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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-07452
AIM Variable Insurance Funds
(Exact name of registrant as specified in charter)
11 Greenway Plaza, Suite 100 Houston, Texas 77046
(Address of principal executive offices) (Zip code)
Philip A. Taylor 11 Greenway Plaza, Suite 100 Houston, Texas 77046
(Name and address of agent for service)
Registrant's telephone number, including area code: (713) 626-1919
Date of fiscal year end: 12/31
Date of reporting period: 6/30/09
Item 1. Reports to Stockholders.
[INVESCO AIM LOGO] AIM V.I. BASIC BALANCED FUND
- SERVICE MARK - Semiannual Report to Shareholders - June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal
year, at the quarter-ends. For the second and fourth quarters, the lists appear
in the Fund's semiannual and annual reports to shareholders. For the first and
third quarters, the Fund files the lists with the Securities and Exchange
Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the
SEC Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied
at the SEC Public Reference Room in Washington, D.C. You can obtain information
on the operation of the Public Reference Room, including information about
duplicating fee charges, by calling 202 942 8090 or 800 732 0330, or by
electronic request at the following E-mail address: publicinfo@sec.gov. The SEC
file numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent
portfolio holdings, as filed on Form N-Q, have also been made available to
insurance companies issuing variable annuity contracts and variable life
insurance policies ("variable products") that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, from our Client Services department at 800 410 4246 or on the
Invesco Aim Web site, invescoaim.com. On the home page, scroll down and click on
Proxy Policy. The information is also available on the SEC Web site, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio
securities during the 12 months ended June 30, 2009, is available at our Web
site. Go to invescoaim.com, access the About Us tab, click on Required Notices
and then click on Proxy Voting Activity. Next, select the Fund from the
drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009,
Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco
Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc.
will be merged into Invesco Institutional (N.A.), Inc., and the consolidated
adviser firm will be renamed Invesco Advisers, Inc. Additional information will
be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND
PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN MORE COMPLETE
INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH
CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
PERFORMANCE SUMMARY
FUND VS. INDEXES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer
charges. If variable product issuer charges were included, returns would be
lower.
Series I Shares 9.40%
Series II Shares 9.14
S&P 500 Index* (Broad Market Index) 3.19
Custom Basic Balanced Index+ (Style-Specific Index) -0.40
Lipper VUF Mixed-Asset Target Allocation Moderate Funds Index*
(Peer Group Index) 6.41
*Lipper Inc.; +Invesco Aim, Lipper Inc.
The S&P 500--REGISTERED TRADEMARK-- 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 CUSTOM BASIC BALANCED INDEX is an index created by Invesco Aim
Advisors, Inc. to benchmark the Fund. The index consists of the following
indexes: 60% Russell 1000--REGISTERED TRADEMARK-- Value Index and 40% Barclays
Capital U.S. Aggregate Index. The Russell 1000 Value Index measures performance
of those Russell 1000 companies with lower price-to-book ratios and lower
forecasted growth values. The Russell 1000 Value Index is a trademark/service
mark of the Frank Russell Company. Russell--REGISTERED TRADEMARK-- is a
trademark of the Frank Russell Company. The Barclays Capital U.S. Aggregate
Index covers U.S. investment-grade fixed-rate bonds with components for
government and corporate securities, mortgage pass-throughs and asset-backed
securities.
The LIPPER VUF MIXED-ASSET TARGET ALLOCATION MODERATE FUNDS INDEX is an
equally weighted representation of the largest variable insurance underlying
funds in the Lipper Mixed-Asset Target Allocation Moderate Funds category. These
funds, by portfolio practice, maintain a mix of between 40%-60% equity
securities, with the remainder invested in bonds, cash and cash equivalents.
The Fund is not managed to track the performance of any particular index,
including the indexes defined here, and consequently, the performance of the
Fund may deviate significantly from the performance of the indexes.
A direct investment cannot be made in an index. Unless otherwise
indicated, index results include reinvested dividends, and they do not reflect
sales charges. Performance of the peer group reflects fund expenses; performance
of a market index does not.
AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
SERIES I SHARES
Inception (5/1/98) -0.43%
10 Years -2.23
5 Years -3.59
1 Year -23.38
SERIES II SHARES
10 Years -2.48%
5 Years -3.84
1 Year -23.58
SERIES II SHARES' INCEPTION DATE IS JANUARY 24, 2002. RETURNS SINCE THAT DATE
ARE HISTORICAL. ALL OTHER RETURNS ARE THE BLENDED RETURNS OF THE HISTORICAL
PERFORMANCE OF SERIES II SHARES SINCE THEIR INCEPTION AND THE RESTATED
HISTORICAL PERFORMANCE OF SERIES I SHARES (FOR PERIODS PRIOR TO INCEPTION OF
SERIES II SHARES) ADJUSTED TO REFLECT THE RULE 12B-1 FEES APPLICABLE TO SERIES
II SHARES. THE INCEPTION DATE OF SERIES I SHARES IS MAY 1, 1998.
THE PERFORMANCE OF THE FUND'S SERIES I AND SERIES II SHARE CLASSES WILL
DIFFER PRIMARILY DUE TO DIFFERENT CLASS EXPENSES.
THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT
GUARANTEE COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER.
PLEASE CONTACT YOUR VARIABLE PRODUCT ISSUER OR FINANCIAL ADVISOR FOR THE MOST
RECENT MONTH-END VARIABLE PRODUCT PERFORMANCE. PERFORMANCE FIGURES REFLECT FUND
EXPENSES, REINVESTED DISTRIBUTIONS AND CHANGES IN NET ASSET VALUE. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS
WHEN YOU SELL SHARES.
THE NET ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT
FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR SERIES I AND SERIES II SHARES
WAS 0.91% AND 1.16%, RESPECTIVELY.1,2 THE TOTAL ANNUAL FUND OPERATING EXPENSE
RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT
FOR SERIES I AND SERIES II SHARES WAS 1.35% AND 1.60%, RESPECTIVELY. THE EXPENSE
RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER
SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD
COVERED BY THIS REPORT.
AIM V.I. BASIC BALANCED FUND, A SERIES PORTFOLIO OF AIM VARIABLE INSURANCE
FUNDS, IS CURRENTLY OFFERED THROUGH INSURANCE COMPANIES ISSUING VARIABLE
PRODUCTS. YOU CANNOT PURCHASE SHARES OF THE FUND DIRECTLY. PERFORMANCE FIGURES
GIVEN REPRESENT THE FUND AND ARE NOT INTENDED TO REFLECT ACTUAL VARIABLE PRODUCT
VALUES. THEY DO NOT REFLECT SALES CHARGES, EXPENSES AND FEES ASSESSED IN
CONNECTION WITH A VARIABLE PRODUCT. SALES CHARGES, EXPENSES AND FEES, WHICH ARE
DETERMINED BY THE VARIABLE PRODUCT ISSUERS, WILL VARY AND WILL LOWER THE TOTAL
RETURN.
THE MOST RECENT MONTH-END PERFORMANCE DATA AT THE FUND LEVEL, EXCLUDING
VARIABLE PRODUCT CHARGES, IS AVAILABLE ON THE INVESCO AIM AUTOMATED INFORMATION
LINE, 866 702 4402. AS MENTIONED ABOVE, FOR THE MOST RECENT MONTH-END
PERFORMANCE INCLUDING VARIABLE PRODUCT CHARGES, PLEASE CONTACT YOUR VARIABLE
PRODUCT ISSUER OR FINANCIAL ADVISOR.
HAD THE ADVISOR NOT WAIVED FEES AND/ OR REIMBURSED EXPENSES, PERFORMANCE
WOULD HAVE BEEN LOWER.
1 The total annual operating expenses less contractual advisor fee waivers
by the advisor in effect through at least June 30, 2010. See current
prospectus for more information.
2 Total annual operating expenses less any contractual fee waivers and/or
expense reimbursements by the advisor in effect through at least April 30,
2010. See current prospectus for more information.
AIM V.I. BASIC BALANCED FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-72.27%
ADVERTISING-4.01%
Interpublic Group of Cos., Inc. (The)(b) 90,597 $ 457,515
- ------------------------------------------------------------------------------
Omnicom Group Inc. 23,793 751,383
==============================================================================
1,208,898
==============================================================================
AEROSPACE & DEFENSE-0.25%
Honeywell International Inc. 2,445 76,773
==============================================================================
APPAREL RETAIL-0.78%
Gap, Inc. (The) 14,323 234,897
==============================================================================
ASSET MANAGEMENT & CUSTODY BANKS-1.94%
State Street Corp. 12,412 585,846
==============================================================================
BREWERS-1.67%
Molson Coors Brewing Co.-Class B 11,907 504,023
==============================================================================
COMMUNICATIONS EQUIPMENT-1.53%
Nokia Corp.-ADR (Finland) 31,593 460,626
==============================================================================
COMPUTER HARDWARE-2.93%
Dell Inc.(b) 64,342 883,416
==============================================================================
CONSTRUCTION MATERIALS-1.29%
Cemex S.A.B. de C.V.-ADR (Mexico)(b) 41,671 389,205
==============================================================================
CONSUMER FINANCE-3.87%
American Express Co. 28,424 660,574
- ------------------------------------------------------------------------------
SLM Corp.(b) 49,333 506,650
==============================================================================
1,167,224
==============================================================================
DATA PROCESSING & OUTSOURCED SERVICES-1.17%
Western Union Co. 21,481 352,288
==============================================================================
DEPARTMENT STORES-1.67%
Kohl's Corp.(b) 6,765 289,204
- ------------------------------------------------------------------------------
Nordstrom, Inc. 10,756 213,937
==============================================================================
503,141
==============================================================================
DIVERSIFIED CAPITAL MARKETS-1.08%
UBS AG (Switzerland)(b) 26,695 325,946
==============================================================================
EDUCATION SERVICES-0.43%
Apollo Group, Inc.-Class A(b) 1,842 131,003
==============================================================================
ELECTRONIC MANUFACTURING SERVICES-1.77%
Tyco Electronics Ltd. (Switzerland) 28,786 535,132
==============================================================================
GENERAL MERCHANDISE STORES-2.15%
Target Corp. 16,430 648,492
==============================================================================
HEALTH CARE DISTRIBUTORS-0.77%
Cardinal Health, Inc. 7,597 232,088
==============================================================================
HEALTH CARE EQUIPMENT-1.13%
Baxter International Inc. 6,417 339,844
==============================================================================
HOME IMPROVEMENT RETAIL-1.83%
Home Depot, Inc. (The) 23,339 551,501
==============================================================================
HOTELS, RESORTS & CRUISE LINES-0.86%
Marriott International, Inc.-Class A 11,730 258,884
==============================================================================
HOUSEHOLD APPLIANCES-0.94%
Whirlpool Corp. 6,682 284,386
==============================================================================
HUMAN RESOURCE & EMPLOYMENT SERVICES-3.00%
Robert Half International, Inc. 38,375 906,418
==============================================================================
INDUSTRIAL CONGLOMERATES-1.24%
Tyco International Ltd. 14,448 375,359
==============================================================================
INDUSTRIAL MACHINERY-2.92%
Illinois Tool Works Inc. 16,465 614,803
- ------------------------------------------------------------------------------
Ingersoll-Rand PLC-Class A 12,688 265,179
==============================================================================
879,982
==============================================================================
INVESTMENT BANKING & BROKERAGE-2.11%
Morgan Stanley 22,355 637,341
==============================================================================
MANAGED HEALTH CARE-5.43%
Aetna Inc. 24,443 612,297
- ------------------------------------------------------------------------------
UnitedHealth Group Inc. 41,013 1,024,505
==============================================================================
1,636,802
==============================================================================
MOVIES & ENTERTAINMENT-0.81%
Walt Disney Co. (The) 10,426 243,239
==============================================================================
OIL & GAS DRILLING-0.47%
Transocean Ltd.(b) 1,924 142,934
==============================================================================
OIL & GAS EQUIPMENT & SERVICES-2.38%
Halliburton Co. 16,532 342,212
- ------------------------------------------------------------------------------
Schlumberger Ltd. 6,971 377,201
==============================================================================
719,413
==============================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-4.15%
Bank of America Corp. 26,562 350,618
- ------------------------------------------------------------------------------
Citigroup Inc.(b) 58,846 174,773
- ------------------------------------------------------------------------------
JPMorgan Chase & Co. 21,293 726,304
==============================================================================
1,251,695
==============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. BASIC BALANCED FUND
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
PACKAGED FOODS & MEATS-0.88%
Unilever N.V. (Netherlands) 11,006 $ 265,521
==============================================================================
PHARMACEUTICALS-0.70%
Sanofi-Aventis S.A. (France) 3,618 212,436
==============================================================================
PROPERTY & CASUALTY INSURANCE-2.15%
XL Capital Ltd.-Class A 56,628 648,957
==============================================================================
PUBLISHING-0.82%
McGraw-Hill Cos., Inc. (The) 8,186 246,480
==============================================================================
REGIONAL BANKS-0.56%
Fifth Third Bancorp 23,941 169,981
==============================================================================
SEMICONDUCTOR EQUIPMENT-5.80%
ASML Holding N.V. (Netherlands) 53,738 1,165,177
- ------------------------------------------------------------------------------
KLA-Tencor Corp. 23,177 585,219
==============================================================================
1,750,396
==============================================================================
SEMICONDUCTORS-1.25%
Maxim Integrated Products, Inc. 24,091 377,988
==============================================================================
