3 identifies any recommended changes in existing
restrictions or procedures based on the experience
under the Code, evolving industry practices, or
developments in applicable laws or regulations.
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8 GIFTS AND ENTERTAINMENT
8.1 In order to minimize any conflict, potential conflict or appearance of conflict of interest, employees are subject to the restrictions and guidelines with respect to gifts made to or received from, and entertainment with, a person that does business with or provides services to INVESCO, that may do business or is being solicited to do business with INVESCO or that is associated with an organisation that does or seeks to do business with INVESCO (a "Business Associate").
A revised UK and Ireland Gifts, Benefits and Entertainment Policy will be communicated shortly under separate cover reflecting the AVZ policy.
9 MISCELLANEOUS
9.1 INTERPRETATION The provisions of this Code will be interpreted by the local Compliance Officer, as applicable. Questions of interpretation should be directed in the first instance to the local Compliance Officer or his/her designee or, if necessary, with the Compliance Officer of another INVESCO entity. The interpretation of the local Compliance Officer is final.
9.2 SANCTIONS If advised of a violation of this Code by an employee, the local Chief Executive Officer (or, in the case of the local Chief Executive Officer, the local Board of Directors) may impose such sanctions as are deemed appropriate. Any violations of this Code and sanctions therefore will be reported to the local Board of Directors at least annually.
9.3 EFFECTIVE DATE This revised Code shall become effective as of 1 March 2007.
DEFINITIONS
1. 'ADVISORY CLIENT' means any client (including both investment companies
and managed accounts) for which INVESCO serves as an investment
adviser, renders investment advice, or makes investment decisions.
2 'BENEFICIAL INTEREST' means the opportunity to share, directly or
indirectly, in any profit or loss on a transaction in Securities,
including but not limited to all joint accounts, partnerships and
trusts.
3 'COVERED ACCOUNTS' means:
3.1 any account/securities held by you, or your family, while an
employee;
3.2 accounts/securities held by you for the benefit of your
spouse, significant other, or any children or relatives who
share your home;
3.3 accounts/securities for which you have or share, directly or
indirectly, through any contract, arrangement, understanding,
relationship, or otherwise:
(i) voting power (which includes power to vote, or to
direct the voting of, a security), or
(ii) investment power (which includes the power to
dispose, or to direct the disposition) of a security;
or
3.4 accounts/securities held by any other person to whose support
you materially contribute or in which, by reason of any
agreement or arrangement, you have or share benefits
substantially equivalent to ownership, including, for example:
(i) arrangements (which may be informal) under which you
have agreed to share the profits from an investment,
and
(ii) accounts maintained or administered by you for a
relative (such as children or parents) who do not
share your home.
3.5 Families include husbands and wives, significant other, sons
and daughters and other immediate family only where any of
those persons take part in discussion or passing on of
investment information.
4. 'EMPLOYEE' means a person who has a contract of employment with, or
employed by, INVESCO UK or any associated INVESCO Company within
Europe; including consultants, contractors or temporary employees.
5. 'EQUIVALENT SECURITY' means any Security issued by the same entity as
the issuer of a security, including options, rights, warrants,
preferred stock, restricted stock, bonds and other obligations of that
company.
6. 'FUND' means an investment company for which INVESCO serves as an
adviser or subadviser.
7. 'HIGH QUALITY SHORT-TERM DEBT INSTRUMENTS' means any instrument having
a maturity at issuance of less than 366 days and which is treated in
one of the highest two rating categories by a Nationally Recognised
Statistical Rating Organisation, or which is unrated but is of
comparable quality.
8. 'INDEPENDENT FUND DIRECTOR' means an independent director of an
investment company advised by INVESCO.
9. 'INITIAL PUBLIC OFFERING' means any security which is being offered for
the first time on a Recognised Stock Exchange.
10. 'OPEN-ENDED COLLECTIVE INVESTMENT SCHEME' means any Open-ended
Investment Company, US Mutual Fund, UK ICVC or Dublin Unit Trust,
Luxembourg SICAV, French SICAV or Bermuda Fund.
11. 'SECURITIES TRANSACTION' means a purchase of or sale of Securities.
12. 'SECURITY' includes stock, notes, bonds, debentures and other evidences
of indebtedness (including loan participations and assignments),
limited partnership interests, investment contracts, and all derivative
instruments, such as options and warrants.
13. "UK ICVC, THE GPR AND AFFILIATE SCHEMES" defined as all UK domiciled
retail and institutional INVESCO ICVCs, and all INVESCO Dublin and
Luxembourg SICAVs and Unit Trusts.
14. "MAIN INDEX" defined as a member of the FTSE 100 or equivalent. The
equivalency will be determined by the Compliance Officer on a case by
case basis.
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PROCEDURES TO DEAL FOR INVESCO UK & IRELAND
1 The procedures to deal are as follows:
A: Obtain the Pre-Clearance Trade Authorisation Form from the "forms" section of the Compliance Intranet site.
B: Complete Trade Authorisation Form noting:
i) permission sought to either buy or sell;
ii) the amount in shares or currency;
iii) is the transaction an INVESCO ICVC/ISA/PEP -- yes or no -- if yes, then you will have to submit your pre-clearance form to *UK- Compliance Personal Share Dealing e-mail group -- if no, then pre-clearance is not required;
iv) type of security;
v) name of company or other;
vi) date of request to deal;
vii) name of beneficial owner; and
viii) address of beneficial owner.
Then complete each of the questions in connection with the transaction you require completed -- "yes" or "no" answers will be required.
C: For Venture Capital Trust ordinary securities or for INVESCO ICVC/PEP/ISA/Mutual Fund Trades, you should now only complete section Two. Once you have answered both questions, the pre-clearance form must be submitted to the e-mail *UK- COMPLIANCE PERSONAL SHARE DEALING - Compliance will review the prospective transaction and revert to you by e-mail. Once you have received this confirmation e-mail you are free to deal. However, the trade must be completed by the end of the next business day from the date of confirmation.
If you wish to sell/buy AMVESCAP shares you should complete
Section two as noted above.
D: For Equity, Bond or Warrant deals, obtain pre-clearance to
deal from the UK Investment Dealers by submitting the
completed pre-clearance form by e-mail to - *UK- INVEST.
DEALERS.
E: Once the UK Investment Dealers have authorised the pre-clearance form, they will send the form on by e-mail to the Compliance Department for additional authorisation. UK Investment Dealers will send the form by e-mail to *UK- COMPLIANCE PERSONAL SHARE DEALING.
Once Compliance have completed their checks, they will authorise the pre-clearance form and send back to the originator. The originator then has until close of business the day after pre-clearance is granted to deal. IF DEALING IS NOT COMPLETED IN THIS TIME FRAME, THEN ADDITIONAL PRE-CLEARANCE MUST BE SOUGHT VIA THE SAME PROCESS.
F: Once authority has been granted from the UK Investment Dealers and Compliance, the originator must also send a copy of the completed form to Elaine Coleman in Henley Compliance, who will enter the authority in the Personal Share Dealing Register.
G: A copy of the contract note must also be sent to Compliance within 5 working days.
NB PERMISSION TO DEAL WILL NOT BE GRANTED RETROSPECTIVELY. DEALS
UNDERTAKEN WITHOUT PERMISSION WILL BE BROUGHT TO THE COMPLIANCE OFFICER'S ATTENTION, BY A REVIEW OF THE PERSONAL SHARE DEALING REGISTER, FOR DISCUSSION WITH THE PERSON CONCERNED AND THE LOCAL CHIEF EXECUTIVE OFFICER AS APPROPRIATE.
INVESCO UK AND IRELAND
PRE-CLEARANCE OF PERSONAL TRADE AUTHORISATION FORM
THIS FORM IS FOR USE BY UK & IRELAND STAFF
PLEASE ENSURE YOU HAVE OPENED THIS FORM WITH MACROS ENABLED
Section A STEP 1 PLEASE COMPLETE THIS SECTION:
PLEASE COMPLETE THIS SECTION FULLY BY PUTTING AN "X" IN ONLY ONE OF THE BOXES BELOW AND THEN PRESSING THE ENTER BUTTON ON YOUR KEYPAD. THE NOTE BELOW THE BOXES WILL THEN TELL YOU WHAT TO DO NEXT
This is a transaction in a Venture Capital Trust (VCT) or an INVESCO/Invesco Perpetual ICVC/ISA/PEP or a transaction in AMVESCAP shares This a transaction in a non-INVESCO ICVC /ISA/PEP This is a transaction which is not listed in the above two options (e.g. Investment Trusts; Ordinary shares etc..)
PLEASE FOLLOW THE INSTRUCTIONS ABOVE FOR GUIDANCE
I have read the INVESCO Code of Ethics and believe that the prepared trade fully complies with the requirements of the Code.
Click here to view the INVESCO UK and Ireland Code of Ethics
(If you click link press the enter button on returning to form)
STEP 2: COMPLETE EITHER SECTION B OR C BELOW AS INSTRUCTED ABOVE AND READ INSTRUCTIONS CAREFULLY
Section B -- Venture Capital Trusts (VCTs); AMVESCAP and Invesco Perpetual ICVC/ISA/PEP/Mutual Fund Trades (Complete this section if directed by Section A above.)
Step 3: Answer the questions below. If you are unable to change the answers to "N" please press the enter button and try again. If this does not work then you may not have enabled macros when opening the form and you should close the form and start again.
1. Are you aware of any recent (within 24 hours) dilution adjustments made against the fund(s) covered? x Yes No
2. Have you or any account covered by the pre-authorization provisions of the Code purchased or sold these securities (or equivalent securities) in the prior 60 days? x Yes No
Step 4 E-mail to: UK -- Compliance Personal Share Dealing
Date: Time:
------------------------- --------- -------
Compliance
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Step 5: Compliance will review and revert by e-mail. You can now trade. The trade must be completed by the end of the next business day from the date of this confirmation. For UK and Ireland staff please ensure copy contract notes are forwarded to Elaine Coleman. For Continental European Staff contract notes should be provided to their local Compliance representative.
Section C -- Equity, Bonds, Warrants etc
Step 3: Answer the questions below. If you are unable to change the answers to "N" please press the enter button and try again. If this does not work then you may not have enabled macros when opening the form and you should clear the form and start again.
1 Do you, or to your knowledge does anyone at INVESCO, possess material
non-public information regarding the security or the issue of the
security? X Yes No
2 To your knowledge are the securities (or equivalent securities) being
considered, for purchase or sale by one or more accounts managed by
INVESCO? X Yes No
3 Have you or any account covered by the pre-authorization provisions of
the Code purchased or sold these securities (or equivalent securities)
in the prior 60 days? X Yes No
4 Are the securities being acquired in an initial public offering?
X Yes No
5 Are the securities being acquired in private placement? If so, please
provide a written explanation on a separate sheet of paper.
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X Yes No
STEP 4: E-mail to: "UK-Invest. Dealers
Authorized by: Date: Time:
Investment Dealers
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Investment Dealers are signing off to confirm that the securities in question have not been traded in the last seven days (unless the deal is E.25,000 and a main index constituent) and there are no outstanding or loss.
STEP 5: Investment Dealers will forward the deal to UK Compliance. Compliance will approve or reject items back to the applicant.
Compliance sign off is given for securities deals on the basis that section 3 questions have been answered 'No' and there would be no breach of Regulatory rules. INVESCO's fiduciary duty by the trade being executed and evidencing checking of MFTP based restrictions controlled by Compliance Administration.
Step 6: Once authorization has been received from Dealers and Compliance you can place the trade by the end of the next business day without further approval. UK and Ireland staff must provide a copy of the contract note to Elaine Coleman, Compliance Department, Henley. Continental European staff must provide copy contract enter to
APPENDIX C
AUTHORITY TO DEAL
This is to confirm that authorisation has been given today to the above application to acquire/dispose of the above amount of shares/bonds/options etc.
This consent shall remain valid until the end of the next business day from the date of this authority letter and the transaction must be completed within this time period.
As a condition of this consent the Company reserves the right to its withdrawal if circumstances arise, prior to your effecting this transaction, that would then make it inappropriate for you to enter into this transaction.
You are required to ensure that a copy of the contract note evidencing the transaction is forwarded to the relevant Compliance department as stated above.
This authorisation is given subject to the INVESCO Code of Ethics. 01 12 2006
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INVESCO UK Ltd. assures that the confidentiality standards and data protection requirements of the country of origin are maintained. It also assures that all information regarding employees' requests for trading remains confidential and are handled by authorised personnel only.
ACKNOWLEDGMENT OF RECEIPT
OF INVESCO UK REVISED CODE OF ETHICS
I ACKNOWLEDGE THAT I HAVE RECEIVED THE INVESCO CODE OF ETHICS DATED 1 MARCH 2007, AND REPRESENT THAT:
1. In accordance with Section 7 of the Code of Ethics, I will fully disclose the Securities holdings in Covered Accounts*
2. In accordance with Section 3 of the Code of Ethics, I will obtain prior
authorisation for all Securities Transactions in each of my Covered
Accounts except for transactions exempt from pre-clearance under
Section 3 of the Code of Ethics*
3. In accordance with section 7 of the Code of Ethics, I will report all Securities Transactions in each of my Covered Accounts except for transactions exempt from reporting under Section 3 of the Code of Ethics.
4. I will comply with the Code of Ethics in all other respects as well.
*Representations Nos: 1 and 2 do not apply to Independent Fund Directors
ANNUAL CERTIFICATION OF COMPLIANCE WITH THE INVESCO CODE OF ETHICS
TO BE COMPLETED BY ALL EMPLOYEES FOLLOWING THE END OF EACH CALENDAR YEAR
I hereby certify that, with respect to the calendar year ending on 31 December, 2006 (the 'Calendar Year), I have arranged for monthly account statements for each of my Covered Account(s) to be provided to INVESCO if applicable. I further certify that I have reviewed the attachments hereto and confirm that:
a) Schedule A contains a complete list of Covered Account(s) as well as a complete list of my directorships, advisory board memberships and similar positions; and
b) Schedule B contains a complete list of trades, other than Exempt Investments, in my Covered Account(s) during the Calendar Year.
I further certify that:
a) For any of my Covered Accounts which have been approved by the Compliance Department as a Discretionary Account(s) (which have been identified on Schedule A with an 'E' prefix), that I have not exercised investment discretion or influenced any investment decisions and that I will not exercise investment discretion or influence any potential investment decisions with such Discretionary Account(s);
b) As appropriate, I have identified on Schedule A hereto those Covered Accounts which contain open-ended Collective Investment Schemes/Investment Companies shares only but for which account statements and confirms are not and have not been provided and hereby confirm that all securities transactions in these accounts are and will be limited exclusively to transactions in shares of open-ended Collective Investment Schemes;
c) For any privately-issued security held by me or my Covered Account(s), I will inform the Compliance Department upon learning that any issuer has either changed its name or has issued or proposed to issue any class of security to the public;
d) I have received a copy of and understand the Code in its entirety and acknowledge that I am subject to its provisions. I also certify that I have complied and will comply with its requirements;
e) I have provided my Department Head with a complete list of gifts received and accepted by me from a person/group that does business or seeks to do business with INVESCO during the Calendar Quarter; and
to the extent that any of the attached Schedules contain inaccurate or incomplete information, I have noted and initialled the change directly on the Schedule and returned this certification along with all Schedules to the Compliance Department. Capitalised terms used herein without definition shall have the meanings given to them in the Code.