SPECIALIZED FINANCE-2.77%
Moody's Corp. 31,727 836,006
==============================================================================
SYSTEMS SOFTWARE-2.76%
CA, Inc. 20,694 360,697
- ------------------------------------------------------------------------------
Microsoft Corp. 19,847 471,763
==============================================================================
832,460
==============================================================================
Total Common Stocks & Other Equity Interests
(Cost $27,255,718) 21,807,021
==============================================================================
<Caption>
PRINCIPAL
AMOUNT
U.S. GOVERNMENT SPONSORED MORTGAGE-BACKED SECURITIES-13.41%
FEDERAL HOME LOAN MORTGAGE CORP. (FHLMC)-4.02%
Pass Through Ctfs.,
7.00%, 06/01/15 to 06/01/32 $ 88,119 96,090
- ------------------------------------------------------------------------------
7.50%, 11/01/30 to 05/01/31 14,939 16,187
- ------------------------------------------------------------------------------
6.50%, 08/01/32 4,165 4,466
- ------------------------------------------------------------------------------
5.50%, 01/01/35 to 02/01/37 458,283 474,911
- ------------------------------------------------------------------------------
Pass Through Ctfs., TBA,
4.50%, 07/01/39(c)(d) 260,000 258,863
- ------------------------------------------------------------------------------
5.50%, 07/01/39(c) 50,000 51,617
- ------------------------------------------------------------------------------
5.50%, 07/01/39(c)(d) 300,000 309,703
==============================================================================
1,211,837
==============================================================================
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)-8.27%
Pass Through Ctfs.,
7.50%, 11/01/15 to 03/01/31 77,918 86,564
- ------------------------------------------------------------------------------
7.00%, 02/01/16 to 09/01/32 23,570 25,440
- ------------------------------------------------------------------------------
6.50%, 07/01/16 to 10/01/35 72,664 78,628
- ------------------------------------------------------------------------------
6.00%, 01/01/17 to 03/01/37 278,285 291,617
- ------------------------------------------------------------------------------
5.50%, 03/01/21 1,157 1,213
- ------------------------------------------------------------------------------
8.00%, 08/01/21 to 12/01/23 13,607 14,782
- ------------------------------------------------------------------------------
Pass Through Ctfs., TBA,
4.00%, 07/01/24(c)(d) 300,000 300,094
- ------------------------------------------------------------------------------
4.50%, 07/01/24 to 07/01/39(c)(d) 400,000 405,906
- ------------------------------------------------------------------------------
5.00%, 07/01/24 to 07/01/39(c)(d) 1,010,000 1,031,114
- ------------------------------------------------------------------------------
6.00%, 07/01/39(c)(d) 250,000 261,289
==============================================================================
2,496,647
==============================================================================
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA)-1.12%
Pass Through Ctfs.,
7.50%, 06/15/23 to 10/15/31 28,899 31,675
- ------------------------------------------------------------------------------
8.50%, 11/15/24 29,225 31,668
- ------------------------------------------------------------------------------
8.00%, 08/15/25 8,102 8,929
- ------------------------------------------------------------------------------
6.50%, 03/15/29 to 01/15/37 242,966 265,704
==============================================================================
337,976
==============================================================================
Total U.S. Government Sponsored Mortgage-
Backed Securities (Cost $4,010,345) 4,046,460
==============================================================================
BONDS & NOTES-12.63%
AEROSPACE & DEFENSE-0.36%
BAE Systems Holdings Inc.,
Sr. Unsec. Gtd. Notes,
4.95%, 06/01/14(e) 20,000 20,039
- ------------------------------------------------------------------------------
6.38%, 06/01/19(e) 30,000 30,666
- ------------------------------------------------------------------------------
Honeywell International Inc.,
Sr. Unsec. Unsub. Notes,
5.00%, 02/15/19 55,000 56,157
==============================================================================
106,862
==============================================================================
ASSET MANAGEMENT & CUSTODY BANKS-0.14%
Bank of New York Mellon Corp. (The),
Sr. Unsec. Notes,
4.30%, 05/15/14 15,000 15,359
- ------------------------------------------------------------------------------
5.45%, 05/15/19 25,000 25,719
==============================================================================
41,078
==============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. BASIC BALANCED FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------
BROADCASTING-0.23%
COX Communications Inc.,
Sr. Unsec. Bonds,
8.38%, 03/01/39(e) $ 30,000 $ 33,388
- ------------------------------------------------------------------------------
COX Enterprises Inc.,
Sr. Unsec. Notes,
7.88%, 09/15/10(e) 35,000 36,287
==============================================================================
69,675
==============================================================================
BUILDING PRODUCTS-0.13%
Owens Corning Inc.,
Unsec. Gtd. Sub. Notes,
9.00%, 06/15/19 40,000 38,950
==============================================================================
CABLE & SATELLITE-0.17%
Comcast Corp.,
Sr. Unsec. Gtd. Notes,
6.55%, 07/01/39 50,000 50,153
==============================================================================
COMMUNICATIONS EQUIPMENT-0.12%
Nokia Corp. (Finland),
Sr. Unsec. Global Notes,
6.63%, 05/15/39 35,000 36,769
==============================================================================
CONSUMER FINANCE-0.26%
American Express Co.,
Sr. Unsec. Notes,
8.13%, 05/20/19 75,000 78,376
==============================================================================
DIVERSIFIED BANKS-1.02%
Barclays Bank PLC (United Kingdom),
Sr. Unsec. Unsub. Global Notes,
6.75%, 05/22/19 55,000 55,248
- ------------------------------------------------------------------------------
Centura Capital Trust I,
Jr. Gtd. Sub. Trust Pfd. Capital Securities,
8.85%, 06/01/27(e) 50,000 45,115
- ------------------------------------------------------------------------------
Lloyds TSB Bank PLC (United Kingdom),
Sr. Unsec. Floating Rate Medium-Term Euro Notes,
4.61%, 04/17/14(f) 58,500 58,247
- ------------------------------------------------------------------------------
National Bank of Canada (Canada),
Unsec. Sub. Floating Rate Euro Deb.,
1.94%, 08/29/87(f) 60,000 26,867
- ------------------------------------------------------------------------------
Standard Chartered PLC (United Kingdom),
Sr. Notes,
5.50%, 11/18/14(e) 100,000 101,618
- ------------------------------------------------------------------------------
Wachovia Corp.-Series G,
Sr. Unsec. Medium-Term Notes,
5.50%, 05/01/13 20,000 20,711
==============================================================================
307,806
==============================================================================
ELECTRIC UTILITIES-0.57%
Carolina Power & Light Co.,
Sec. First Mortgage Bonds,
5.30%, 01/15/19 15,000 15,714
- ------------------------------------------------------------------------------
DCP Midstream LLC,
Sr. Unsec. Notes,
7.88%, 08/16/10 85,000 88,635
- ------------------------------------------------------------------------------
PPL Electric Utilities Corp.,
Sec. First Mortgage Bonds,
6.25%, 05/15/39 50,000 53,318
- ------------------------------------------------------------------------------
Virginia Electric & Power Co.,
Sr. Unsec. Notes,
5.00%, 06/30/19 15,000 15,146
==============================================================================
172,813
==============================================================================
HEALTH CARE SERVICES-0.07%
Express Scripts Inc.,
Sr. Unsec. Global Notes,
6.25%, 06/15/14 20,000 21,082
==============================================================================
INTEGRATED OIL & GAS-0.07%
Husky Energy Inc. (Canada),
Sr. Unsec. Unsub. Global Notes,
7.25%, 12/15/19 20,000 21,790
==============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.61%
AT&T Inc.,
Sr. Unsec. Unsub. Global Notes,
6.55%, 02/15/39 25,000 25,404
- ------------------------------------------------------------------------------
Verizon Wireless Capital LLC,
Notes,
3.75%, 05/20/11(e) 60,000 61,200
- ------------------------------------------------------------------------------
Windstream Georgia Communications Corp.,
Sr. Unsec. Deb.,
6.50%, 11/15/13 98,000 98,229
==============================================================================
184,833
==============================================================================
INVESTMENT BANKING & BROKERAGE-2.54%
Bear Stearns Cos. LLC (The),
Sr. Unsec. Unsub. Floating Rate Notes,
1.51%, 07/19/10(f) 180,000 180,223
- ------------------------------------------------------------------------------
Charles Schwab Corp. (The),
Sr. Unsec. Notes,
4.95%, 06/01/14 80,000 81,851
- ------------------------------------------------------------------------------
Goldman Sachs Group Inc. (The),
Sr. Unsec. Global Notes,
7.50%, 02/15/19 40,000 42,844
- ------------------------------------------------------------------------------
Jefferies Group Inc.,
Sr. Unsec. Deb.,
6.45%, 06/08/27 50,000 37,460
- ------------------------------------------------------------------------------
Sr. Unsec. Notes,
5.88%, 06/08/14 230,000 209,305
- ------------------------------------------------------------------------------
Merrill Lynch & Co. Inc.,
Sr. Unsec. Medium-Term Notes,
6.88%, 04/25/18 85,000 77,579
- ------------------------------------------------------------------------------
Morgan Stanley,
Sr. Unsec. Medium-Term Global Notes,
6.00%, 05/13/14 40,000 40,748
- ------------------------------------------------------------------------------
Series F, Sr. Unsec. Medium-Term Global Notes,
5.95%, 12/28/17 100,000 96,310
==============================================================================
766,320
==============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. BASIC BALANCED FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------
LIFE & HEALTH INSURANCE-0.98%
Hartford Life Global Funding Trusts,
Sr. Sec. Unsub. Floating Rate Medium-Term Notes,
0.92%, 10/15/09(f) $ 50,000 $ 49,694
- ------------------------------------------------------------------------------
MetLife Inc.,
Sr. Unsec. Notes,
6.75%, 06/01/16 75,000 76,507
- ------------------------------------------------------------------------------
Unsec. Global Notes,
7.72%, 02/15/19 75,000 80,214
- ------------------------------------------------------------------------------
Prudential Financial Inc.,
Jr. Unsec. Sub. Global Notes,
8.88%, 06/15/38 70,000 59,136
- ------------------------------------------------------------------------------
Sr. Notes,
7.38%, 06/15/19 30,000 29,495
==============================================================================
295,046
==============================================================================
MORTGAGE BACKED SECURITIES-0.45%
U.S. Bank N.A.,
Sr. Unsec. Medium-Term Global Notes,
5.92%, 05/25/12 132,718 134,498
==============================================================================
MOVIES & ENTERTAINMENT-0.10%
Time Warner Cable Inc.,
Sr. Unsec. Gtd. Unsub. Global Notes,
6.75%, 07/01/18 30,000 31,292
==============================================================================
MULTI-LINE INSURANCE-0.86%
American Financial Group Inc.,
Sr. Notes,
9.88%, 06/15/19 165,000 164,087
- ------------------------------------------------------------------------------
Liberty Mutual Group Inc.,
Sr. Unsec. Notes,
5.75%, 03/15/14(e) 45,000 35,764
- ------------------------------------------------------------------------------
Nationwide Mutual Insurance Co.,
Unsec. Sub. Notes,
5.81%, 12/15/24(e) 100,000 60,616
==============================================================================
260,467
==============================================================================
OIL & GAS DRILLING-0.21%
Pride International Inc.,
Sr. Unsec. Notes,
8.50%, 06/15/19 65,000 64,513
==============================================================================
OIL & GAS EXPLORATION & PRODUCTION-0.55%
Anadarko Petroleum Corp.,
Sr. Unsec. Notes,
7.63%, 03/15/14 70,000 75,924
- ------------------------------------------------------------------------------
EOG Resources Inc.,
Sr. Unsec. Notes,
5.63%, 06/01/19 35,000 36,756
- ------------------------------------------------------------------------------
Petroleos Mexicanos (Mexico),
Notes,
8.00%, 05/03/19(e) 50,000 53,764
==============================================================================
166,444
==============================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-0.89%
Bank of America Corp.,
Sr. Global Notes,
7.63%, 06/01/19 75,000 75,490
- ------------------------------------------------------------------------------
General Electric Capital Corp.,
Sr. Unsec. Unsub. Global Notes,
5.90%, 05/13/14 75,000 77,097
- ------------------------------------------------------------------------------
JPMorgan Chase & Co.,
Sr. Unsec. Global Notes,
4.75%, 05/01/13 65,000 66,440
- ------------------------------------------------------------------------------
Sr. Unsec. Unsub. Global Notes,
6.30%, 04/23/19 20,000 20,390
- ------------------------------------------------------------------------------
Pemex Finance Ltd. (Mexico)-Series 1999-2, Class
A1, Sr. Unsec. Global Bonds,
9.69%, 08/15/09 28,000 28,202
- ------------------------------------------------------------------------------
Twin Reefs Pass-Through Trust,
Floating Rate Pass Through Ctfs. Notes,
1.39% (Acquired 12/07/04; Cost
$90,000)(e)(f)(g)(h) 90,000 292
- ------------------------------------------------------------------------------
Two-Rock Pass-Through Trust (Bermuda),
Floating Rate Pass Through Ctfs.,
1.90% (Acquired 11/10/06; Cost
$100,118)(e)(f)(g) 100,000 325
==============================================================================
268,236
==============================================================================
PACKAGED FOODS & MEATS-0.27%
Kraft Foods Inc.,
Sr. Unsec. Notes,
6.88%, 01/26/39 75,000 80,029
==============================================================================
PROPERTY & CASUALTY INSURANCE-0.24%
Chubb Corp.,
Sr. Unsec. Notes,
5.75%, 05/15/18 30,000 31,636
- ------------------------------------------------------------------------------
Travelers Cos. Inc. (The),
Sr. Unsec. Global Notes,
5.90%, 06/02/19 40,000 41,595
==============================================================================
73,231
==============================================================================
REGIONAL BANKS-0.19%
PNC Capital Trust C,
Jr. Unsec. Gtd. Sub. Floating Rate Trust Pfd.