UPON YOUR FULL REVIEW AND EXECUTION, PLEASE RETURN THE ENTIRE PACKAGE
IMMEDIATELY TO THE COMPLIANCE DEPARTMENT IN HENLEY
Annual Certificate of Compliance with THE INVESCO CODE OF ETHICS
COVERED ACCOUNTS
The following is a list of Covered Accounts subject to the INVESCO Code of Ethics:
DIRECTORSHIPS, ADVISORY BOARD MEMBERSHIPS AND SIMILAR POSITIONS HELD
The following is a list of directorships, advisory board memberships and similar positions that I hold:
Annual Certificate of Compliance with THE INVESCO CODE OF ETHICS
Trades undertaken during the period for which contract notes/monthly statements have not been forwarded:
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TYPE OF TRANSACTION IN AVZ PRE BASIS FOR QUARTERLY REPORTING ANNUAL REPORT OF
CLEARANCE APPROVAL OF TRANSACTIONS HOLDINGS
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- OPEN MARKET PURCHASES & SALES Yes Yes Yes
- TRANSACTIONS IN 401(k) PLAN
Local Not permitted in Local compliance Local compliance
compliance blackout periods. officer officer
officer
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EXERCISE OF EMPLOYEE STOCK OPTIONS WHEN SAME Yes Not permitted in Yes n/a
DAY SALE blackout periods.
- REC'D WHEN MERGED W/ INVESCO AVZ Company Local compliance
- OPTIONS FOR STOCK GRANTS Secretarial in Option holding officer
- OPTIONS FOR GLOBAL STOCK PLANS London (Michael period must be
- OPTIONS FOR RESTRICTED STKAWARDS Perman's office) satisfied.
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SALE OF STOCKS EXERCISED AND HELD UNTIL LATER Yes Not permitted in Yes Yes
DATE. OPTIONS EXERCISED WILL HAVE BEEN RECEIVED blackout periods.
AS FOLLOWS: Local
- REC'D WHEN MERGED W/ INVESCO compliance Stock holding Local compliance Local compliance
- OPTIONS FOR STOCK GRANTS officer period must be officer officer
- OPTIONS FOR GLOBAL STOCK PLANS satisfied.
- OPTIONS FOR RESTRICTED STKAWARDS
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SALE OF STOCK PURCHASED THROUGH SHARESAVE Yes Not permitted in Yes Yes
blackout periods.
Local Local compliance Local compliance
compliance officer officer
officer
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SALE OF STOCK PURCHASED THROUGH UK SIP Yes Not permitted in Yes Yes
blackout periods.
Local Local compliance Local compliance
compliance officer officer
officer
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1) OPEN MARKET PURCHASES/SALES - Pre-clearance to deal is required from Compliance, no dealing is permitted during close/blackout periods. Details of closed periods are posted to the intranet site by Company Secretarial (Michael Perman's Team).
2) EMPLOYEE STOCK OPTIONS (a) EXERCISE/SAME DAY SALE - authorisation of the Option is granted by Company Secretarial Department and signed by Trustees of the Scheme. Dealing would take place through Cazenove, who would not process the deal unless authorisation had been obtained.
3) EMPLOYEE STOCK OPTIONS (b) EXERCISE/TAKE POSSESSION/SUBSEQUENT DAY SALE - same as above, except that individual would pay for the shares and pay tax. The stock would then be lodged in the employee share service arrangement - then if subsequent disposal was sought the normal pre-clearance process would apply (pre-clearance from Compliance - no dealing during closed periods).
4) STOCK GRANTS (GLOBAL STOCK PLANS) - Awards made yearly, stock would be purchased through Company Secretarial and held for three years. After three years elect to keep the shares or distribute - stock would be transferred to employee share service arrangement with normal pre-clearance/closed period requirements.
5) EMPLOYEES WHO RECEIVE AVZ STOCK WHEN THEIR COMPANY IS PURCHASED BY AVZ - stock distribution as part of the transaction to buy the Company concerned. Stock would be issued to the individual concerned and, depending on the terms of the deal, may be required to be held for a period. Stock would be transferred into the employee share service, and subject to terms of the Company deal would then follow normal pre-clearance/close period guidelines.
6) RESTRICTED STOCK AWARDS - similar to stock grants as above - except tax not paid initially - pre-clearance from Compliance and closed period restrictions apply.
7) TRANSACTIONS IN AVZ STOCK VIA 401(k) PLAN - Transaction no different to open market purchases - pre-clearance required, dealing in closed periods no allowed.
8) SHARESAVE - If share save is exercised then stock would be placed into employee share service arrangement. Then if individual sells they go through normal pre-clearance and closed period process. Dealing through Cazenove, who are aware of all closed periods. So an individual would be unable to deal through them if permission was refused by Compliance for closed period reasons, as Cazenove have all the information as well. Special rules may be brought in at share save anniversary dates. These will be communicated as appropriate.
9) UK SIP - A UK SIP is open to UK employees - which is a tax efficient way of purchasing shares on a monthly basis. The shares must be held for 5 years from initial purchase date - sell before and then tax would be paid. If you sell after the five year period, then normal pre-clearance and closed period restrictions would apply.
(INVESCO LOGO)
INVESCO PLC
CODE OF CONDUCT
INTRODUCTION
Our company's Core Purpose and Mission are a logical beginning point for our Code of Conduct:
INVESCO is committed to "Helping People Worldwide Build Their Financial Security". That Core Purpose underlies our Mission, which is to deliver superior investment performance worldwide. Over the years, INVESCO has developed a set of values that will continue to help us achieve our Core Purpose and Mission. Our values include:
- Working with integrity
- Respecting our employees and clients
- Empowering people
This Code of Conduct ("Code of Conduct" or "Code") has been created to assist us in accomplishing our Core Purpose and Mission. It contains a number of policies and standards which, when taken together, are designed to help define the essence of the conduct of an INVESCO representative. These policies and standards are also intended to provide guidance to INVESCO personnel in fulfilling their obligations to comply with applicable laws, rules and regulations. This Code of Conduct applies to all officers and other employees of INVESCO and its subsidiaries (collectively, "Covered Persons"). These standards are neither exclusive nor complete. Additional company policies and rules can be found in the company's Intranet site, and others may be published to company personnel from time to time. Covered Persons are required to comply with all applicable laws, rules and regulations, whether or not specifically addressed in these policies. For additional guidance, or if you have questions regarding the existence, interpretation or application of any law, rule or regulation, please contact your supervisor, the General Counsel of your business unit or division, or the INVESCO General Counsel.
Our culture is based upon a set of shared values and principles. These include working with integrity and commitment to our clients, colleagues and communities. In practice, this means that our clients' interests must always come first, that Covered Persons should treat each other with respect and consideration, and that INVESCO should
participate as a responsible corporate citizen in every community in which it operates. This commitment is a vital part of our achieving our principal responsibility as a publicly-held company: producing a fair return on our shareholders' capital.
This Code of Conduct contains broad and general principles that supplement the specific policies, procedures and training within each business unit of INVESCO.
YOUR RESPONSIBLITIES
One person's misconduct can damage our entire company's hard-earned reputation and compromise the public's trust in the company. Every Covered Person should therefore become familiar with this Code and abide strictly by its provisions. In brief:
- It is your responsibility at all times to comply with the law and behave in an ethical manner.
- This Code cannot anticipate every possible situation or cover every topic in detail. The company has established special policies to address specific subjects and will update this Code and those specific policies from time-to-time. If you are unclear about a situation, stop and ask for guidance before taking action.
- Failure to obey laws and regulations violates this Code and may expose both you and the company to criminal or civil sanctions. Any violation of this Code or other company policies may result in disciplinary action, up to and including termination of employment. The company may also seek civil remedies from you and even refer criminal misconduct to law enforcement agencies.
- You are responsible for reporting possible violations of this Code to the company (see below).
- If you have a question about a topic covered in this Code or a concern regarding any conduct, please speak with your supervisor or with an appropriate member of the Legal & Compliance Department.
- If you are aware of a violation and are uncomfortable speaking with any of these people or wish to remain anonymous, you may call the toll-free INVESCO Compliance Reporting Line (the "Compliance Reporting Line"). If you are calling from a U.S. or Canadian location dial 1-866-7-3627. For calls from all other locations, dial an international operator and request a collect call to 1-704-943-1136. When asked for your name use "INVESCO." (See further details below.)