Capital Securities,
1.24%, 06/01/28(f) 100,000 56,942
==============================================================================
REINSURANCE-0.08%
Stingray Pass-Through Trust,
Pass Through Ctfs.,
5.90%, 01/12/15 (Acquired 01/07/05-11/03/05;
Cost $196,920)(e) 200,000 24,000
==============================================================================
RESEARCH & CONSULTING SERVICES-0.40%
Erac USA Finance Co.,
Unsec. Gtd. Notes,
5.80%, 10/15/12(e) 130,000 121,399
==============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. BASIC BALANCED FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------
RETAIL REIT'S-0.08%
Simon Property Group LP,
Sr. Unsec. Notes,
6.75%, 05/15/14 $ 25,000 $ 25,206
==============================================================================
STEEL-0.05%
ArcelorMittal (Luxembourg),
Sr. Unsec. Unsub. Global Notes,
9.00%, 02/15/15 15,000 15,830
==============================================================================
TOBACCO-0.35%
Philip Morris International Inc.,
Sr. Unsec. Unsub. Global Notes,
5.65%, 05/16/18 100,000 104,383
==============================================================================
TRADING COMPANIES & DISTRIBUTORS-0.21%
GATX Corp.,
Sr. Notes,
8.75%, 05/15/14 60,000 62,214
==============================================================================
TRUCKING-0.43%
Stagecoach Transport Holdings PLC (The) (United
Kingdom),
Sr. Unsec. Unsub. Yankee Notes,
8.63%, 11/15/09 130,000 130,247
==============================================================================
Total Bonds & Notes (Cost $4,285,386) 3,810,484
==============================================================================
ASSET-BACKED SECURITIES-6.30%
BA Master Credit Card Trust II-Series 99-J, Class
A, Sec. Euro Note,
7.00%, 02/15/12 80,000 80,978
- ------------------------------------------------------------------------------
Bear Stearns Adjustable Rate Mortgage Trust-Series
2003-6, Class 1A3, Pass Through Ctfs.,
4.56%, 08/25/33 54,930 45,884
- ------------------------------------------------------------------------------
Bear Stearns Commercial Mortgage Securities,
Series 2004-PWR6, Class A6, Pass Through Ctfs.,
4.83%, 11/11/41 80,000 71,066
- ------------------------------------------------------------------------------
Series 2005-PWR8, Class A4, Pass Through Ctfs.,
4.67%, 06/11/41 45,000 38,856
- ------------------------------------------------------------------------------
Series 2006-PW11, Class A4, Pass Through Ctfs.,
5.46%, 03/11/39 100,000 86,095
- ------------------------------------------------------------------------------
Series 2006-T24, Class A4, Pass Through Ctfs.,
5.54%, 10/12/41 50,000 42,599
- ------------------------------------------------------------------------------
Chase Issuance Trust,
Series 2007-A17, Class A, Pass Through Ctfs.,
5.12%, 10/15/14 80,000 83,629
- ------------------------------------------------------------------------------
Series 2009-A3, Class A3, Pass Through Ctfs.,
2.40%, 06/17/13 50,000 49,668
- ------------------------------------------------------------------------------
Citicorp Lease Pass-Through Trust-Series 1999-1,
Class A2, Pass Through Ctfs.,
8.04%, 12/15/19(e) 325,000 296,048
- ------------------------------------------------------------------------------
Citigroup Mortgage Loan Trust Inc.-Series 2004-
UST1, Class A4, Pass Through Ctfs.,
3.44%, 08/25/34 114,679 105,319
- ------------------------------------------------------------------------------
Countrywide Asset-Backed Ctfs.-Series 2007-4,
Class A1B, Pass Through Ctfs.,
5.81%, 09/25/37 66,373 61,239
- ------------------------------------------------------------------------------
Goldman Sachs Mortgage Securities Corp. II-Series
2005 GG4, Class A4A, Pass Through Ctfs.,
4.75%, 07/10/39 125,000 106,405
- ------------------------------------------------------------------------------
Honda Auto Receivables Owner Trust-Series 2009-2,
Class A3, Pass Through Ctfs.,
2.79%, 01/15/13 45,000 45,341
- ------------------------------------------------------------------------------
LB-UBS Commercial Mortgage Trust-Series 2001-WM,
Class A2, Pass Through Ctfs.,
6.53%, 07/14/16(e) 80,000 82,376
- ------------------------------------------------------------------------------
Morgan Stanley Capital I,
Series 2005-HQ7, Class A4, Pass Through Ctfs.,
5.21%, 11/14/42 60,000 53,027
- ------------------------------------------------------------------------------
Series 2005-T19, Class A4A, Pass Through Ctfs.,
4.89%, 06/12/47 80,000 70,312
- ------------------------------------------------------------------------------
Series 2008-T29, Class A1, Pass Through Ctfs.,
6.23%, 01/11/43 53,136 54,276
- ------------------------------------------------------------------------------
Nissan Auto Receivables Owner Trust-Series 2006-B,
Class A4, Pass Through Ctfs.,
5.22%, 11/15/11 46,009 46,867
- ------------------------------------------------------------------------------
Option One Mortgage Securities Corp.-Series 2007-
4A, Floating Rate Notes,
0.41%, 04/25/12 (Acquired 05/11/07; Cost
$47,228)(e)(f) 47,228 18,891
- ------------------------------------------------------------------------------
Structured Asset Securities Corp.-Series 2007-OSI,
Class A2, Floating Rate Pass Through Ctfs.,
0.40%, 06/25/37(f) 95,292 70,379
- ------------------------------------------------------------------------------
USAA Auto Owner Trust,
Series 2006-2, Class A4, Pass Through Ctfs.,
5.37%, 02/15/12 47,342 48,613
- ------------------------------------------------------------------------------
Series 2009-1, Class A3, Pass Through Ctfs.,
3.02%, 06/17/13 80,000 81,003
- ------------------------------------------------------------------------------
Wachovia Bank Commercial Mortgage Trust-Series
2005-C18, Class A4, Pass Through Ctfs.,
4.94%, 04/15/42 80,000 68,510
- ------------------------------------------------------------------------------
WaMu Mortgage Pass Through Ctfs.-Series 2003-AR8,
Class A, Floating Rate,
4.11%, 08/25/33(f) 87,496 76,277
- ------------------------------------------------------------------------------
Wells Fargo Mortgage Backed Securities Trust,
Series 2004-K, Class 1A2, Floating Rate Pass
Through Ctfs.,
4.47%, 07/25/34(f) 36,812 33,161
- ------------------------------------------------------------------------------
Series 2004-Z, Class 2A1, Floating Rate Pass
Through Ctfs.,
4.57%, 12/25/34(f) 95,000 83,595
==============================================================================
Total Asset-Backed Securities (Cost
$2,028,352) 1,900,414
==============================================================================
<Caption>
SHARES
PREFERRED STOCKS-1.97%
OFFICE SERVICES & SUPPLIES-1.97%
Pitney Bowes International Holdings Inc.-Series D,
4.85% Pfd. (Cost $578,455) 6 594,807
==============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. BASIC BALANCED FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------
U.S. TREASURY NOTES-0.93%
4.88%, 08/15/09(i) $ 30,000 $ 30,169
- ------------------------------------------------------------------------------
1.50%, 12/31/13 260,000 250,453
==============================================================================
Total U.S. Treasury Notes (Cost $288,513) 280,622
==============================================================================
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
MONEY MARKET FUNDS-3.31%
Liquid Assets Portfolio-Institutional Class(j) 498,874 $ 498,874
- ------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(j) 498,874 498,874
==============================================================================
Total Money Market Funds (Cost $997,748) 997,748
==============================================================================
TOTAL INVESTMENTS-110.82% (Cost $39,444,517) 33,437,556
==============================================================================
OTHER ASSETS LESS LIABILITIES-(10.82)% (3,265,730)
==============================================================================
NET ASSETS-100.00% $30,171,826
______________________________________________________________________________
==============================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
Ctfs. - Certificates
Deb. - Debentures
Gtd. - Guaranteed
Jr. - Junior
Pfd. - Preferred
REIT - Real Estate Investment Trust
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
TBA - To Be Announced
Unsec. - Unsecured
Unsub. - Unsubordinated
</Table>
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) Non-income producing security.
(c) Security purchased on forward commitment basis.
(d) This security is subject to dollar roll transactions. See Note 1I.
(e) Security purchased or received in a transaction exempt from registration
under the Securities Act of 1933, as amended. The security may be resold
pursuant to an exemption from registration under the 1933 Act, typically
to qualified institutional buyers. The aggregate value of these securities
at June 30, 2009 was $1,021,788, which represented 3.39% of the Fund's Net
Assets.
(f) Interest or dividend rate is redetermined periodically. Rate shown is the
rate in effect on June 30, 2009.
(g) Perpetual bond with no specified maturity date.
(h) Defaulted security. Currently, the issuer is in default with respect to
interest payments. The value of this security at June 30, 2009 represented
less than 0.01% of the Fund's Net Assets.
(i) All or a portion of the value was pledged as collateral to cover margin
requirements for open futures contracts. See Note 1L and Note 4.
(j) The money market fund and the Fund are affiliated by having the same
investment advisor.
PORTFOLIO COMPOSITION
By security type, based on Total Investments
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
Common Stocks & Other Equity Interests 65.2%
- -------------------------------------------------------------------------
U.S. Government Sponsored Mortgage-Backed Securities 12.1
- -------------------------------------------------------------------------
Bonds & Notes 11.4
- -------------------------------------------------------------------------
Asset-Backed Securities 5.6
- -------------------------------------------------------------------------
Preferred Stocks 1.8
- -------------------------------------------------------------------------
U.S. Treasury Securities 0.9
- -------------------------------------------------------------------------
Money Market Funds 3.0
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. BASIC BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $38,446,769) $ 32,439,808
- --------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 997,748
================================================================================
Total investments, at value (Cost $39,444,517) 33,437,556
================================================================================
Cash 1,468
- --------------------------------------------------------------------------------
Foreign currencies, at value (Cost $28) 28
- --------------------------------------------------------------------------------
Receivables for:
Investments sold 250,970
- --------------------------------------------------------------------------------
Variation margin 1,667
- --------------------------------------------------------------------------------
Fund shares sold 409
- --------------------------------------------------------------------------------
Dividends and Interest 82,378
- --------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 21,135
================================================================================
Total assets 33,795,611
________________________________________________________________________________
================================================================================
LIABILITIES:
Payables for:
Investments purchased 2,595,746
- --------------------------------------------------------------------------------
Credit default swap agreements close-out 146,461
- --------------------------------------------------------------------------------
Fund shares reacquired 777,295
- --------------------------------------------------------------------------------
Accrued fees to affiliates 27,422
- --------------------------------------------------------------------------------
Accrued other operating expenses 47,309
- --------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 29,552
================================================================================
Total liabilities 3,623,785
================================================================================
Net assets applicable to shares outstanding $ 30,171,826
________________________________________________________________________________
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 53,156,114
- --------------------------------------------------------------------------------
Undistributed net investment income 1,928,628
- --------------------------------------------------------------------------------
Undistributed net realized gain (loss) (18,897,322)
- --------------------------------------------------------------------------------
Unrealized appreciation (depreciation) (6,015,594)
================================================================================
$ 30,171,826
________________________________________________________________________________
================================================================================
NET ASSETS:
Series I $ 27,374,563
________________________________________________________________________________
================================================================================
Series II $ 2,797,263
________________________________________________________________________________
================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 3,676,519
________________________________________________________________________________
================================================================================
Series II 377,891
________________________________________________________________________________
================================================================================
Series I:
Net asset value per share $ 7.45
________________________________________________________________________________
================================================================================
Series II:
Net asset value per share $ 7.40
________________________________________________________________________________
================================================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Interest $ 281,690
- ------------------------------------------------------
Dividends (net of foreign withholding
taxes of $9,297) 246,277
- ------------------------------------------------------
Dividends from affiliated money market
funds 8,508
======================================================
Total investment income 536,475
======================================================
EXPENSES:
Advisory fees 107,704
- ------------------------------------------------------
Administrative services fees 53,611
- ------------------------------------------------------
Custodian fees 7,056
- ------------------------------------------------------
Distribution fees -- Series II 3,242
- ------------------------------------------------------
Transfer agent fees 4,628
- ------------------------------------------------------
Trustees' and officers' fees and
benefits 10,689
- ------------------------------------------------------
Professional services fees 26,299
- ------------------------------------------------------
Other 16,940
======================================================
Total expenses 230,169
======================================================
Less: Fees waived (97,789)
======================================================
Net expenses 132,380
======================================================
Net investment income 404,095
======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (includes net
gains (losses) from securities sold
to affiliates of $(21,119)) (3,595,472)
- ------------------------------------------------------
Foreign currencies 342
- ------------------------------------------------------
Futures contracts (12,062)
- ------------------------------------------------------
Swap agreements (68,354)
======================================================
(3,675,546)
======================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 5,747,279
- ------------------------------------------------------
Foreign currencies 571
- ------------------------------------------------------
Futures contracts (26,288)
- ------------------------------------------------------
Swap agreements 60,365
======================================================
5,781,927
======================================================
Net realized and unrealized gain 2,106,381
======================================================
Net increase in net assets resulting
from operations $ 2,510,476
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. BASIC BALANCED FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- ------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 404,095 $ 1,486,455
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) (3,675,546) (4,422,833)
- ------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 5,781,927 (18,183,564)
======================================================================================================
Net increase (decrease) in net assets resulting from operations 2,510,476 (21,119,942)
======================================================================================================
Distributions to shareholders from net investment income:
Series I -- (1,806,595)
- ------------------------------------------------------------------------------------------------------
Series II -- (174,919)
======================================================================================================
Total distributions from net investment income -- (1,981,514)
======================================================================================================
Share transactions-net:
Series I (2,517,939) (10,390,808)
- ------------------------------------------------------------------------------------------------------
Series II (245,883) (377,217)
======================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (2,763,822) (10,768,025)
======================================================================================================
Net increase (decrease) in net assets (253,346) (33,869,481)
======================================================================================================
NET ASSETS:
Beginning of period 30,425,172 64,294,653
======================================================================================================
End of period (includes undistributed net investment income of
$1,928,628 and $1,524,533, respectively) $30,171,826 $ 30,425,172
______________________________________________________________________________________________________
======================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. BASIC BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Basic Balanced Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is long-term growth of capital and current
income.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
A security listed or traded on an exchange (except convertible bonds) is
valued at its 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, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Swap agreements are fair valued using an evaluated quote provided by an
independent pricing service. Evaluated quotes provided by the pricing
service are valued based on a model which may include end of day net
present values, spreads, ratings, industry, and company performance.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
AIM V.I. BASIC BALANCED FUND
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Paydown gains and losses on mortgage and asset-backed securities are
recorded as adjustments to interest income. Dividend income is recorded on
the ex-dividend date. Bond premiums and discounts are amortized and/or
accreted for financial reporting purposes.
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. DOLLAR ROLL AND FORWARD COMMITMENT TRANSACTIONS -- The Fund may engage in
dollar roll and forward commitment transactions with respect to mortgage-
backed securities issued by GNMA, FNMA and FHLMC. These transactions are
often conducted on a to be announced ("TBA") basis. In a TBA mortgage-
backed transaction, the seller does not specify the particular securities
to be delivered. Rather, a Fund agrees to accept any security that meets
specified terms, such as an agreed upon issuer, coupon rate and terms of
the underlying mortgages. TBA mortgage-backed transactions generally
settle once a month on a specific date.
In a dollar roll transaction, the Fund sells a mortgage-backed security
held in the Fund to a financial institution such as a bank or broker-
dealer, and simultaneously agrees to purchase a substantially similar
security (same type, coupon and maturity) from the institution at an
agreed upon price and future date. The mortgage-backed securities to be
purchased will bear the same coupon as those sold, but generally will be
collateralized by different pools of mortgages with different prepayment
histories. Based on the typical structure of dollar roll transactions by
the Fund, the dollar roll transactions are accounted for as financing
transactions in which the Fund receives compensation as either a "fee" or
a "drop". "Fee" income which is agreed upon amongst the parties at the
commencement of the dollar roll and the "drop" which is the difference
between the selling price and the repurchase price of the mortgage-backed
securities are amortized to income. During the period between the sale and
purchase settlement dates, the Fund will not be entitled to receive
interest and principal payments on securities purchased and not yet
settled. Proceeds of the sale may be invested in short-term instruments,
and the income from these investments, together with any additional fee
income received on the sale, could generate income for the Fund exceeding
the yield on the security sold. Dollar roll transactions are considered
borrowings under the 1940 Act.
AIM V.I. BASIC BALANCED FUND
Forward commitment transactions involve commitments by the Fund to
acquire or sell TBA mortgage-backed securities from/to a financial
institution, such as a bank or broker-dealer at a specified future date
and amount. The TBA mortgage-backed security is marked to market until
settlement and the unrealized appreciation or depreciation is recorded in
the statement of operations.
At the time the Fund enters into the dollar roll or forward commitment
transaction, mortgage-backed securities or other liquid assets held by the
Fund having a dollar value equal to the purchase price or in an amount
sufficient to honor the forward commitment will be segregated.
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 purchase under the
agreement. In the event that the buyer of securities in a dollar roll
transaction files for bankruptcy or becomes insolvent, the Fund's use of
the proceeds from the sale of the securities may be restricted pending a
determination by the other party, or its trustee or receiver, whether to
enforce the Fund's obligation to purchase the securities. The return
earned by the Fund with the proceeds of the dollar roll transaction may
not exceed the return on the securities sold.
Forward commitment transactions involve the risk that a counter-party to
the transaction may fail to complete the transaction. If this occurs, the
Fund may lose the opportunity to purchase or sell the security at the
agreed upon price. Settlement dates of forward commitment transactions may
be a month or more after entering into these transactions and as a result
the market values of the securities may vary from the purchase or sale
prices. Therefore, forward commitment transactions may increase the Fund's
overall interest rate exposure.
J. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
Reported net realized foreign currency gains or losses arise from (i)
sales of foreign currencies, (ii) currency gains or losses realized
between the trade and settlement dates on securities transactions, and
(iii) the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency gains and losses arise from changes in the fair values of
assets and liabilities, other than investments in securities at fiscal
period end, resulting from changes in exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
K. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed, realized gains (losses) are
recorded. Realized and unrealized gains (losses) on the contracts are
included in the Statement of Operations. The maximum risks associated with
foreign currency contracts include failure of the counterparty to meet the
terms of the contract and the value of the foreign currency changing
unfavorably. These risks may be in excess of the amounts reflected in the
Statement of Assets and Liabilities.
L. FUTURES CONTRACTS -- The Fund may enter into futures contracts to manage
exposure to interest rate and equity price movements and currency risks. A
futures contract is an agreement between two parties to purchase or sell a
specified underlying instrument for a fixed price at a future date. The
Fund currently invests only in exchange-traded futures and they are
standardized as to maturity date and underlying financial instrument.
Initial margin deposits required upon entering into futures contracts are
satisfied by the segregation of specific securities as collateral for the
account of the broker (the Fund's agent in acquiring the futures
position). During the period the futures contracts are open, changes in
the value of the contracts are recognized as unrealized gains or losses by
recalculating the value of the contracts on a daily basis. Subsequent or
variation margin payments are received or made depending upon whether
unrealized gains or losses are incurred. These amounts are reflected as
receivables or payables on the Statement of Assets and Liabilities. When
the contracts are closed or expire, the Fund recognizes a realized gain or
loss equal to the difference between the proceeds from, or cost of, the
closing transaction and the Fund's basis in the contract. The net realized
gain (loss) and the change in unrealized gain (loss) on futures contracts
held during the period is included on the Statement of Operations. The
primary risks associated with futures contracts are market risk and the
absence of a liquid secondary market. If the Fund were unable to liquidate
a futures contract and/or enter into an offsetting closing transaction,
the Fund would continue to be subject to market risk with respect to the
value of the contracts and continue to be required to maintain the margin
deposits on the futures contracts. Futures contracts have minimal
counterparty risk since the exchange's clearinghouse, as counterparty to
all exchange traded futures, guarantees the futures against default. Risks
may exceed amounts recognized in the Statement of Assets and Liabilities.
M. SWAP AGREEMENTS -- The Fund may enter into various swap transactions,
including interest rate, index, currency exchange rate and credit default
swap contracts ("CDS") for investment purposes or to manage interest rate,
currency or credit risk.
Interest rate, index, and currency exchange rate swap agreements are
two-party contracts entered into primarily to exchange the returns (or
differentials in rates of returns) earned or realized on particular
predetermined investments or instruments. The gross returns to be
exchanged or "swapped" between the parties are calculated with respect to
a notional amount, i.e., the return on or increase in value of a
particular dollar amount invested at a particular interest rate, in a
particular foreign currency, or in a "basket" of securities representing a
particular index.
A CDS is an agreement between two parties ("Counterparties") to exchange
the credit risk of an issuer. A buyer of a CDS is said to buy protection
by paying a fixed payment over the life of the agreement and in some
situations an upfront payment to the seller of the CDS. If a defined
credit event occurs (such as payment default or bankruptcy), the Fund as a
protection buyer would cease paying its fixed payment, the Fund would
deliver eligible bonds
AIM V.I. BASIC BALANCED FUND
issued by the reference entity to the seller, and the seller would pay the
full notional value, or the "par value", of the referenced obligation to
the Fund. A seller of a CDS is said to sell protection and thus would
receive a fixed payment over the life of the agreement and an upfront
payment, if applicable. If a credit event occurs, the Fund as a protection
seller would cease to receive the fixed payment stream, the Fund would pay
the buyer "par value" or the full notional value of the referenced
obligation, and the Fund would receive the eligible bonds issued by the
reference entity. In turn, these bonds may be sold in order to realize a
recovery value. Alternatively, the seller of the CDS and its counterparty
may agree to net the notional amount and the market value of the bonds and
make a cash payment equal to the difference to the buyer of protection. If
no credit event occurs, the Fund receives the fixed payment over the life
of the agreement. As the seller, the Fund would effectively add leverage
to its portfolio because, in addition to its total net assets, the Fund
would be subject to investment exposure on the notional amount of the CDS.
In connection with these agreements, cash and securities may be identified
as collateral in accordance with the terms of the respective swap
agreements to provide assets of value and recourse in the event of default
under the swap agreement or bankruptcy/insolvency of a party to the swap
agreement. The Fund's maximum risk of loss from counterparty risk, either
as the protection seller or as the protection buyer, is the value of the
contract. The risk may be mitigated by having a master netting arrangement
between the Fund and the counterparty and by the posting of collateral by
the counterparty to cover the Fund's exposure to the counterparty.
Implied credit spreads represent the current level at which protection
could be bought or sold given the terms of the existing CDS contract and
serve as an indicator of the current status of the payment/performance
risk of the CDS. An implied spread that has widened or increased since
entry into the initial contract may indicate a deteriorating credit
profile and increased risk of default for the reference entity. A
declining or narrowing spread may indicate an improving credit profile or
decreased risk of default for the reference entity. Alternatively, credit
spreads may increase or decrease reflecting the general tolerance for risk
in the credit markets.
Changes in the value of swap agreements are recognized as unrealized
gains (losses) in the Statement of Operations by "marking to market" on a
daily basis to reflect the value of the swap agreement at the end of each
trading day. Payments received or paid at the beginning of the agreement
are reflected as such on the Statement of Assets and Liabilities and may
be referred to as upfront payments. The Fund accrues for the fixed payment
stream and amortizes upfront payments, if any, on swap agreements on a
daily basis with the net amount, recorded as a component of realized gain
(loss) on the Statement of Operations. A liquidation payment received or
made at the termination of a swap agreement is recorded as realized gain
(loss) on the Statement of Operations. The Fund segregates liquid
securities having a value at least equal to the amount of the potential
obligation of a Fund under any swap transaction. Entering into these
agreements involves, to varying degrees, lack of liquidity and elements of
credit, market, and counterparty risk in excess of amounts recognized on
the Statement of Assets and Liabilities. Such risks involve the
possibility that a swap is difficult to sell or liquidate; the
counterparty does not honor its obligations under the agreement and
unfavorable interest rates and market fluctuations.
N. COLLATERAL -- To the extent the Fund has pledged or segregated a security
as collateral and that security is subsequently sold, it is the Fund's
practice to replace such collateral no later than the next business day.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
First $150 million 0.75%
- -------------------------------------------------------------------
Over $150 million 0.50%
___________________________________________________________________
===================================================================
</Table>
Through June 30, 2010, the Advisor has contractually agreed to waive advisory
fees to the extent necessary so that the advisory fees payable by the Fund
(based on the Fund's average daily net assets) do not exceed the annual rate of:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
First $150 million 0.62%
- -------------------------------------------------------------------
Next $4.85 billion 0.50%
- -------------------------------------------------------------------
Next $5 billion 0.475%
- -------------------------------------------------------------------
Over $10 billion 0.45%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 0.91% and Series
II shares to 1.16% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, 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. These credits are used to pay certain expenses incurred by the Fund. To
the
AIM V.I. BASIC BALANCED FUND
extent that the annualized expense ratio does not exceed the expense limitation,
the Advisor will retain its ability to be reimbursed for such fee waivers or
reimbursements prior to the end of each fiscal year.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash in such affiliated money market
funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$97,789.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $24,795 for accounting and fund
administrative services and reimbursed $28,816 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- ----------------------------------------------------------------------------------------------------------------------
Equity Securities $21,374,071 $ 1,430,698 $594,807 $23,399,576
- ----------------------------------------------------------------------------------------------------------------------
U.S. Treasury Securities -- 280,622 -- 280,622
- ----------------------------------------------------------------------------------------------------------------------
U.S. Government Sponsored Agency Securities -- 4,046,460 -- 4,046,460
- ----------------------------------------------------------------------------------------------------------------------
Corporate Debt Securities -- 3,810,484 -- 3,810,484
- ----------------------------------------------------------------------------------------------------------------------
Asset Backed Securities -- 1,900,414 -- 1,900,414
======================================================================================================================
33,437,556
======================================================================================================================
Other Investments* (9,204) -- (9,204)
======================================================================================================================
Total Investments $21,364,867 $11,468,678 $594,807 $33,428,352
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
* Other Investments includes futures, which are included at unrealized
appreciation/(depreciation).
AIM V.I. BASIC BALANCED FUND
NOTE 4--DERIVATIVE INVESTMENTS
Effective with the beginning of the Fund's fiscal year, the Fund has adopted the
provisions of FASB Statement No. 161, Disclosures about Derivative Instruments
and Hedging Activities. The standard is intended to improve financial reporting
about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an
entity's financial position and financial performance. The adoption of this
provision has no impact on the results of operations reported in the financial
statements.
VALUE OF DERIVATIVE INSTRUMENTS AT PERIOD-END
The Table below summarizes the value of the Fund's derivative instruments,
detailed by primary risk exposure, held as of June 30, 2009:
<Table>
<Caption>
VALUE
----------------------
RISK EXPOSURE/ DERIVATIVE TYPE ASSETS LIABILITIES
- ----------------------------------------------------------------------------------------------------
Credit Risk
Credit Default Swaps(a) $ -- $(146,461)
- ----------------------------------------------------------------------------------------------------
Interest rate risk
Futures contracts(b) 4,215 (13,419)
====================================================================================================
$4,215 $(159,880)
____________________________________________________________________________________________________
====================================================================================================
</Table>
(a) Value is disclosed on the Statement of Assets and Liabilities under Credit
default swap agreements close-out. Contracts were closed upon the
declaration of bankruptcy by Lehman Brothers Holdings Inc. on September 15,
2008.
(b) Includes cumulative appreciation (depreciation) of futures contracts. Only
current day's variation margin receivable (payable) is reported within the
Statement of Assets & Liabilities.
EFFECT OF DERIVATIVE INSTRUMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009
The table below summarizes the gains (losses) on derivative instruments,
detailed by primary risk exposure, recognized in earnings during the period:
<Table>
<Caption>
LOCATION OF GAIN (LOSS) ON
STATEMENT OF OPERATIONS
-----------------------------
FUTURES* SWAP AGREEMENTS*
- -----------------------------------------------------------------------------------------------------
Realized Gain (Loss)
Credit risk $ -- $(68,354)
- -----------------------------------------------------------------------------------------------------
Interest rate risk (12,062) --
=====================================================================================================
Subtotal $(12,062) $(68,354)
=====================================================================================================
Change in Unrealized Appreciation (Depreciation)
Credit risk $ -- $ 60,365
- -----------------------------------------------------------------------------------------------------
Interest rate risk (26,288) --
=====================================================================================================
Subtotal $(26,288) $ 60,365
=====================================================================================================
Total $(38,350) $ (7,989)
_____________________________________________________________________________________________________
=====================================================================================================
</Table>
* The average value outstanding of futures and swap agreements during the period
was $612,676 and $2,625,000, respectively.
FUTURES CONTRACTS
<Table>
<Caption>
OPEN FUTURES CONTRACTS
- -------------------------------------------------------------------------------------------------------------------------
UNREALIZED
NUMBER OF MONTH/ APPRECIATION
CONTRACT CONTRACTS COMMITMENT VALUE (DEPRECIATION)
- -------------------------------------------------------------------------------------------------------------------------
U.S. Treasury 2 Year Notes 5 September/Long $ 1,081,094 $(2,087)
- -------------------------------------------------------------------------------------------------------------------------
U.S. Treasury 5 Year Notes 4 September/Long 458,875 1,570
=========================================================================================================================
Subtotal $ 1,539,969 $ (517)
=========================================================================================================================
U.S. Treasury 10 Year Notes 10 September/Short (1,162,656) (1,019)
- -------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Long Bonds 2 September/Short (236,719) (7,668)
=========================================================================================================================
Subtotal $(1,399,375) $(8,687)
=========================================================================================================================
Total $(9,204)
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
AIM V.I. BASIC BALANCED FUND
NOTE 5--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS
The Fund is permitted to purchase or sell securities from or to certain other
AIM Funds under specified conditions outlined in procedures adopted by the Board
of Trustees of the Trust. The procedures have been designed to ensure that any
purchase or sale of securities by the Fund from or to another fund or portfolio
that is or could be considered an affiliate by virtue of having a common
investment advisor (or affiliated investment advisors), common Trustees and/or
common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined
under the procedures, each transaction is effected at the current market price.
Pursuant to these procedures, for the six months ended June 30, 2009, the Fund
engaged in securities purchases of $151,114 and securities sales of $60,500,
which resulted in net realized gains (losses) of $(21,119).
NOTE 6--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $1,459
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 7--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the custodian bank
can be compensated by earning the additional interest; or (ii) compensate by
paying the custodian bank at a rate agreed upon by the custodian bank and
Invesco Aim, not to exceed the contractually agreed upon rate.
NOTE 8--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
December 31, 2010 $10,514,572
- -----------------------------------------------------------------------------------------------
December 31, 2016 3,766,094
===============================================================================================
Total capital loss carryforward $14,280,666
_______________________________________________________________________________________________
===============================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
NOTE 9--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $8,080,555 and
$8,537,463, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 1,698,116
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (8,438,494)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $(6,740,378)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $40,177,934.