- If you are an attorney or an executive officer of the company, you may have additional reporting or other obligations under specific rules applicable to you, such as the POLICY FOR REPORTING BY ATTORNEYS EMPLOYED BY INVESCO PLC AND ITS SUBSIDIARIES, and you should also comply with such rules.
STATEMENT OF GENERAL PRINCIPLES
INVESCO with its subsidiaries and various divisions operates in a highly-regulated and complex environment. There are numerous layers of overlapping, and occasionally conflicting, laws, customs and local practices. This Code of Conduct was designed to provide all of us who are part of the INVESCO group with a clear statement of our firm's ethical and cultural standards.
We operate in major countries and securities markets throughout the world. Generally, we serve our clients as fiduciaries.
Fiduciary businesses are generally held to a higher standard of conduct than other businesses, and as such there are special obligations that apply. The following key duties and principles govern our conduct as fiduciaries:
- Best interests of clients - As fiduciaries, we have a duty to act with reasonable care, skill and caution in the best interests of our clients, and to avoid conflicts of interest.
- Global fiduciary standards - INVESCO seeks to maintain the same high fiduciary standards throughout the world, even though those standards may not be legally required, or even recognized, in some countries.
- Compliance with applicable laws, rules and regulations - We have a duty to comply with the laws, rules and regulations of the jurisdictions in which we operate, and to comply with the terms of our agreements with our clients.
- Client confidentiality - We must maintain the confidentiality of information relating to the client, and comply with the data protection requirements imposed by many jurisdictions.
- Information - Clients must be provided with timely and accurate information regarding their accounts.
- Segregation and protection of assets - Processes must be established for the proper maintenance, control and protection of client assets. Fiduciary assets must be segregated from INVESCO assets and property.
- Delegation of duties - Fiduciary duties should be delegated only when the client consents and where permitted by applicable law. Reasonable care, skill and caution must be exercised in the selection of agents and review of their performance.
- Client guidelines - INVESCO is responsible for making investment decisions on behalf of clients that are consistent with the prospectus, contract, or other controlling document relating to the client's account.
- Relations with regulators - We seek relationships with regulators that are open and responsive in nature.
1. Compliance with Laws, Rules and Regulations
INVESCO strives to ensure that all activity by or on behalf of INVESCO is in compliance with applicable laws, rules and regulations ("applicable laws"). Many of these applicable laws are specifically described in this Code of Conduct and in other INVESCO and business unit policies and procedures. In the conduct of our business, all Covered Persons are required to comply with all applicable laws.
2. Fair and Honest Dealing
Covered Persons shall deal fairly and honestly with INVESCO's shareholders, customers, suppliers, competitors and employees. Covered Persons shall behave in an ethical manner and shall not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing practice.
3. Conflicts of Interest
INVESCO and its Covered Persons must adhere to the highest standards of honest and ethical conduct. These include, but are not limited to, sensitivity to the existence of a conflict of interest or the appearance of a conflict of interest. Conflicts of interest can arise in many ways, and we must all be sensitive to those situations in which they are most likely to be present. A conflict of interest exists when a Covered Person's personal interest interferes, or appears to interfere, in any way with the interests of INVESCO or its clients, or when a Covered Person otherwise takes actions or has interests that may make it difficult to perform his or her company work objectively and effectively. For example, a conflict of interest would arise if a Covered Person, or a member of his or her family, receives improper personal benefits as a result of his or her position with INVESCO.
All Covered Persons owe a duty of undivided and unqualified loyalty to INVESCO and may not use their positions improperly to profit personally or to assist others in profiting at the expense of the company. All Covered Persons are therefore expected and
required to regulate their activities so as to avoid conflicts of interest. In addition, Covered Persons shall promptly communicate to the applicable member of the Legal & Compliance Department any material transaction or relationship that reasonably could be expected to give rise to a conflict of interest so that the company and the Covered Person may take steps to minimize the conflict.
Covered Persons shall not take for personal use (or for use by a family member) any business opportunity learned of during the course of serving INVESCO, using INVESCO property or as a result of such individual's position with INVESCO. To the extent that an employee or officer learns of a business opportunity that is within INVESCO's existing or proposed lines of business, the employee or officer should inform his or her supervisor, the divisional or business unit General Counsel, or the Board of Directors, as appropriate, of the business opportunity and refrain from personally pursuing the matter until such time as INVESCO decides to forego the business opportunity. At no time may any employee or officer utilize any INVESCO property, information or position to generate personal gain or engage or participate in any business that directly competes with INVESCO.
While not all-inclusive, the following examples of outside financial interests will serve to illustrate some of the types of activities that might cause conflicts of interest:
- Ownership or other interest in or employment by any outside concern which does business with INVESCO. This does not apply to stock or other investments in a publicly-held company, provided that the stock and other investments do not, in the aggregate, exceed 5% of the outstanding ownership interests of such company. INVESCO may, following a review of the relevant facts, permit ownership interests which exceed these amounts if management or the Board of Directors, as appropriate, concludes that such ownership interests will not adversely affect INVESCO's business interests or the judgment of the affected Covered Person.
- Conducting business, not on behalf of INVESCO, with any INVESCO vendor, supplier, contractor, agency, or any of their directors, officers or employees.
- Representation of INVESCO by a Covered Person in any transaction in which he or she, or a family member, has a substantial personal interest.
- Disclosure or use of confidential, special or inside information of or about INVESCO, particularly for personal profit or advantage of the Covered Person or a family member of such person.
- Competition with INVESCO by a Covered Person, directly or indirectly, in the purchase, sale or ownership of property or services or business investment opportunities.
As described in more detail in Sections 4, 5 and 6 below, acting as an officer or director of an outside organization, personal share dealing, and the use of material non-public information represent additional areas where conflicts can arise and are of particular sensitivity.
In addition to conflicts of interest between the company and its Covered Persons, conflicts of interest may arise between the company and its clients, including investment funds. Where a Covered Person is trading in securities owned by client accounts, or where a portfolio management team for a hedge fund also manages mutual funds that invest in the same securities, are each examples of situations that may give rise to real or apparent conflicts of interest. All Covered Persons must follow the procedures in place within their respective divisions and business units and must also be sensitive to the types of situations that can give rise to such conflicts or apparent conflicts.
4. Outside Activities and Compensation
No Covered Person shall perform work or render services for any competitor of INVESCO or for any organization with which INVESCO does business or which seeks to do business with INVESCO, outside of the normal course of his or her employment with INVESCO, without the prior written approval of the company. Nor shall any such person be a director, officer, or consultant of such an organization, or permit his or her name to be used in any fashion that would tend to indicate a business connection with such organization, without such approval. Outside organizations can include public or private corporations, partnerships, charitable foundations and other not-for-profit institutions. With the above approval, Covered Persons may receive compensation for such activities.
Service with organizations outside of INVESCO can, however, raise serious regulatory issues, including conflicts of interest and access to material non-public information.
As an outside board member or officer, a Covered Person may come into possession of material non-public information about the outside company or other public companies. It is critical that a proper information barrier be in place between INVESCO and the outside organization, and that the Covered Person does not communicate such information to other Covered Persons in violation of the information barrier.
Similarly, INVESCO may have a business relationship with the outside organization or may seek a relationship in the future. In those circumstances, the Covered Person must not be involved in any way in the business relationship between INVESCO and the outside organization.
INVESCO retains the right to prohibit membership by Covered Persons on any board of directors/trustees or as an officer of an outside organization where such membership might conflict with the best interests of the company. Approval will be granted on a
case-by-case basis, subject to proper resolution of potential conflicts of interest. Outside activities will be approved only if these issues can be satisfactorily resolved.
5. Personal Share Dealing
Purchasing and selling securities in a Covered Person's own account, or accounts over which the Covered Person has access or control, can give rise to potential conflicts of interest. As fiduciaries, we are held to the highest standards of conduct. Improperly gaining advance knowledge of portfolio transactions, or conducting securities transactions based upon information obtained at INVESCO, can be a violation of those standards.