</Table>
AIM V.I. BASIC BALANCED FUND
NOTE 10--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- -----------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
------------------------ ---------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
Sold:
Series I 213,017 $ 1,423,157 213,379 $ 1,989,301
- -----------------------------------------------------------------------------------------------------------------------
Series II 16,989 114,028 39,073 381,508
=======================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 265,676 1,806,595
- -----------------------------------------------------------------------------------------------------------------------
Series II -- -- 25,837 174,919
=======================================================================================================================
Reacquired:
Series I (586,317) (3,941,096) (1,426,183) (14,186,704)
- -----------------------------------------------------------------------------------------------------------------------
Series II (56,254) (359,911) (99,172) (933,644)
=======================================================================================================================
Net increase (decrease) in share activity (412,565) $(2,763,822) (981,390) $(10,768,025)
_______________________________________________________________________________________________________________________
=======================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 83% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
(LOSSES)
NET ASSET ON SECURITIES DIVIDENDS
VALUE, NET (BOTH TOTAL FROM FROM NET NET ASSET NET ASSETS,
BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT VALUE, END TOTAL END OF PERIOD
OF PERIOD INCOME(a) UNREALIZED) OPERATIONS INCOME OF PERIOD RETURN(b) (000S OMITTED)
- --------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $ 6.81 $0.09 $ 0.55 $ 0.64 $ -- $ 7.45 9.40% $27,375
Year ended 12/31/08 11.81 0.31 (4.84) (4.53) (0.47) 6.81 (38.32) 27,596
Year ended 12/31/07 11.92 0.28 (0.01) 0.27 (0.38) 11.81 2.20 59,000
Year ended 12/31/06 10.99 0.25 0.91 1.16 (0.23) 11.92 10.55 84,212
Year ended 12/31/05 10.59 0.18 0.38 0.56 (0.16) 10.99 5.29 90,633
Year ended 12/31/04 9.99 0.13 0.62 0.75 (0.15) 10.59 7.52 99,070
- --------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 6.78 0.09 0.53 0.62 -- 7.40 9.14 2,797
Year ended 12/31/08 11.73 0.28 (4.79) (4.51) (0.44) 6.78 (38.46) 2,829
Year ended 12/31/07 11.84 0.25 (0.01) 0.24 (0.35) 11.73 1.94 5,295
Year ended 12/31/06 10.91 0.22 0.91 1.13 (0.20) 11.84 10.36 5,878
Year ended 12/31/05 10.53 0.15 0.37 0.52 (0.14) 10.91 4.91 5,870
Year ended 12/31/04 9.95 0.10 0.62 0.72 (0.14) 10.53 7.24 5,642
________________________________________________________________________________________________________________________________
================================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
WITH FEE WAIVERS FEE WAIVERS INCOME
AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
ABSORBED ABSORBED NET ASSETS TURNOVER(c)
- ---------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 0.90%(d) 1.58%(d) 2.84%(d) 31%
Year ended 12/31/08 0.91 1.35 3.11 50
Year ended 12/31/07 0.91 1.18 2.31 47
Year ended 12/31/06 0.91 1.15 2.16 44
Year ended 12/31/05 0.95 1.15 1.68 44
Year ended 12/31/04 1.12 1.12 1.24 51
- ---------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 1.15(d) 1.83(d) 2.59(d) 31
Year ended 12/31/08 1.16 1.60 2.86 50
Year ended 12/31/07 1.16 1.43 2.06 47
Year ended 12/31/06 1.16 1.40 1.91 44
Year ended 12/31/05 1.20 1.40 1.43 44
Year ended 12/31/04 1.37 1.37 0.99 51
_______________________________________________________________________________________
=======================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Total returns are not annualized for periods less than one
year, if applicable and do not reflect charges assessed in connection with
a variable product, which if included would reduce total returns.
(c) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(d) Ratios are annualized and based on average daily net assets (000's omitted)
of $26,344 and $2,615 for Series I and Series II shares, respectively.
AIM V.I. BASIC BALANCED FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,094.00 $4.67 $1,020.33 $4.51 0.90%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,091.40 5.96 1,019.09 5.76 1.15
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. BASIC BALANCED FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM Variable Insurance Funds is required
under the Investment Company Act of 1940 to approve annually the renewal of the
AIM V.I. Basic Balanced Fund (the Fund) investment advisory agreement with
Invesco Aim Advisors, Inc. (Invesco Aim) and the Master Intergroup Sub-Advisory
Contract for Mutual Funds (the sub-advisory contracts) with Invesco Asset
Management Deutschland GmbH, Invesco Asset Management Limited, 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 Ltd.
(collectively, the Affiliated Sub-Advisers). During contract renewal meetings
held on June 16-17, 2009, the Board as a whole, and the disinterested or
"independent" Trustees voting separately, approved the continuance of the Fund's
investment advisory agreement and the sub-advisory contracts for another year,
effective July 1, 2009. In doing so, the Board determined that the Fund's
investment advisory agreement and the sub-advisory contracts are in the best
interests of the Fund and its shareholders and that the compensation to Invesco
Aim and the Affiliated Sub-Advisers under the Fund's investment advisory
agreement and sub-advisory contracts is fair and reasonable.
THE BOARD'S FUND EVALUATION PROCESS
The Board's Investments Committee has established three Sub-Committees that are
responsible for overseeing the management of a number of the series portfolios
of the AIM Funds. This Sub-Committee structure permits the Trustees to focus on
the performance of the AIM Funds that have been assigned to them. The
Sub-Committees meet throughout the year to review the performance of their
assigned funds, and the Sub-Committees review monthly and quarterly comparative
performance information and periodic asset flow data for their assigned funds.
These materials are prepared under the direction and supervision of the
independent Senior Officer, an officer of the AIM Funds who reports directly to
the independent Trustees. Over the course of each year, the Sub-Committees meet
with portfolio managers for their assigned funds and other members of management
and review with these individuals the performance, investment objective(s),
policies, strategies and limitations of these funds.
In addition to their meetings throughout the year, the Sub-Committees meet
at designated contract renewal meetings each year to conduct an in-depth review
of the performance, fees, expenses and other matters related to their assigned
funds. During the contract renewal process, the Trustees receive comparative
performance and fee data regarding the AIM Funds prepared by an independent
company, Lipper, Inc. (Lipper), under the direction and supervision of the
Senior Officer who also prepares a separate analysis of this information for the
Trustees. Each Sub-Committee then makes recommendations to the Investments
Committee regarding the fees and expenses of their assigned funds. The
Investments Committee considers each Sub-Committee's recommendations and makes
its own recommendations regarding the fees and expenses of the AIM Funds to the
full Board. The Investments Committee also considers each Sub-Committee's
recommendations in making its annual recommendation to the Board whether to
approve the continuance of each AIM Fund's investment advisory agreement and
sub-advisory contracts for another year.
The independent Trustees met separately during their evaluation of the
Fund's investment advisory agreement and sub-advisory contracts with independent
legal counsel. The independent Trustees were also assisted in their annual
evaluation of the Fund's investment advisory agreement by the Senior Officer.
One responsibility of the Senior Officer is to manage the process by which the
AIM Funds' proposed management fees are negotiated during the annual contract
renewal process to ensure that they are negotiated in a manner that is at arms'
length and reasonable. Accordingly, the Senior Officer must either supervise a
competitive bidding process or prepare an independent written evaluation. The
Senior Officer recommended that an independent written evaluation be provided
and, at the direction of the Board, prepared an independent written evaluation.
During the annual contract renewal process, the Board considered the
factors discussed below in evaluating the fairness and reasonableness of the
Fund's investment advisory agreement and sub-advisory contracts. The Board
considered all of the information provided to them, including information
provided at their meetings throughout the year as part of their ongoing
oversight of the Fund, and did not identify any particular factor that was
controlling. Each Trustee may have evaluated the information provided
differently from another Trustee and attributed different weight to the various
factors. The Trustees recognized that the advisory arrangements and resulting
advisory fees for the Fund and the other AIM Funds are the result of years of
review and negotiation between the Trustees and Invesco Aim, that the Trustees
may focus to a greater extent on certain aspects of these arrangements in some
years than in others, and that the Trustees' deliberations and conclusions in a
particular year may be based in part on their deliberations and conclusions
regarding these same arrangements throughout the year and in prior years.
The discussion below serves as a summary of the Senior Officer's
independent written evaluation with respect to the Fund's investment advisory
agreement as well as a discussion of the material factors and related
conclusions that formed the basis for the Board's approval of the Fund's
investment advisory agreement and sub-advisory contracts. Unless otherwise
stated, information set forth below is as of June 17, 2009, and does not reflect
any changes that may have occurred since that date, including but not limited to
changes to the Fund's performance, advisory fees, expense limitations and/or fee
waivers.
FACTORS AND CONCLUSIONS AND SUMMARY OF INDEPENDENT WRITTEN FEE EVALUATION
A. Nature, Extent and Quality of Services Provided by Invesco Aim
The Board reviewed the advisory services provided to the Fund by Invesco Aim
under the Fund's investment advisory agreement, the performance of Invesco Aim
in providing these services, and the credentials and experience of the officers
and employees of Invesco Aim who provide these services. The Board's review of
the qualifications of Invesco Aim to provide these services included the Board's
consideration of Invesco Aim's portfolio and product review process, various
back office support functions provided by Invesco Aim and its affiliates, and
Invesco Aim's equity and fixed income trading operations. The Board concluded
that the nature, extent and quality of the advisory services provided to the
Fund by Invesco Aim are appropriate and that Invesco Aim currently is providing
satisfactory advisory services in accordance with the terms of the Fund's
investment advisory agreement. In addition, based on their
AIM V.I. BASIC BALANCED FUND
continued
ongoing meetings throughout the year with the Fund's portfolio manager or
managers, the Board concluded that these individuals are competent and able to
continue to carry out their responsibilities under the Fund's investment
advisory agreement.
In determining whether to continue the Fund's investment advisory
agreement, the Board considered the prior relationship between Invesco Aim and
the Fund, as well as the Board's knowledge of Invesco Aim's operations, and
concluded that it is beneficial to maintain the current relationship, in part,
because of such knowledge. The Board also considered the steps that Invesco Aim
and its affiliates continue to take to improve the quality and efficiency of the
services they provide to the AIM Funds in the areas of investment performance,
product line diversification, distribution, fund operations, shareholder
services and compliance. The Board concluded that the quality and efficiency of
the services Invesco Aim and its affiliates provide to the AIM Funds in each of
these areas support the Board's approval of the continuance of the Fund's
investment advisory agreement.
B. Nature, Extent and Quality of Services Provided by Affiliated
Sub-Advisers
The Board reviewed the services provided by the Affiliated Sub-Advisers under
the sub-advisory contracts and the credentials and experience of the officers
and employees of the Affiliated Sub-Advisers who provide these services. The
Board concluded that the nature, extent and quality of the services provided by
the Affiliated Sub-Advisers are appropriate. The Board noted that the Affiliated
Sub-Advisers, which have offices and personnel that are geographically dispersed
in financial centers around the world, can provide research and other
information and make recommendations on the markets and economies of various
countries and securities of companies located in such countries or on various
types of investments and investment techniques. The Board noted that Invesco
Institutional (N.A.), Inc. (Invesco Institutional) manages a portion of the
Fund's assets. The Board concluded that the sub-advisory contracts benefit the
Fund and its shareholders by permitting Invesco Aim to utilize the additional
resources and talent of the Affiliated Sub-Advisers in managing the Fund.
C. Fund Performance
The Board considered fund performance as a relevant factor in considering
whether to approve the investment advisory agreement, as well as the
sub-advisory contracts for the Fund, as Invesco Institutional currently manages
a portion of the Fund's assets.
The Board compared the Fund's performance during the past one, three and
five calendar years to the performance of all funds in the Lipper performance
universe that are not managed by Invesco Aim or an Affiliated Sub-Adviser and
against the Lipper VA Underlying Funds - Mixed-Asset Target Allocation Moderate
Funds Index. The Board noted that the Fund's performance was in the fifth
quintile of its performance universe for the one, three and five year period
(the first quintile being the best performing funds and the fifth quintile being
the worst performing funds). The Board noted that the Fund's performance was
below the performance of the Index for the one, three and five year periods. The
Board also noted that Invesco Aim made manager and process changes in 2008 and
early 2009, and Invesco Aim believes it is too early to assess the impact of
such changes on the Fund's performance. Although the independent written
evaluation of the Fund's Senior Officer only considered Fund performance through
the most recent calendar year, the Board also reviewed more recent Fund
performance and this review did not change their conclusions. The Board noted
that, in response to the Board's focus on fund performance, Invesco Aim has
taken a number of actions intended to improve the investment process for the
funds.
D. Advisory and Sub-Advisory Fees and Fee Waivers
The Board compared the Fund's contractual advisory fee rate to the contractual
advisory fee rates of funds in the Fund's Lipper expense group that are not
managed by Invesco Aim or an Affiliated Sub-Adviser, at a common asset level.
The Board noted that the Fund's contractual advisory fee rate was below the
median contractual advisory fee rate of funds in its expense group. The Board
also reviewed the methodology used by Lipper in determining contractual fee
rates, which includes using audited financial data from the most recent annual
report of each fund in the expense group that was publicly available as of the
end of the past calendar year. The Board noted that some comparative data was at
least one year old and did not reflect the market downturn that occurred in the
fourth quarter of 2008.
The Board also compared the Fund's effective fee rate (the advisory fee
after any advisory fee waivers and before any expense limitations/waivers) to
the advisory fee rates of other domestic clients of Invesco Aim and its
affiliates with investment strategies comparable to those of the Fund, including
one mutual fund advised by Invesco Aim. The Board noted that the Fund's rate was
above the effective fee rate for the other mutual fund advised by Invesco Aim.
The Board noted that Invesco Aim has contractually agreed to waive
advisory fees of the Fund through December 31, 2009 and that this fee waiver
includes breakpoints based on net asset levels. Invesco Aim advised the Board
that the fee waiver does not result in an effective rate below the uniform fee
schedule for the Fund at its current asset level, the fee waiver will expire on
December 31, 2009 and the uniform fee schedule will apply from January 1, 2010
through June 30, 2010. The Board also noted that Invesco Aim has contractually
agreed to waive fees and/or limit expenses of the Fund through at least April
30, 2010, in an amount necessary to limit total annual operating expenses to a
specified percentage of average daily net assets for each class of the Fund. The
Board considered the effect this fee waiver would have on the Fund's total
estimated expenses.
The Board also considered the services provided by the Affiliated
Sub-Advisers pursuant to the sub-advisory contracts and the services provided by
Invesco Aim pursuant to the Fund's advisory agreement, as well as the allocation
of fees between Invesco Aim and the Affiliated Sub-Advisers pursuant to the
sub-advisory contracts. The Board noted that the sub-advisory fees have no
direct effect on the Fund or its shareholders, as they are paid by Invesco Aim
to the Affiliated Sub-Advisers, and that Invesco Aim and the Affiliated
Sub-Advisers are affiliates.
After taking account of the Fund's contractual advisory fee rate, the
contractual sub-advisory fee rate, the comparative advisory fee information
discussed above, the expense limitations and other relevant factors, the Board
concluded that the Fund's advisory and sub-advisory fees are fair and
reasonable.
AIM V.I. BASIC BALANCED FUND continued
E. Economies of Scale and Breakpoints
The Board considered the extent to which there are economies of scale in the
provision of advisory services to the Fund. The Board also considered whether
the Fund benefits from such economies of scale through contractual breakpoints
in the Fund's advisory fee schedule. The Board noted that the Fund's contractual
advisory fee schedule includes one breakpoint, but that due to the Fund's asset
level at the end of the past calendar year, the Fund is not currently benefiting
from the breakpoint. The Board also noted that Invesco Aim's contractual
advisory fee waiver discussed above includes breakpoints based on net asset
levels and that the uniform fee schedule will contain seven breakpoints. The
Board concluded that the Fund's advisory fees would reflect economies of scale
at higher asset levels. The Board also noted that the Fund shares directly in
economies of scale through lower fees charged by third party service providers
based on the combined size of all of the AIM Funds and affiliates.
F. Profitability and Financial Resources
The Board reviewed information from Invesco Aim concerning the costs of the
advisory and other services that Invesco Aim and its affiliates provide to the
Fund and the profitability of Invesco Aim and its affiliates in providing these
services. The Board also reviewed information concerning the financial condition
of Invesco Aim and its affiliates. The Board reviewed with Invesco Aim the
methodology used to prepare the profitability information. The Board considered
the overall profitability of Invesco Ltd., the ultimate parent of Invesco Aim
and the Affiliated Sub-Advisers, and of Invesco Aim, as well as the
profitability of Invesco Aim in connection with managing the Fund. The Board
noted that Invesco Aim continues to operate at a net profit, although the
reduction of assets under management as a result of market movements and the
increase in voluntary fee waivers for affiliated money market funds have reduced
the profitability of Invesco Aim and its affiliates. The Board concluded that
the Fund's fees are fair and reasonable, and that the level of profits realized
by Invesco Aim and its affiliates from providing services to the Fund is not
excessive in light of the nature, quality and extent of the services provided.
The Board considered whether Invesco Aim is financially sound and has the
resources necessary to perform its obligations under the Fund's investment
advisory agreement, and concluded that Invesco Aim has the financial resources
necessary to fulfill these obligations. The Board also considered whether each
Affiliated Sub-Adviser is financially sound and has the resources necessary to
perform its obligations under the sub-advisory contracts, and concluded that
each Affiliated Sub-Adviser has the financial resources necessary to fulfill
these obligations.
G. Collateral Benefits to Invesco Aim and its Affiliates
The Board considered various other benefits received by Invesco Aim and its
affiliates resulting from Invesco Aim's relationship with the Fund, including
the fees received by Invesco Aim and its affiliates for their provision of
administrative, transfer agency and distribution services to the Fund. The Board
considered the performance of Invesco Aim and its affiliates in providing these
services and the organizational structure employed by Invesco Aim and its
affiliates to provide these services. The Board also considered that these
services are provided to the Fund pursuant to written contracts that are
reviewed and approved on an annual basis by the Board. The Board concluded that
Invesco Aim and its affiliates are providing these services in a satisfactory
manner and in accordance with the terms of their contracts, and are qualified to
continue to provide these services to the Fund.
The Board considered the benefits realized by Invesco Aim and the
Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed
through "soft dollar" arrangements. The Board noted that soft dollar
arrangements shift the payment obligation for research and execution services
from Invesco Aim and the Affiliated Sub-Advisers to the funds and therefore may
reduce Invesco Aim's and the Affiliated Sub-Advisers' expenses. The Board
concluded that Invesco Aim's and the Affiliated Sub-Advisers' soft dollar
arrangements are appropriate. The Board also concluded that, based on their
review and representations made by the Chief Compliance Officer of Invesco Aim,
these arrangements are consistent with regulatory requirements.
The Board considered the fact that the Fund's uninvested cash and cash
collateral from any securities lending arrangements may be invested in money
market funds advised by Invesco Aim pursuant to procedures approved by the
Board. The Board noted that Invesco Aim will receive advisory fees from these
affiliated money market funds attributable to such investments, although Invesco
Aim has contractually agreed to waive through at least June 30, 2010, the
advisory fees payable by the Fund in an amount equal to 100% of the net advisory
fee Invesco Aim receives from the affiliated money market funds with respect to
the Fund's investment in the affiliated money market funds of uninvested cash,
but not cash collateral. The Board concluded that the Fund's investment of
uninvested cash and cash collateral from any securities lending arrangements in
the affiliated money market funds is in the best interests of the Fund and its
shareholders.
AIM V.I. BASIC BALANCED FUND
[INVESCO AIM LOGO] AIM V.I. BASIC VALUE FUND
- SERVICE MARK - Semiannual Report to Shareholders - June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal
year, at the quarter-ends. For the second and fourth quarters, the lists appear
in the Fund's semiannual and annual reports to shareholders. For the first and
third quarters, the Fund files the lists with the Securities and Exchange
Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the
SEC Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied
at the SEC Public Reference Room in Washington, D.C. You can obtain information
on the operation of the Public Reference Room, including information about
duplicating fee charges, by calling 202 942 8090 or 800 732 0330, or by
electronic request at the following E-mail address: publicinfo@sec.gov.
The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund's most
recent portfolio holdings, as filed on Form N-Q, have also been made available
to insurance companies issuing variable annuity contracts and variable life
insurance policies ("variable products") that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, from our Client Services department at 800 410 4246 or on the
Invesco Aim Web site, invescoaim.com. On the home page, scroll down and click on
Proxy Policy. The information is also available on the SEC Web site, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio
securities during the 12 months ended June 30, 2009, is available at our Web
site. Go to invescoaim.com, access the About Us tab, click on Required Notices
and then click on Proxy Voting Activity. Next, select the Fund from the
drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009,
Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco
Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc.
will be merged into Invesco Institutional (N.A.), Inc., and the consolidated
adviser firm will be renamed Invesco Advisers, Inc. Additional information will
be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND
PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN MORE COMPLETE
INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH
CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
PERFORMANCE SUMMARY
FUND VS. INDEXES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer
charges. If variable product issuer charges were included, returns would be
lower.
Series I Shares 16.59%
Series II Shares 16.22
S&P 500 Index+ (Broad Market Index) 3.19
Russell 1000 Value Index+ (Style-Specific Index) -2.87
Lipper VUF Large-Cap Value Funds Index+ (Peer Group Index) 1.15
+ Lipper Inc.
The S&P 500--REGISTERED TRADEMARK-- 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 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 Value Index is a trademark/
service mark of the Frank Russell Company. Russell--REGISTERED TRADEMARK-- is a
trademark of the Frank Russell Company.
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 Index.
The Fund is not managed to track the performance of any particular index,
including the indexes defined here, and consequently, the performance of the
Fund may deviate significantly from the performance of the indexes.
A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of the peer group reflects fund expenses; performance of a
market index does not.
THE PERFORMANCE OF THE FUND'S SERIES I AND SERIES II SHARE CLASSES WILL DIFFER
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES.
THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT GUARANTEE
COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE
CONTACT YOUR VARIABLE PRODUCT ISSUER OR FINANCIAL ADVISOR FOR THE MOST RECENT
MONTH-END VARIABLE PRODUCT PERFORMANCE. PERFORMANCE FIGURES REFLECT FUND
EXPENSES, REINVESTED DISTRIBUTIONS AND CHANGES IN NET ASSET VALUE. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS
WHEN YOU SELL SHARES.
THE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT
FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR SERIES I AND SERIES II SHARES
WAS 1.03% AND 1.28%, RESPECTIVELY. THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY
FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS REPORT THAT ARE
BASED ON EXPENSES INCURRED DURING THE PERIOD COVERED BY THIS REPORT.
AIM V.I. BASIC VALUE FUND, A SERIES PORTFOLIO OF AIM VARIABLE INSURANCE
FUNDS, IS CURRENTLY OFFERED THROUGH INSURANCE COMPANIES ISSUING VARIABLE
PRODUCTS. YOU CANNOT PURCHASE SHARES OF THE FUND DIRECTLY. PERFORMANCE FIGURES
GIVEN REPRESENT THE FUND AND ARE NOT INTENDED TO REFLECT ACTUAL VARIABLE PRODUCT
VALUES. THEY DO NOT REFLECT SALES CHARGES, EXPENSES AND FEES ASSESSED IN
CONNECTION WITH A VARIABLE PRODUCT. SALES CHARGES, EXPENSES AND FEES, WHICH ARE
DETERMINED BY THE VARIABLE PRODUCT ISSUERS, WILL VARY AND WILL LOWER THE TOTAL
RETURN.
THE MOST RECENT MONTH-END PERFORMANCE DATA AT THE FUND LEVEL, EXCLUDING
VARIABLE PRODUCT CHARGES, IS AVAILABLE ON THE INVESCO AIM AUTOMATED INFORMATION
LINE, 866 702 4402. AS MENTIONED ABOVE, FOR THE MOST RECENT MONTH-END
PERFORMANCE INCLUDING VARIABLE PRODUCT CHARGES, PLEASE CONTACT YOUR VARIABLE
PRODUCT ISSUER OR FINANCIAL ADVISOR.
AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
SERIES I SHARES
Inception (9/10/01) -2.66%
5 Years -6.33
1 Year -32.08
SERIES II SHARES
Inception (9/10/01) -2.91%
5 Years -6.60
1 Year -32.37
AIM V.I. BASIC VALUE FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-95.04%
ADVERTISING-5.17%
Interpublic Group of Cos., Inc. (The)(b) 1,312,779 $ 6,629,534
- ------------------------------------------------------------------------------
Omnicom Group Inc. 323,607 10,219,509
==============================================================================
16,849,043
==============================================================================
ASSET MANAGEMENT & CUSTODY BANKS-2.40%
State Street Corp. 165,870 7,829,064
==============================================================================
BREWERS-2.08%
Molson Coors Brewing Co.-Class B 160,131 6,778,345
==============================================================================
CASINOS & GAMING-0.76%
International Game Technology 155,357 2,470,176
==============================================================================
COMMUNICATIONS EQUIPMENT-2.08%
Nokia Corp.-ADR (Finland) 465,253 6,783,389
==============================================================================
COMPUTER HARDWARE-3.59%
Dell Inc.(b) 852,170 11,700,294
==============================================================================
CONSTRUCTION MATERIALS-1.60%
Cemex S.A.B. de C.V.-ADR (Mexico)(b) 560,492 5,234,995
==============================================================================
CONSUMER FINANCE-4.92%
American Express Co. 381,697 8,870,638
- ------------------------------------------------------------------------------
SLM Corp.(b) 698,576 7,174,376
==============================================================================
16,045,014
==============================================================================
DATA PROCESSING & OUTSOURCED SERVICES-2.49%
Alliance Data Systems Corp.(b) 81,620 3,361,928
- ------------------------------------------------------------------------------
Western Union Co. 290,580 4,765,512
==============================================================================
8,127,440
==============================================================================
DEPARTMENT STORES-1.81%
Kohl's Corp.(b) 70,873 3,029,821
- ------------------------------------------------------------------------------
Nordstrom, Inc. 144,440 2,872,911
==============================================================================
5,902,732
==============================================================================
DIVERSIFIED CAPITAL MARKETS-1.40%
UBS AG (Switzerland)(b) 373,468 4,560,044
==============================================================================
EDUCATION SERVICES-0.54%
Apollo Group Inc.-Class A(b) 24,734 1,759,082
==============================================================================
ELECTRONIC MANUFACTURING SERVICES-2.46%
Tyco Electronics Ltd. (Switzerland) 431,667 8,024,690
==============================================================================
GENERAL MERCHANDISE STORES-2.63%
Target Corp. 216,904 8,561,201
==============================================================================
HEALTH CARE DISTRIBUTORS-0.98%
Cardinal Health, Inc. 104,187 3,182,913
==============================================================================
HOME IMPROVEMENT RETAIL-1.97%
Home Depot, Inc. (The) 272,501 6,439,199
==============================================================================
HOTELS, RESORTS & CRUISE LINES-1.06%
Marriott International, Inc.-Class A 156,761 3,459,722
==============================================================================
HOUSEHOLD APPLIANCES-1.21%
Whirlpool Corp. 92,607 3,941,354
==============================================================================
HUMAN RESOURCE & EMPLOYMENT SERVICES-3.80%
Robert Half International, Inc. 524,849 12,396,933
==============================================================================
INDUSTRIAL CONGLOMERATES-1.81%
Tyco International Ltd. 226,664 5,888,731
==============================================================================
INDUSTRIAL MACHINERY-4.48%
Illinois Tool Works Inc. 231,462 8,642,791
- ------------------------------------------------------------------------------
Ingersoll-Rand PLC-Class A 286,073 5,978,926
==============================================================================
14,621,717
==============================================================================
INVESTMENT BANKING & BROKERAGE-2.62%
Morgan Stanley 300,199 8,558,674
==============================================================================
LIFE SCIENCES TOOLS & SERVICES-2.08%
Waters Corp.(b) 131,794 6,783,437
==============================================================================
MANAGED HEALTH CARE-6.85%
Aetna Inc. 325,227 8,146,937
- ------------------------------------------------------------------------------
UnitedHealth Group Inc. 568,342 14,197,183
==============================================================================
22,344,120
==============================================================================
MOVIES & ENTERTAINMENT-1.06%
Walt Disney Co. (The) 147,771 3,447,497
==============================================================================
OIL & GAS DRILLING-0.66%
Transocean Ltd.(b) 29,010 2,155,153
==============================================================================
OIL & GAS EQUIPMENT & SERVICES-3.34%
Halliburton Co. 233,368 4,830,718
- ------------------------------------------------------------------------------
Weatherford International Ltd.(b) 309,586 6,055,502
==============================================================================
10,886,220
==============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. BASIC VALUE FUND
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
OTHER DIVERSIFIED FINANCIAL SERVICES-6.07%
Bank of America Corp. 664,500 $ 8,771,400
- ------------------------------------------------------------------------------
Citigroup Inc.(b) 645,112 1,915,983
- ------------------------------------------------------------------------------
JPMorgan Chase & Co. 266,982 9,106,756
==============================================================================
19,794,139
==============================================================================
PACKAGED FOODS & MEATS-1.10%
Unilever N.V. (Netherlands) 148,766 3,589,002
==============================================================================
PHARMACEUTICALS-0.95%
Sanofi-Aventis S.A. (France) 52,584 3,087,547
==============================================================================
PROPERTY & CASUALTY INSURANCE-2.86%
XL Capital Ltd.-Class A 812,851 9,315,272
==============================================================================
PUBLISHING-1.03%
McGraw-Hill Cos., Inc. (The) 111,101 3,345,251
==============================================================================
REGIONAL BANKS-1.49%
Fifth Third Bancorp 684,085 4,857,004
==============================================================================
SEMICONDUCTOR EQUIPMENT-7.33%
ASML Holding N.V. (Netherlands) 740,386 16,053,458
- ------------------------------------------------------------------------------
KLA-Tencor Corp. 310,716 7,845,579
==============================================================================
23,899,037
==============================================================================
SEMICONDUCTORS-1.56%
Maxim Integrated Products, Inc. 323,667 5,078,335
==============================================================================
SPECIALIZED FINANCE-3.46%
Moody's Corp. 428,031 11,278,617
==============================================================================
SYSTEMS SOFTWARE-3.34%
CA, Inc. 251,017 4,375,226
- ------------------------------------------------------------------------------
Microsoft Corp. 274,039 6,513,907
==============================================================================
10,889,133
==============================================================================
Total Common Stocks & Other Equity Interests
(Cost $372,946,572) 309,864,516
==============================================================================
MONEY MARKET FUNDS-4.82%
Liquid Assets Portfolio-Institutional Class(c) 7,846,905 7,846,905
- ------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(c) 7,846,905 7,846,905
==============================================================================
Total Money Market Funds (Cost $15,693,810) 15,693,810
==============================================================================
TOTAL INVESTMENTS-99.86% (Cost $388,640,382) 325,558,326
==============================================================================
OTHER ASSETS LESS LIABILITIES-0.14% 470,195
==============================================================================
NET ASSETS-100.00% $326,028,521
______________________________________________________________________________
==============================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
</Table>
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) Non-income producing security.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
PORTFOLIO COMPOSITION
By sector, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
Financials 25.2%
- -------------------------------------------------------------------------
Information Technology 22.8
- -------------------------------------------------------------------------
Consumer Discretionary 17.2
- -------------------------------------------------------------------------
Health Care 10.9
- -------------------------------------------------------------------------
Industrials 10.1
- -------------------------------------------------------------------------
Energy 4.0
- -------------------------------------------------------------------------
Consumer Staples 3.2
- -------------------------------------------------------------------------
Materials 1.6
- -------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities 5.0
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. BASIC VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $372,946,572) $309,864,516
- --------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 15,693,810
================================================================================
Total investments, at value (Cost $388,640,382) 325,558,326
================================================================================
Receivables for:
Investments sold 3,150,938
- --------------------------------------------------------------------------------
Fund shares sold 102,675
- --------------------------------------------------------------------------------
Dividends 232,178
- --------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 14,457
================================================================================
Total assets 329,058,574
________________________________________________________________________________
================================================================================
LIABILITIES:
Payables for:
Fund shares reacquired 2,627,533
- --------------------------------------------------------------------------------
Accrued fees to affiliates 277,478
- --------------------------------------------------------------------------------
Accrued other operating expenses 54,408
- --------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 70,634
================================================================================
Total liabilities 3,030,053
================================================================================
Net assets applicable to shares outstanding $326,028,521
________________________________________________________________________________
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $457,334,254
- --------------------------------------------------------------------------------
Undistributed net investment income 6,181,928
- --------------------------------------------------------------------------------
Undistributed net realized gain (loss) (74,413,249)
- --------------------------------------------------------------------------------
Unrealized appreciation (depreciation) (63,074,412)
================================================================================