All personal securities transactions must be pre-cleared unless an exemption is obtained. Generally, an exemption will be granted only for Covered Persons whose duties do not give them access to information regarding the sale or purchase of, or the recommendation to sell or purchase, securities in any portfolio. Transactions in certain retirement benefit plans, such as 401(k)s and Money Purchase Plans, and in specified categories of securities, are exempt from pre-clearance. Every Covered Person must also comply with the specific rules in effect in this area for the Covered Person's division or business unit.
INVESCO also has policies that specifically cover personal transactions in the shares and American Depositary Shares of the company. All Covered Persons are obligated to follow those procedures whenever they conduct such transactions.
6. Information Barriers and Material Non-Public Information
In the conduct of our business, Covered Persons may come into possession of material non-public information. This information could concern an issuer, a client, a portfolio, the market for a particular security, or INVESCO itself. The purchase or sale of INVESCO's securities or the securities of other publicly-traded companies while aware of material nonpublic information about such company, or the disclosure of material nonpublic information to others who then trade in such company's securities, is prohibited by this Code of Conduct and by United States and other jurisdictions' securities laws. INVESCO and its subsidiaries have adopted insider trading policies that apply to all Covered Persons. All Covered Persons should review the insider trading policies carefully and follow the policies and procedures described therein. The failure of a Covered Person to comply with the company's insider trading policy may subject him or her to company-imposed sanctions, up to and including termination for cause, whether or not the failure to comply results in a violation of law. You should seek the advice of the applicable divisional or business unit General Counsel on any questions regarding this subject and the company's insider trading policy. All Covered Persons are prohibited from using such information in ways that violate the law, including for personal gain. Non-public information must be kept confidential, which may include keeping it confidential from other Covered Persons.
7. Anti-Bribery and Dealings with Governmental Officials
Special care must be taken when dealing with government customers. Activities that might be appropriate when working with private sector customers may be improper and even illegal when dealing with government employees, or when providing goods and services to another customer who, in turn, will deliver the company's product to a government end user. Many of the countries in which INVESCO conducts its business prohibit the improper influencing of governmental officials or other persons by the payment of bribes, gifts, political contributions, lavish hospitality or by other means. Our policy requires adherence to those restrictions.
Do not directly or indirectly promise, offer or make payment in money or anything of value to anyone, including a government official, agent or employee of a government, political party, labor organization or business entity or a candidate of a political party, or their families, with the intent to induce favorable business treatment or to improperly affect business or government decisions. This policy prohibits actions intended either to influence a specific decision or merely to enhance future relationships. In general, all travel and entertainment that Covered Persons provide to governmental officials must be pre-approved within the appropriate business unit. If approved, a written confirmation that such expenses do not violate local law must be obtained from an appropriate third party (e.g., the business unit's legal counsel or the government official's supervisor).
Covered Persons shall comply with all laws, rules and regulations governing political campaign finance and lobbying activities and shall not engage in any conduct that is intended to avoid the application of such laws to activities undertaken on INVESCO's behalf. In addition, appropriate executive officers shall monitor compliance with lobbyist registration and disclosure requirements by all individuals who act on behalf of INVESCO.
These prohibitions extend to any consultants or agents we may retain on behalf
of INVESCO.
8. Anti-Discrimination and Harassment
INVESCO is committed to providing a work environment that is free of discrimination and harassment. Such conduct, whether overt or subtle, is demeaning, may be illegal, and undermines the integrity of the employment relationship.
Sexual harassment can include unwelcome sexual advances, requests for sexual favors, pressure to engage in a sexual relationship as a condition of employment or promotion, or conduct which creates a hostile or offensive work environment.
Discrimination can take many forms including actions, words, jokes, or comments based upon an individual's race, citizenship, ethnicity, color, religion, sex, veteran status, national origin, age, disability, sexual orientation, marital status or other legally protected characteristic. Any Covered Person who engages in harassment or discrimination will be subject to disciplinary action, up to and including termination of employment.
9. Anti-Money Laundering
In the global marketplace, the attempted use of financial institutions and instruments to launder money is a significant problem that has resulted in the passage of strict laws in many countries. Money laundering is the attempt to disguise money derived from or intended to finance illegal activity including drug trafficking, terrorism, organized crime, fraud, and many other crimes. Money launderers go to great lengths to hide the sources of their funds. Among the most common stratagems are placing cash in legitimate financial institutions, layering between numerous financial institutions, and integrating the laundered proceeds back into the economy as apparently legitimate funds.
All Covered Persons must be vigilant in the fight against money laundering, and must not allow INVESCO to be used for money laundering. Each business unit has developed an anti-money laundering program that is consistent with INVESCO's group-wide policy. Each Covered Person must comply with the applicable program.
10. Antitrust
The laws of many countries are designed to protect consumers from illegal competitive actions such as price fixing and dividing markets. It is INVESCO's policy and practice to compete based on the merits of our products and services. In order to further that policy, Covered Persons must not fix or control prices with competitors, divide up territories or markets, limit the production or sale of products, boycott certain suppliers or customers, unfairly control or restrict trade in any way, restrict a competitor's marketing practices, or disparage a competitor. Covered Persons must never discuss products, pricing or markets with competitors with the intent to fix prices or divide markets.
11. Data Privacy
Data privacy, as it relates both to our clients and our employees, has become a major political and legal issue in many jurisdictions in which we do business. A variety of laws in each of those jurisdictions governs the collection, storage, dissemination, transfer, use, access to and confidentiality of personal information and patient health information. These laws can work to limit transfers of such data across borders and even among affiliated entities in the INVESCO group of companies. INVESCO and its Covered Persons will comply with all provisions of these laws that relate to its business, including
the privacy, security and electronic transmission of financial, health and other personal information. The company expects its Covered Persons to keep all such data confidential and to protect, use and disclose information in the conduct of our business only in compliance with these laws. The company will consider and may release personal information to third parties to comply with law or to protect the rights, property or safety of INVESCO and its customers. In accordance with INVESCO policies, each business unit has developed required disclosures and data security procedures applicable to that business unit. All Covered Persons must comply with the applicable procedures.
With respect to INVESCO Covered Persons, all salary, benefit, medical and other personal information relating to Covered Persons shall generally be treated as confidential. Personnel files, payroll information, disciplinary matters, and similar information are to be maintained in a manner designed to protect confidentiality in accordance with applicable laws. All Covered Persons shall exercise due care to prevent the release or sharing of such information beyond those persons who may need such information to fulfill their job functions. Notwithstanding the foregoing, all personnel information belongs solely to INVESCO and may be reviewed or used by the company as needed to conduct its business.
12. Communications with the Media and Analysts
INVESCO has a long-standing policy of co-operating with the news media and the financial community. This policy is intended to enhance respect for the company, provide accurate information, and achieve our business goals.
INVESCO employs media relations professionals who are responsible for handling all contacts with the news media. INVESCO's Communications and Corporate Affairs Department is responsible for formulating and directing our media relations policy worldwide. Other INVESCO employees may not speak to or disseminate information to the news media unless such contact has been requested and arranged by or coordinated with an INVESCO media relations professional in accordance with the company's media relations policy. Any contact from the news media should be referred promptly and without comment to an INVESCO media relations professional. If you do not know the appropriate media relations professional for your unit, you can refer the contact to the INVESCO Communications and Corporate Affairs Department.
Many countries have detailed rules with regard to the dissemination of information about public companies. In particular, a public company must have procedures for controlling the release of information that may have a material impact on its share price. The Chief Executive Officer and the Chief Financial Officer are responsible for INVESCO's relationships with the financial community, including the release of price sensitive information. Other INVESCO employees may not speak to or disseminate information regarding the company to the financial community (including analysts, investors, shareholders, Company lenders, and rating agencies) unless such contact has been
requested and arranged by the Chief Executive Officer, the Chief Financial Officer or the Investor Relations Group within the Finance Department.
13. Electronic Communications
The use of electronic mail, the Internet and other technology assets is an important part of our work at INVESCO. Used improperly, this technology presents legal and business risks for the company and for individual employees. There are also important privacy issues associated with the use of technology, and related regulations are evolving.
In accordance with INVESCO's Electronic Communications policies, all Covered Persons are required to use information technology for proper business purposes and in a manner that does not compromise the confidentiality of sensitive or proprietary information. All communications with the public, clients, prospects and fellow employees must be conducted with dignity, integrity, and competence and in an ethical and professional manner.
We must not use information technology to: transmit or store materials which are obscene, pornographic, or otherwise offensive; engage in criminal activity; obtain unauthorized access to data or files; commit copyright violations; install personal software without permission; or make Internet statements, without permission, that suggest that the user is speaking on behalf of INVESCO or its affiliates.
14. Gifts and Relationships with Customers and Suppliers
INVESCO seeks to do business with clients and suppliers on a fair and equitable basis. We may not accept gifts of other than nominal value, or lavish entertainment, or other valuable benefits or special favors from customers or suppliers. We must observe any limits imposed by our business unit's policies, local laws, or regulations with respect to the acceptance of gifts or gratuities.
15. International Issues
If you conduct business for INVESCO outside of the U.S., in addition to being familiar with the local laws of the other countries involved, be sure you are familiar with the following U.S. laws and regulations. Violations of these laws can result in substantial fines, imprisonment and severe restrictions on the company's ability to do business.
FOREIGN CORRUPT PRACTICES ACT
The United States Foreign Corrupt Practices Act (FCPA) and similar laws in many other countries have a variety of provisions that regulate business in other countries and with foreign citizens. In essence, these laws make it a crime to promise or give anything of value to a foreign official or political party in order to obtain or keep business or obtain any improper advantage. It is also illegal to make payments to agents, sales
representatives or other third parties if you have reason to believe your gift will be used illegally. Seek advice from the appropriate member of the Legal & Compliance Department for interpretation of the FCPA or similar laws if you are involved in any business dealings that involve foreign countries.
ANTI-BOYCOTT LAWS
From time to time, various countries may impose restrictions upon the ability of businesses in their jurisdiction to engage in commerce with designated individuals, countries or companies. These laws are commonly referred to as boycotts or trade embargoes. It may be against the law to cooperate in any boycotts between foreign countries not sanctioned by the laws of the place where your office is located. All requests for boycott support or boycott-related information must be reported to your supervisor and the member of the Legal & Compliance Department with responsibility for your office.
Similarly, many countries contribute the names of criminal or terrorist organizations or individuals to a common database and require financial institutions to screen customer lists against the database as part of their "Know Your Customer" obligations. We must be aware of, and where appropriate, adhere to any such restrictions.
EMBARGO SANCTIONS
The United States Treasury Department's Office of Foreign Assets Control prohibits U.S. companies and their foreign subsidiaries from doing business with certain countries and agencies and certain individuals. The laws of other countries may have similar types of prohibitions. The regulations vary depending on the country and the type of transaction and often change as countries' foreign policies change. If you are aware of any sensitive political issues with a country in which INVESCO is doing or considering doing business, seek advice from the appropriate member of the Legal & Compliance Department.
16. Political Activities and Lobbying
Covered Persons are encouraged to vote in elections for which they are eligible, and to make contributions supporting candidates or parties of their choice. Covered Persons are also encouraged to express their views on government, legislation and other matters of local or national interest.
Many jurisdictions have imposed severe and complex restrictions on the ability of individuals and companies to make political contributions. You should assume that INVESCO and its Covered Persons are generally prohibited from certain types of political activities, and you must be familiar with the rules in effect for your business unit. No Covered Person may, under any circumstances, use company funds to make political contributions without the prior written approval of a member of the Legal &
Compliance Department, nor may you represent your personal political views as being those of the company.
17. Retention of Books and Records
INVESCO corporate records are important assets. Corporate records include essentially everything you produce as a Covered Person, regardless of its format. A corporate record may be in the form of paper, computer tapes, microfilm, e-mail, or voice mail. It may be something as obvious as a memorandum or a contract or something not as obvious, such as a desk calendar, an appointment book, or an expense record.
INVESCO is required by law to maintain certain types of corporate records, usually for a specified period of time. Failure to retain such documents for such minimum periods could subject INVESCO to penalties and fines, cause the loss of rights, obstruct justice, place INVESCO in contempt of court, or place INVESCO at a serious disadvantage in litigation. However, storage of voluminous records over time is costly. Therefore, INVESCO has established controls to assure retention for required periods and timely destruction of retrievable records, such as paper copies and records on computers, electronic systems, microfiche, and microfilm. Even if a document is retained for the legally required period, liability could still result if a document is destroyed before its scheduled destruction date.
INVESCO and its affiliates are subject to the regulatory requirements of numerous countries and regulatory agencies. Virtually all of them have specific requirements concerning the creation, maintenance and storage of business records. INVESCO expects all Covered Persons to become familiar with and fully comply with the records retention/destruction schedule for the departments and office locations for which they work. If you believe documents should be retained beyond the applicable retention period, consult with the Legal & Compliance Department.
18. Sales and Marketing Materials
INVESCO is committed to building sustained, open, and honest relationships with our customers, and to complying with all relevant regulatory requirements. This requires that all marketing and sales-related materials be prepared under standards approved by the Legal & Compliance Department and, prior to use, reviewed and approved by the appropriate supervisor within a business unit. Covered materials include requests for proposals, client presentations, performance summaries, advertisements, and published market commentaries.
19. Substance Abuse
INVESCO is committed to providing a safe and healthy work place for all employees. The use, possession, sale, transfer, purchase, or being "under the influence" of drugs at
any time while on company premises or on company business is prohibited. The term "drug" includes alcoholic beverages (other than in connection with entertainment events, or in other appropriate settings), prescriptions not authorized by your doctor, inhalants, marijuana, cocaine, heroin and other illegal substances.
20. Confidential Information
Confidential information includes all non-public information that might be of use to competitors, or harmful to the company or its customers, if disclosed. All information (in any form, including electronic information) that is created or used in support of company business activities is the property of INVESCO. This company information is a valuable asset and Covered Persons are expected to protect it from unauthorized disclosure. This includes INVESCO customer, supplier, business partner and employee data. United Kingdom, United States (federal and state) and other jurisdictions' laws may restrict the use of such information and impose penalties for impermissible use or disclosure.
Covered Persons must maintain the confidentiality of information entrusted to them by the company or its customers, vendors or consultants except when disclosure is properly authorized by the company or legally mandated. Covered Persons shall take all reasonable efforts to safeguard such confidential information that is in their possession against inadvertent disclosure and shall comply with any non-disclosure obligations imposed on INVESCO in its agreements with third parties.
Information pertaining to INVESCO's competitive position or business strategies, and information relating to negotiations with Covered Persons or third parties, should be protected and shared only with Covered Persons having a need to know such information in order to perform their job responsibilities.
21. Protection and Proper Use of Company Assets
All Covered Persons shall strive to preserve and protect the company's assets and resources and to promote their efficient use. The standards set forth below are intended to guide Covered Persons by articulating INVESCO's expectations as they relate to activities or behaviors that may affect the company's assets.
Personal Use of Corporate Assets
Theft, carelessness and waste have a direct impact on INVESCO's profitability. Covered Persons are not to convert assets of the company to personal use. Company property should be used for the company's legitimate business purposes and the business of the company shall be conducted in a manner designed to further INVESCO's interest rather than the personal interest of an individual Covered Person. Covered Persons are prohibited from the unauthorized use or taking of INVESCO's equipment, supplies, materials or services. Prior to engaging in any activity on
company time which will result in remuneration to the Covered Person or the use of INVESCO's equipment, supplies, materials or services for personal or non-work related purposes, officers and other Covered Persons shall obtain the approval of the supervisor of the appropriate business unit.