$326,028,521
________________________________________________________________________________
================================================================================
NET ASSETS:
Series I $182,182,029
________________________________________________________________________________
================================================================================
Series II $143,846,492
________________________________________________________________________________
================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 38,139,977
________________________________________________________________________________
================================================================================
Series II 30,379,720
________________________________________________________________________________
================================================================================
Series I:
Net asset value per share $ 4.78
________________________________________________________________________________
================================================================================
Series II:
Net asset value per share $ 4.73
________________________________________________________________________________
================================================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding
taxes of $130,821) $ 3,031,111
- ------------------------------------------------------
Dividends from affiliated money market
funds (includes securities lending
income of $164,158) 206,427
======================================================
Total investment income 3,237,538
======================================================
EXPENSES:
Advisory fees 963,496
- ------------------------------------------------------
Administrative services fees 369,731
- ------------------------------------------------------
Custodian fees 2,568
- ------------------------------------------------------
Distribution fees -- Series II 156,262
- ------------------------------------------------------
Transfer agent fees 12,698
- ------------------------------------------------------
Trustees' and officers' fees and
benefits 15,325
- ------------------------------------------------------
Other 22,495
======================================================
Total expenses 1,542,575
======================================================
Less: Fees waived (6,387)
======================================================
Net expenses 1,536,188
======================================================
Net investment income 1,701,350
======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (includes net
gains (losses) from securities
sold to affiliates of $(2,099)) (22,206,193)
- ------------------------------------------------------
Foreign currencies 7,780
======================================================
(22,198,413)
======================================================
Change in net unrealized appreciation
of:
Investment securities 64,123,809
- ------------------------------------------------------
Foreign currencies 7,644
======================================================
64,131,453
======================================================
Net realized and unrealized gain 41,933,040
======================================================
Net increase in net assets resulting
from operations $ 43,634,390
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. BASIC VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- --------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 1,701,350 $ 4,405,070
- --------------------------------------------------------------------------------------------------------
Net realized gain (loss) (22,198,413) (49,252,859)
- --------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 64,131,453 (280,398,576)
========================================================================================================
Net increase (decrease) in net assets resulting from operations 43,634,390 (325,246,365)
========================================================================================================
Distributions to shareholders from net investment income:
Series I -- (2,317,576)
- --------------------------------------------------------------------------------------------------------
Series II -- (1,044,721)
========================================================================================================
Total distributions from net investment income -- (3,362,297)
========================================================================================================
Distributions to shareholders from net realized gains:
Series I -- (50,134,173)
- --------------------------------------------------------------------------------------------------------
Series II -- (40,634,468)
========================================================================================================
Total distributions from net realized gains -- (90,768,641)
========================================================================================================
Share transactions-net:
Series I 473,761 (7,248,339)
- --------------------------------------------------------------------------------------------------------
Series II (2,646,911) 7,590,709
========================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (2,173,150) 342,370
========================================================================================================
Net increase (decrease) in net assets 41,461,240 (419,034,933)
========================================================================================================
NET ASSETS:
Beginning of period 284,567,281 703,602,214
========================================================================================================
End of period (includes undistributed net investment income of
$6,181,928 and $4,480,578, respectively) $326,028,521 $ 284,567,281
________________________________________________________________________________________________________
========================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. BASIC VALUE FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Basic Value Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
AIM V.I. BASIC VALUE FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. SECURITIES LENDING -- The Fund may lend portfolio securities having a
market value up to one-third of the Fund's total assets. Such loans are
secured by collateral equal to no less than the market value of the loaned
securities determined daily by the securities lending provider. Such
collateral will be cash or debt securities issued or guaranteed by the
U.S. Government or any of its sponsored agencies. Cash collateral received
in connection with these loans is invested in short-term money market
instruments or affiliated money market funds and is shown as such on the
Schedule of Investments. It is the Fund's policy to obtain additional
collateral from or return excess collateral to the borrower by the end of
the next business day, following the valuation date of the securities
loaned. Therefore, the value of the collateral held may be temporarily
less than the value of the securities on loan. Lending securities entails
a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase
the collateral accordingly, and the borrower fails to return the
securities. Upon the failure of the borrower to return the securities,
collateral may be liquidated and the securities may be purchased on the
open market to replace the loaned securities. The Fund could experience
delays and costs in gaining access to the collateral. The Fund bears the
risk of any deficiency in the amount of the collateral available for
return to the borrower due to any loss on the collateral invested.
Dividends received on cash collateral investments for securities lending
transactions, which are net of compensation to counterparties, is included
in Dividends from affiliates on the Statement of Operations. The aggregate
value of securities out on loan is shown as a footnote on the Statement of
Assets and Liabilities, if any.
J. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are
AIM V.I. BASIC VALUE FUND
included with the net realized and unrealized gain or loss from
investments in the Statement of Operations. Reported net realized foreign
currency gains or losses arise from (i) sales of foreign currencies, (ii)
currency gains or losses realized between the trade and settlement dates
on securities transactions, and (iii) the difference between the amounts
of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign currency gains and losses arise
from changes in the fair values of assets and liabilities, other than
investments in securities at fiscal period end, resulting from changes in
exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
K. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed, realized gains (losses) are
recorded. Realized and unrealized gains (losses) on the contracts are
included in the Statement of Operations. The maximum risks associated with
foreign currency contracts include failure of the counterparty to meet the
terms of the contract and the value of the foreign currency changing
unfavorably. These risks may be in excess of the amounts reflected in the
Statement of Assets and Liabilities.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS 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%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 1.30% and Series
II shares to 1.45% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, 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. These credits are used to pay certain expenses incurred by the Fund. The
Advisor did not waive fees and/or reimburse expenses during the period under
this expense limitation.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash (excluding investments of cash
collateral from securities lending) in such affiliated money market funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$6,387.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants'
AIM V.I. BASIC VALUE FUND
accounts. Pursuant to such agreement, for the six months ended June 30, 2009,
Invesco Aim was paid $36,970 for accounting and fund administrative services and
reimbursed $332,761 for services provided by insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- ----------------------------------------------------------------------------------------------------------------------
Equity Securities $305,915,866 $19,642,460 $-- $325,558,326
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
NOTE 4--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS
The Fund is permitted to purchase or sell securities from or to certain other
AIM Funds under specified conditions outlined in procedures adopted by the Board
of Trustees of the Trust. The procedures have been designed to ensure that any
purchase or sale of securities by the Fund from or to another fund or portfolio
that is or could be considered an affiliate by virtue of having a common
investment advisor (or affiliated investment advisors), common Trustees and/or
common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined
under the procedures, each transaction is effected at the current market price.
Pursuant to these procedures, for the six months ended June 30, 2009, the Fund
engaged in securities sales of $956,181, which resulted in net realized gains
(losses) of $(2,099).
NOTE 5--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $1,770
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 6--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the
AIM V.I. BASIC VALUE FUND
custodian bank can be compensated by earning the additional interest; or (ii)
compensate by paying the custodian bank at a rate agreed upon by the custodian
bank and Invesco Aim, not to exceed the contractually agreed upon rate.
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- ---------------------------------------------------------------------------------
December 31, 2016 $40,544,208
_________________________________________________________________________________
=================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $30,770,497 and
$35,668,738, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ---------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 29,328,964
- ---------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (103,072,581)
=================================================================================
Net unrealized appreciation (depreciation) of investment
securities $ (73,743,617)
_________________________________________________________________________________
=================================================================================
Cost of investments for tax purposes is $399,301,943.
</Table>
NOTE 9--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- ------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 3,656,014 $ 16,432,339 1,778,569 $ 13,914,876
- ------------------------------------------------------------------------------------------------------------------------
Series II 4,314,836 18,916,525 2,620,573 20,597,994
========================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 12,700,181 52,451,749
- ------------------------------------------------------------------------------------------------------------------------
Series II -- -- 10,165,656 41,679,189
========================================================================================================================
Reacquired:
Series I (4,005,563) (15,958,578) (7,399,923) (73,614,964)
- ------------------------------------------------------------------------------------------------------------------------
Series II (5,134,669) (21,563,436) (5,649,845) (54,686,474)
========================================================================================================================
Net increase (decrease) in share activity (1,169,382) $ (2,173,150) 14,215,211 $ 342,370
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 65% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
AIM V.I. BASIC VALUE FUND
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
(LOSSES)
NET ASSET NET ON SECURITIES DIVIDENDS DISTRIBUTIONS
VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET
BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END
OF PERIOD (LOSS) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD
- ---------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $ 4.10 $ 0.03(c) $ 0.65 $ 0.68 $ -- $ -- $ -- $ 4.78
Year ended 12/31/08 12.73 0.10(c) (6.68) (6.58) (0.09) (1.96) (2.05) 4.10
Year ended 12/31/07 13.35 0.07(c) 0.17 0.24 (0.08) (0.78) (0.86) 12.73
Year ended 12/31/06 12.37 0.07(c) 1.54 1.61 (0.05) (0.58) (0.63) 13.35
Year ended 12/31/05 11.84 0.05 0.63 0.68 (0.01) (0.14) (0.15) 12.37
Year ended 12/31/04 10.66 0.02 1.16 1.18 -- -- -- 11.84
- ---------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 4.07 0.02(c) 0.64 0.66 -- -- -- 4.73
Year ended 12/31/08 12.62 0.07(c) (6.61) (6.54) (0.05) (1.96) (2.01) 4.07
Year ended 12/31/07 13.24 0.04(c) 0.16 0.20 (0.04) (0.78) (0.82) 12.62
Year ended 12/31/06 12.26 0.04(c) 1.54 1.58 (0.02) (0.58) (0.60) 13.24
Year ended 12/31/05 11.76 0.02 0.62 0.64 -- (0.14) (0.14) 12.26
Year ended 12/31/04 10.61 (0.01) 1.16 1.15 -- -- -- 11.76
_________________________________________________________________________________________________________________________________
=================================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS)
TOTAL END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
RETURN(a) (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(b)
- -------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 16.59% $182,182 1.00%(d) 1.00%(d) 1.33%(d) 11%
Year ended 12/31/08 (51.77) 157,693 1.03 1.03 0.99 58
Year ended 12/31/07 1.62 399,974 0.96 0.99 0.52 25
Year ended 12/31/06 13.12 489,352 0.97 1.02 0.54 15
Year ended 12/31/05 5.74 487,332 0.97 1.02 0.38 16
Year ended 12/31/04 11.07 496,837 1.02 1.02 0.17 14
- -------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 16.22 143,846 1.25(d) 1.25(d) 1.08(d) 11
Year ended 12/31/08 (51.90) 126,874 1.28 1.28 0.74 58
Year ended 12/31/07 1.36 303,628 1.21 1.24 0.27 25
Year ended 12/31/06 12.94 339,457 1.22 1.27 0.29 15
Year ended 12/31/05 5.43 363,393 1.22 1.27 0.13 16
Year ended 12/31/04 10.84 353,605 1.27 1.27 (0.08) 14
___________________________________________________________________________________________________________________
===================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Total returns are not annualized for periods less than one
year, if applicable and do not reflect charges assessed in connection with
a variable product, which if included would reduce total returns.
(b) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(c) Calculated using average shares outstanding.
(d) Ratios are annualized and based on average daily net assets (000's omitted)
of $154,620 and $126,045, for Series I and Series II shares, respectively.
AIM V.I. BASIC VALUE FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,165.90 $5.37 $1,019.84 $5.01 1.00%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,162.20 6.70 1,018.60 6.26 1.25
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. BASIC VALUE FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM Variable Insurance Funds is required
under the Investment Company Act of 1940 to approve annually the renewal of the
AIM V.I. Basic Value Fund (the Fund) investment advisory agreement with Invesco
Aim Advisors, Inc. (Invesco Aim) and the Master Intergroup Sub-Advisory Contract
for Mutual Funds (the sub-advisory contracts) with Invesco Asset Management
Deutschland GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively,
the Affiliated Sub-Advisers). During contract renewal meetings held on June
16-17, 2009, the Board as a whole, and the disinterested or "independent"
Trustees voting separately, approved the continuance of the Fund's investment
advisory agreement and the sub-advisory contracts for another year, effective
July 1, 2009. In doing so, the Board determined that the Fund's investment
advisory agreement and the sub-advisory contracts are in the best interests of
the Fund and its shareholders and that the compensation to Invesco Aim and the
Affiliated Sub-Advisers under the Fund's investment advisory agreement and
sub-advisory contracts is fair and reasonable.
THE BOARD'S FUND EVALUATION PROCESS
The Board's Investments Committee has established three Sub-Committees that are
responsible for overseeing the management of a number of the series portfolios
of the AIM Funds. This Sub-Committee structure permits the Trustees to focus on
the performance of the AIM Funds that have been assigned to them. The
Sub-Committees meet throughout the year to review the performance of their
assigned funds, and the Sub-Committees review monthly and quarterly comparative
performance information and periodic asset flow data for their assigned funds.
These materials are prepared under the direction and supervision of the
independent Senior Officer, an officer of the AIM Funds who reports directly to
the independent Trustees. Over the course of each year, the Sub-Committees meet
with portfolio managers for their assigned funds and other members of management
and review with these individuals the performance, investment objective(s),
policies, strategies and limitations of these funds.
In addition to their meetings throughout the year, the Sub-Committees meet
at designated contract renewal meetings each year to conduct an in-depth review
of the performance, fees, expenses and other matters related to their assigned
funds. During the contract renewal process, the Trustees receive comparative
performance and fee data regarding the AIM Funds prepared by an independent
company, Lipper, Inc. (Lipper), under the direction and supervision of the
Senior Officer who also prepares a separate analysis of this information for the
Trustees. Each Sub-Committee then makes recommendations to the Investments
Committee regarding the fees and expenses of their assigned funds. The
Investments Committee considers each Sub-Committee's recommendations and makes
its own recommendations regarding the fees and expenses of the AIM Funds to the
full Board. The Investments Committee also considers each Sub-Committee's
recommendations in making its annual recommendation to the Board whether to
approve the continuance of each AIM Fund's investment advisory agreement and
sub-advisory contracts for another year.