Use of Company Software
Covered Persons use software programs for word processing, spreadsheets, data management, and many other applications. Software products purchased by the company are covered by some form of licensing agreement that describes the terms, conditions and allowed uses. It is the company's policy to respect copyright laws and observe the terms and conditions of any license agreements. Copyright laws in the United States and other countries impose civil and criminal penalties for illegal reproductions and use of licensed software. You must be aware of the restrictions on the use of software and abide by those restrictions. INVESCO business equipment may not be used to reproduce commercial software. In addition, you may not use personal software on company equipment without prior written approval.
Computer Resources/E-mail
The company's computer resources, which include the electronic mail system, belong to INVESCO and not to the Covered Person. They are not intended to be used for amusement, solicitation, or other non-business purposes. While it is recognized that Covered Persons will occasionally use the system for personal communications, it is expected that such uses will be kept to a minimum and that Covered Persons will be responsible and professional in their use of e-mail. The use of the computer systems to make or forward derogatory or offensive remarks about other people or groups is prohibited. E-mail messages should be treated as any other written business communication.
22. INVESCO Intellectual Property
Employees and officers must carefully maintain and manage the intellectual property rights of INVESCO, including patents, trademarks, copyrights and trade secrets, to preserve and protect their value. Information, ideas and intellectual property assets of INVESCO are important to the company's success.
INVESCO's name, logo, trademarks, inventions, processes and innovations are intellectual property assets and their protection is vital to the success of the company's business. The company's and any of its subsidiaries' names, logos and other trademarks and service marks are to be used only for authorized company business and never in connection with personal or other activities unless appropriately approved and in accordance with company policy. In addition, our Covered Persons must respect the intellectual property rights of third parties. Violation of these rights can subject both you and the company to substantial liability, including criminal penalties.
Any work product produced in the course of performing your job shall be deemed to be a "work made for hire" and shall belong to INVESCO and is to be used only for the benefit of INVESCO. This includes such items as marketing plans, product development plans, computer programs, software, hardware and similar materials. You must share any innovations or inventions you create with your supervisor so that the company can take steps to protect these valuable assets.
23. Integrity and Accuracy of Financial Records
The preparation and maintenance of accurate books, records and accounts is required by law and essential to the proper discharge of financial, legal and reporting obligations. All Covered Persons are prohibited from directly or indirectly falsifying or causing to be false or misleading any financial or accounting book, record or account. In addition, all financial data must be completely and accurately recorded in compliance with applicable law and INVESCO's accounting policies and procedures. A Covered Person may violate this section by acting or by failing to act when he or she becomes aware of a violation or potential violation of this section.
24. Disclosure in Reports and Documents.
Filings and Public Materials. As a public company, it is important that the company's filings with UK authorities, the United States Securities and Exchange Commission (the "SEC") and other U.S. federal, state, domestic and international regulatory agencies are full, fair, accurate, timely and understandable. The company also makes many other filings with the SEC and other UK, U.S. and international regulatory agencies on behalf of the funds that its subsidiaries and affiliates manage. Further, the company prepares mutual fund account statements, client investment performance information, prospectuses and advertising materials that are sent out to its mutual fund shareholders and clients.
Disclosure and Reporting Policy. The company's policy is to comply with all applicable disclosure, financial reporting and accounting regulations applicable to the company. The company maintains the highest commitment to its disclosure and reporting requirements, and expects and requires all Covered Persons to record information accurately and truthfully in the books and records of the company.
Information for Filings. Depending on his or her position with the company, a Covered Person may be called upon to provide necessary information to assure that the company's public reports and regulatory filings are full, fair, accurate, timely and understandable. The company expects all Covered Persons to be diligent in providing accurate information to the inquiries that are made related to the company's public disclosure requirements.
Disclosure Controls and Procedures and Internal Control Over Financial Reporting. Covered Persons are required to cooperate and comply with the company's disclosure controls and procedures and internal controls over financial reporting so that the company's reports and documents filed with the UK authorities, the SEC and other U.S. federal, state, domestic and international regulatory agencies comply in all material respects with applicable laws, and rules and regulations, and provide full, fair, accurate, timely and understandable disclosure.
25. Improper Influence on the Conduct of Audits
Every Covered Person must deal fairly and honestly with outside accountants performing audits, reviews or examinations of INVESCO's and its subsidiaries' financial statements. To that end, no Covered Person of INVESCO may make or cause to be made a materially false or misleading statement (or omit facts necessary to make the statements made not misleading) in connection with an audit, review or examination of financial statements by independent accountants or the preparation of any document or report required to be filed with a governmental or regulatory authority. Covered Persons of INVESCO also are prohibited from coercing, manipulating, misleading or fraudulently inducing any independent public or certified public accountant engaged in the performance or review of financial statements that are required to be filed with a governmental or regulatory authority if he or she knows or should have known that his or her actions could result in making those financial statements materially misleading.
26. Standards for INVESCO's Financial Officers
INVESCO's Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer (the "Financial Officers") are required to take all reasonable steps to provide full, fair, accurate, timely and understandable disclosures in the reports and documents that INVESCO files with or submits to the SEC and other regulatory bodies and in other public communications made by INVESCO. In the event that a Financial Officer learns that any such report, document or communication does not meet this standard and such deviation is material, then the Financial Officers are required to review and investigate such deviation, advise the Board of Directors or the Audit Committee of the Board of Directors regarding the deviation and, where necessary, revise the relevant report, document or communication.
Although a particular accounting treatment for one or more of INVESCO's operations may be permitted under applicable accounting standards, the Financial Officers may not authorize or permit the use of such an accounting treatment if the effect is to distort or conceal INVESCO's true financial condition. The accounting standards and treatments utilized by INVESCO must, in all instances, be determined on an objective and uniform basis and without reference to a single transaction or series of transactions and their impact on INVESCO's financial results for a particular time period. Any new or novel accounting treatment or standard that is to be utilized in the preparation of INVESCO's
financial statements must be discussed with INVESCO's Audit Committee and its independent auditors.
27. Policy and Procedures on Reporting Potential Material Violations
INVESCO's Audit Committee has adopted the following statement of policy with respect to the reporting by employees of potential material violations of this Code of Conduct, laws or regulations and our related non-retaliation policy:
"INVESCO strives to ensure that all activity by or on behalf of INVESCO is in compliance with applicable laws, rules and regulations. INVESCO and its employees must adhere to the highest standards of honest and ethical conduct. Employees of INVESCO and its subsidiaries are affirmatively required to report possible violations of the INVESCO Code of Conduct, laws or regulations promptly to their manager, a Human Resources Director at the employee's site, the employee's Legal and Compliance Department representative, or via the 24-hour toll-free, anonymous INVESCO Compliance Reporting Line.
INVESCO will not permit retribution, harassment, or intimidation of any employee who in good faith reports a possible violation. Specifically, INVESCO policy prevents any employee from being subject to disciplinary or retaliatory action by INVESCO or any of its employees or agents as a result of the employee's good faith:
- Disclosing information to a government or law enforcement agency, where the employee has reasonable cause to believe that the information discloses a violation or possible violation of federal or state law or regulation; or
- Providing information, causing information to be provided, filing, causing to be filed, testifying, participating in a proceeding filed or about to be filed, or otherwise assisting in an investigation or proceeding regarding any conduct that the employee reasonably believes involves a violation of: (1) any criminal law relating to securities fraud, mail fraud, bank fraud, or wire, radio, television or internet fraud; (2) any rule or regulation of the United States Securities and Exchange Commission or any other national, state or provincial securities regulatory authority; or any provision of applicable law relating to fraud against shareholders, where, with respect to investigations, such information or assistance is provided to or the investigation is being conducted by a national, state or provincial regulatory agency, a member of any parliamentary body, or a person at INVESCO with supervisory or similar authority over the employee.
However, employees who file reports or provide evidence which they know to be false or without a reasonable belief in the truth and accuracy of such information will not be protected by the above policy statement and may be subject to disciplinary action, including termination of their employment."
If you are a Covered Person with complaints or concerns regarding:
(i) violations of this Code of Conduct or the rules mentioned herein;
(ii) violations of laws or regulations generally involving INVESCO; or
(iii) questionable accounting matters, internal accounting controls, auditing matters, breaches of fiduciary duty or violations of United States or foreign securities laws or rules (collectively "Accounting Matters"), including:
- fraud or deliberate error in the preparation, evaluation, review or audit of any financial statement of INVESCO;
- fraud or deliberate error in the recording and maintaining of financial records of INVESCO;
- deficiencies in or non-compliance with INVESCO's internal accounting controls;
- misrepresentation or false statements to or by a senior officer or accountant regarding a matter contained in the financial records, financial reports or audit reports of INVESCO;
- deviation from full and fair reporting of INVESCO's financial condition; or
- fraudulent or criminal activities engaged in by officers, directors or employees of INVESCO;
you may report your concerns in any of three ways:
YOU CAN SPEAK WITH YOUR SUPERVISOR. We encourage you to first contact your immediate supervisor, who is in turn responsible for informing INVESCO's Compliance Reporting Line (described below) of any concerns raised.
YOU CAN SPEAK DIRECTLY WITH THE BUSINESS UNIT OR DIVISIONAL GENERAL COUNSEL. If you prefer not to discuss a concern with your own supervisor, you may instead contact the General Counsel of your business unit or division directly. You are also free to e-mail the business unit or divisional General Counsel at the appropriate e-mail address. Such person will then likewise be responsible for informing INVESCO's Compliance Reporting Line (described below) of any concerns raised.
YOU CAN CALL OUR COMPLIANCE REPORTING LINE. You may also call the INVESCO Compliance Reporting Line. If you are calling from a U.S. or Canadian location dial 1-866-7-3627. For calls from all other locations, dial an international operator and request a collect call to 1-704-943-1136. When asked for your name use "INVESCO." You can
use the Compliance Reporting Line to report possible violations or to check on the status of a previously filed report. You can also report to the Compliance Reporting Line if you believe that a report previously made to company management, your supervisor, other management personnel or the applicable business unit or divisional General Counsel has not been addressed.
The Compliance Reporting Line is administered by an outside vendor. The telephone operators for the Compliance Reporting Line have been trained to receive your call. The Compliance Reporting Line is available 24 hours a day, seven days a week. All calls will be answered by a live person. Calls are not recorded and are not able to be traced. You have the option to remain anonymous. If you remain anonymous, you will be given a numeric code so that you may call back and ask for follow up. You will be guided through the call and prompted by appropriate questions from the operator. You will be given a date on which you can call back and receive a follow up report. Once the call is completed, a report will be generated and sent to the appropriate departments within INVESCO based on the subject matter of your call. You are urged to call back for follow up, because in the event more information is required, this will be an opportunity for you to provide those details.
If you report a possible violation, regardless of the method that you use to make the report, it is important that you provide as much detail as possible, including names, dates, times, locations and the specific conduct in question. Only with sufficient specific information can INVESCO adequately investigate the reported action.
Your submission of information will be treated in a confidential manner to the extent reasonably possible. Please note, however, that if an investigation by INVESCO of the activities you have reported takes place, it may be impossible for INVESCO to maintain the confidentiality of the fact of the report or the information reported.
Complaints relating to Accounting Matters will be reviewed under Audit Committee direction and oversight by such persons as the Audit Committee determines to be appropriate. All other matters will be reviewed under the direction and oversight of the appropriate departments within INVESCO, usually also including the Legal & Compliance Department. Prompt and appropriate corrective action will be taken when and as warranted in the judgment of the Audit Committee or other reviewing department.
28. Disclosure; Amendments
To the extent required by law, the company shall publicly (e.g., in its Annual Report on Form 20-F and/or on its website) disclose this Code of Conduct and its application to all of the company's Covered Persons.
This Code may only be amended by INVESCO's Board of Directors or a duly authorized committee thereof. To the extent required by law, amendments to the Code of Conduct shall be disclosed publicly. As set forth in Item 16B of the company's Annual Report on Form 20-F for 2005 filed with the SEC, the company has elected to disclose certain amendments to the Code that affect, and any waivers of the Code granted to, Financial Officers on the company's Web site in accordance with the requirements of Instruction 4 to Item 16B.
29. Waivers of the Code.
a. Waivers for Executive Officers. Any change in or waiver of this Code for executive officers (as defined in Rule 3b-7 under the Securities Exchange Act of 1934, "Executive Officers") of the company may be made only by the Board of Directors or a committee thereof in the manner described in Section 29(d) below, and any such waiver (including any implicit waiver) shall be promptly disclosed to shareholders as required by the corporate governance listing standards of the New York Stock Exchange and other applicable laws, rules and regulations.
b. Waivers for Other Covered Persons. Any requests for waivers of this Code for Covered Persons other than Executive Officers of the company may be made to the Legal and Compliance Department in the manner described in Section 29(e) below.
c. Definition of Waiver. For the purposes of the Code, the term "waiver" shall mean a material departure from a provision of the Code. An "implicit waiver" shall mean the failure of the company to take action within a reasonable period of time regarding a material departure from a provision of the Code that has been made known to an Executive Officer.
d. Manner for Requesting Executive Officer Waivers.
i. Request and Criteria. If an Executive Officer wishes to request a waiver of this Code, the Executive Officer may submit to the Global Compliance Director or the Legal and Compliance Department a written request for a waiver of the Code only if he/she can demonstrate that such a waiver:
A. is necessary to alleviate undue hardship or in view of unforeseen circumstances or is otherwise appropriate under all the relevant facts and circumstances;
B. will not be inconsistent with the purposes and objectives of the Code;
C. will not adversely affect the interests of clients of the company or the interests of the company; and
D. will not result in a transaction or conduct that would violate provisions of applicable laws or regulations.
ii. Discretionary Waiver and Response. The Legal and Compliance Department will forward the waiver request to the Board of Directors or a committee thereof for consideration. Any decision to grant a waiver from the Code shall be at the sole and absolute discretion of the Board of Directors or committee thereof, as appropriate. The Company Secretary will advise the Legal and Compliance Department in writing of the Board of Director's decision regarding the waiver, including the grounds for granting or denying the waiver request. The Legal and Compliance Department shall promptly advise the Executive Officer in writing of the Board of Director's decision.
e. Manner for Requesting Other Covered Person Waivers.
i. Request and Criteria. If a Covered Person who is a non-Executive Officer wishes to request a waiver of this Code, such Covered Person may submit to the Legal and Compliance Department a written request for a waiver of the Code only if he/she can demonstrate that such a waiver would satisfy the same criteria set forth in Section 29(d).
ii. Discretionary Waiver and Response. The Legal and Compliance Department shall forward the waiver request to the General Counsel of the company for consideration. The decision to grant a waiver shall be at the sole and absolute discretion of the General Counsel of the company. The General Counsel will advise the Legal and Compliance Department in writing of his/her decision regarding the waiver, including the grounds for granting or denying the waiver request. The Legal and Compliance Department shall promptly advise the Covered Person in writing of the General Counsel's decision.
30. Internal Use. This Code is intended solely for the internal use by the company and does not constitute an admission, by or on behalf of the company, as to any fact, circumstance, or legal conclusion.
CONCLUSION
As Covered Persons, each of us is obligated to read and understand this Code of Conduct and our relevant business unit's policies and procedures. No code of conduct, however, can address every situation for which guidance may be necessary. If you are unclear about a situation, stop and ask for guidance before taking action. All Covered
Persons are expected to abide by both the letter and spirit of this Code. Covered Persons are also expected to perform their work with honesty and integrity in any areas not specifically addressed by the Code. INVESCO will investigate reported violations of the Code and, if violations are found, may take disciplinary action, if appropriate, against the individuals involved, and may make reports, if appropriate, to civil, criminal or regulatory authorities. Nothing in this Code restricts the company from taking any disciplinary action on any matters pertaining to the conduct of a Covered Person, whether or not expressly set forth in the Code. Any questions regarding the scope or interpretation of this Code should be referred to the appropriate Compliance or Legal officer.
Revised: July 2006