The independent Trustees met separately during their evaluation of the
Fund's investment advisory agreement and sub-advisory contracts with independent
legal counsel. The independent Trustees were also assisted in their annual
evaluation of the Fund's investment advisory agreement by the Senior Officer.
One responsibility of the Senior Officer is to manage the process by which the
AIM Funds' proposed management fees are negotiated during the annual contract
renewal process to ensure that they are negotiated in a manner that is at arms'
length and reasonable. Accordingly, the Senior Officer must either supervise a
competitive bidding process or prepare an independent written evaluation. The
Senior Officer recommended that an independent written evaluation be provided
and, at the direction of the Board, prepared an independent written evaluation.
During the annual contract renewal process, the Board considered the
factors discussed below in evaluating the fairness and reasonableness of the
Fund's investment advisory agreement and sub-advisory contracts. The Board
considered all of the information provided to them, including information
provided at their meetings throughout the year as part of their ongoing
oversight of the Fund, and did not identify any particular factor that was
controlling. Each Trustee may have evaluated the information provided
differently from another Trustee and attributed different weight to the various
factors. The Trustees recognized that the advisory arrangements and resulting
advisory fees for the Fund and the other AIM Funds are the result of years of
review and negotiation between the Trustees and Invesco Aim, that the Trustees
may focus to a greater extent on certain aspects of these arrangements in some
years than in others, and that the Trustees' deliberations and conclusions in a
particular year may be based in part on their deliberations and conclusions
regarding these same arrangements throughout the year and in prior years.
The discussion below serves as a summary of the Senior Officer's
independent written evaluation with respect to the Fund's investment advisory
agreement as well as a discussion of the material factors and related
conclusions that formed the basis for the Board's approval of the Fund's
investment advisory agreement and sub-advisory contracts. Unless otherwise
stated, information set forth below is as of June 17, 2009, and does not reflect
any changes that may have occurred since that date, including but not limited to
changes to the Fund's performance, advisory fees, expense limitations and/or fee
waivers.
FACTORS AND CONCLUSIONS AND SUMMARY OF INDEPENDENT WRITTEN FEE EVALUATION
A. Nature, Extent and Quality of Services Provided by Invesco Aim
The Board reviewed the advisory services provided to the Fund by Invesco Aim
under the Fund's investment advisory agreement, the performance of Invesco Aim
in providing these services, and the credentials and experience of the officers
and employees of Invesco Aim who provide these services. The Board's review of
the qualifications of Invesco Aim to provide these services included the Board's
consideration of Invesco Aim's portfolio and product review process, various
back office support functions provided by Invesco Aim and its affiliates, and
Invesco Aim's equity and fixed income trading operations. The Board concluded
that the nature, extent and quality of the advisory services provided to the
Fund by Invesco Aim are appropriate and that Invesco Aim currently is providing
satisfactory advisory services in accordance with the terms of the Fund's
investment advisory
AIM V.I. BASIC VALUE FUND continued
agreement. In addition, based on their ongoing meetings throughout the year with
the Fund's portfolio manager or managers, the Board concluded that these
individuals are competent and able to continue to carry out their
responsibilities under the Fund's investment advisory agreement.
In determining whether to continue the Fund's investment advisory
agreement, the Board considered the prior relationship between Invesco Aim and
the Fund, as well as the Board's knowledge of Invesco Aim's operations, and
concluded that it is beneficial to maintain the current relationship, in part,
because of such knowledge. The Board also considered the steps that Invesco Aim
and its affiliates continue to take to improve the quality and efficiency of the
services they provide to the AIM Funds in the areas of investment performance,
product line diversification, distribution, fund operations, shareholder
services and compliance. The Board concluded that the quality and efficiency of
the services Invesco Aim and its affiliates provide to the AIM Funds in each of
these areas support the Board's approval of the continuance of the Fund's
investment advisory agreement.
B. Nature, Extent and Quality of Services Provided by Affiliated
Sub-Advisers
The Board reviewed the services provided by the Affiliated Sub-Advisers under
the sub-advisory contracts and the credentials and experience of the officers
and employees of the Affiliated Sub-Advisers who provide these services. The
Board concluded that the nature, extent and quality of the services provided by
the Affiliated Sub-Advisers are appropriate. The Board noted that the Affiliated
Sub-Advisers, which have offices and personnel that are geographically dispersed
in financial centers around the world, can provide research and other
information and make recommendations on the markets and economies of various
countries and securities of companies located in such countries or on various
types of investments and investment techniques. The Board concluded that the
sub-advisory contracts benefit the Fund and its shareholders by permitting
Invesco Aim to utilize the additional resources and talent of the Affiliated
Sub-Advisers in managing the Fund.
C. Fund Performance
The Board considered fund performance as a relevant factor in considering
whether to approve the investment advisory agreement. The Board did not view
fund performance as a relevant factor in considering whether to approve the
sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently
manages assets of the Fund.
The Board compared the Fund's performance during the past one, three and
five calendar years to the performance of all funds in the Lipper performance
universe that are not managed by Invesco Aim or an Affiliated Sub-Adviser and
against the Lipper VA Underlying Funds Large-Cap Value Index. The Board noted
that the Fund's performance was in the fifth quintile of its performance
universe for the one, three and five year periods (the first quintile being the
best performing funds and the fifth quintile being the worst performing funds).
The Board noted that the Fund's performance was below the performance of the
Index for the one, three and five year periods. The Board also noted that
Invesco Aim acknowledges the Fund's underperform-ance, and has confirmed that
the portfolio managers have consistently followed their intrinsic value mandate.
Invesco Aim continues to monitor the Fund and to provide the Board with periodic
reporting on business issues that affect the Fund's performance. The Board also
considered a report of the Senior Officer describing (i) the Board's oversight
of performance issues for the intrinsic value funds, including the Fund, and
Invesco Aim's response, including numerous meetings with portfolio managers,
members of management and members of the Global Performance Measurement & Risk
Group; (ii) actions consistent with the exercise by the Trustees of their
fiduciary duties; and (iii) conclusions and recommendations for consideration by
the Board. Although the independent written evaluation of the Fund's Senior
Officer only considered Fund performance through the most recent calendar year,
the Board also reviewed more recent Fund performance and this review did not
change their conclusions. The Board noted that, in response to the Board's focus
on fund performance, Invesco Aim has taken a number of actions intended to
improve the investment process for the funds.
D. Advisory and Sub-Advisory Fees and Fee Waivers
The Board compared the Fund's contractual advisory fee rate to the contractual
advisory fee rates of funds in the Fund's Lipper expense group that are not
managed by Invesco Aim or an Affiliated Sub-Adviser, at a common asset level.
The Board noted that the Fund's contractual advisory fee rate was below the
median contractual advisory fee rate of funds in its expense group. The Board
also reviewed the methodology used by Lipper in determining contractual fee
rates, which includes using audited financial data from the most recent annual
report of each fund in the expense group that was publicly available as of the
end of the past calendar year. The Board noted that some comparative data was at
least one year old and that other data did not reflect the market downturn that
occurred in the fourth quarter of 2008.
The Board also compared the Fund's effective fee rate (the advisory fee
after any advisory fee waivers and before any expense limitations/waivers) to
the advisory fee rates of other domestic clients of Invesco Aim and its
affiliates with investment strategies comparable to those of the Fund, including
two mutual funds advised by Invesco Aim. The Board noted that the Fund's rate
was above the effective fee rates for the two mutual funds.
Additionally, the Board compared the Fund's effective fee rate to the
effective fee rates paid by numerous separately managed accounts/wrap accounts
advised by an Invesco Aim affiliate. The Board noted that the Fund's rate was
above the rates for all but three of the separately managed accounts/wrap
accounts. The Board considered that management of the separately managed
accounts/wrap accounts by the Invesco Aim affiliate involves different levels of
services and different operational and regulatory requirements than Invesco
Aim's management of the Fund. The Board concluded that these differences are
appropriately reflected in the fee structure for the Fund.
The Board noted that Invesco Aim has contractually agreed to waive fees
and/or limit expenses of the Fund through at least April 30, 2010 in an amount
necessary to limit total annual operating expenses to a specified percentage of
average daily net assets for each class of
AIM V.I. BASIC VALUE FUND continued
the Fund. The Board noted that at the current expense ratio for the Fund, this
expense waiver does not have any impact.
The Board also considered the services provided by the Affiliated
Sub-Advisers pursuant to the sub-advisory contracts and the services provided by
Invesco Aim pursuant to the Fund's advisory agreement, as well as the allocation
of fees between Invesco Aim and the Affiliated Sub-Advisers pursuant to the
sub-advisory contracts. The Board noted that the sub-advisory fees have no
direct effect on the Fund or its shareholders, as they are paid by Invesco Aim
to the Affiliated Sub-Advisers, and that Invesco Aim and the Affiliated
Sub-Advisers are affiliates.
After taking account of the Fund's contractual advisory fee rate, the
contractual sub-advisory fee rate, the comparative advisory fee information
discussed above and other relevant factors, the Board concluded that the Fund's
advisory and sub-advisory fees are fair and reasonable.
E. Economies of Scale and Breakpoints
The Board considered the extent to which there are economies of scale in the
provision of advisory services to the Fund. The Board also considered whether
the Fund benefits from such economies of scale through contractual breakpoints
in the Fund's advisory fee schedule. The Board noted that the Fund's contractual
advisory fee schedule includes seven breakpoints and that the level of the
Fund's advisory fees, as a percentage of the Fund's net assets, has decreased as
net assets increased because of the breakpoints. The Board concluded that the
Fund's advisory fees appropriately reflect economies of scale at current asset
levels. The Board also noted that the Fund shares directly in economies of scale
through lower fees charged by third party service providers based on the
combined size of all of the AIM Funds and affiliates.
F. Profitability and Financial Resources
The Board reviewed information from Invesco Aim concerning the costs of the
advisory and other services that Invesco Aim and its affiliates provide to the
Fund and the profitability of Invesco Aim and its affiliates in providing these
services. The Board also reviewed information concerning the financial condition
of Invesco Aim and its affiliates. The Board reviewed with Invesco Aim the
methodology used to prepare the profitability information. The Board considered
the overall profitability of Invesco Ltd., the ultimate parent of Invesco Aim
and the Affiliated Sub-Advisers, and of Invesco Aim, as well as the
profitability of Invesco Aim in connection with managing the Fund. The Board
noted that Invesco Aim continues to operate at a net profit, although the
reduction of assets under management as a result of market movements and the
increase in voluntary fee waivers for affiliated money market funds have reduced
the profitability of Invesco Aim and its affiliates. The Board concluded that
the Fund's fees are fair and reasonable, and that the level of profits realized
by Invesco Aim and its affiliates from providing services to the Fund is not
excessive in light of the nature, quality and extent of the services provided.
The Board considered whether Invesco Aim is financially sound and has the
resources necessary to perform its obligations under the Fund's investment
advisory agreement, and concluded that Invesco Aim has the financial resources
necessary to fulfill these obligations. The Board also considered whether each
Affiliated Sub-Adviser is financially sound and has the resources necessary to
perform its obligations under the sub-advisory contracts, and concluded that
each Affiliated Sub-Adviser has the financial resources necessary to fulfill
these obligations.
G. Collateral Benefits to Invesco Aim and its Affiliates
The Board considered various other benefits received by Invesco Aim and its
affiliates resulting from Invesco Aim's relationship with the Fund, including
the fees received by Invesco Aim and its affiliates for their provision of
administrative, transfer agency and distribution services to the Fund. The Board
considered the performance of Invesco Aim and its affiliates in providing these
services and the organizational structure employed by Invesco Aim and its
affiliates to provide these services. The Board also considered that these
services are provided to the Fund pursuant to written contracts that are
reviewed and approved on an annual basis by the Board. The Board concluded that
Invesco Aim and its affiliates are providing these services in a satisfactory
manner and in accordance with the terms of their contracts, and are qualified to
continue to provide these services to the Fund.
The Board considered the benefits realized by Invesco Aim and the
Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed
through "soft dollar" arrangements. The Board noted that soft dollar
arrangements shift the payment obligation for research and execution services
from Invesco Aim and the Affiliated Sub-Advisers to the funds and therefore may
reduce Invesco Aim's and the Affiliated Sub-Advisers' expenses. The Board
concluded that Invesco Aim's and the Affiliated Sub-Advisers' soft dollar
arrangements are appropriate. The Board also concluded that, based on their
review and representations made by the Chief Compliance Officer of Invesco Aim,
these arrangements are consistent with regulatory requirements.
The Board considered the fact that the Fund's uninvested cash and cash
collateral from any securities lending arrangements may be invested in money
market funds advised by Invesco Aim pursuant to procedures approved by the
Board. The Board noted that Invesco Aim will receive advisory fees from these
affiliated money market funds attributable to such investments, although Invesco
Aim has contractually agreed to waive through at least June 30, 2010, the
advisory fees payable by the Fund in an amount equal to 100% of the net advisory
fee Invesco Aim receives from the affiliated money market funds with respect to
the Fund's investment in the affiliated money market funds of uninvested cash,
but not cash collateral. The Board concluded that the Fund's investment of
uninvested cash and cash collateral from any securities lending arrangements in
the affiliated money market funds is in the best interests of the Fund and its
shareholders.
AIM V.I. BASIC VALUE FUND
[INVESCO AIM LOGO] AIM V.I. CAPITAL APPRECIATION FUND
--SERVICE MARK-- Semiannual Report to Shareholders o June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund
files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the SEC
Web site, sec. gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by
calling 202 942 8090 or 800 732 0330, or by electronic request at the following E-mail address: publicinfo@sec.gov. The SEC file
numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent portfolio holdings, as filed on Form N-Q, have also been
made available to insurance companies issuing variable annuity contracts and variable life insurance policies ("variable products")
that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, from our Client Services department at 800 410 4246 or on the Invesco Aim Web site,
invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site,
sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2009, is
available at our Web site. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting
Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. will be merged into
Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc. Additional information
will be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN
MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer SERIES I SHARES
charges. If variable product issuer charges were included, returns would be lower. Inception (5/5/93) 4.67%
10 Years -3.21
Series I Shares 2.72% 5 Years -4.37
Series II Shares 2.53 1 Year -33.45
S&P 500 Index(Triangle) (Broad Market Index) 3.19
Russell 1000 Growth Index(Triangle) (Style-Specific Index) 11.53 SERIES II SHARES
Lipper VUF Multi-Cap Growth Funds Category Average(Triangle) (Peer Group) 11.80 10 Years -3.45%
5 Years -4.62
(Triangle) Lipper Inc. 1 Year -33.63
==========================================
The S&P 500 --REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index
covering all major areas of the U.S. economy. It is not the 500 largest companies, but FEES ASSESSED IN CONNECTION WITH A
rather the most widely held 500 companies chosen with respect to market size, VARIABLE PRODUCT. SALES CHARGES, EXPENSES
liquidity, and their industry. AND FEES, WHICH ARE DETERMINED BY THE
VARIABLE PRODUCT ISSUERS, WILL VARY AND
The RUSSELL 1000 --REGISTERED TRADEMARK-- GROWTH INDEX measures the performance of WILL LOWER THE TOTAL RETURN.
those Russell 1000 companies with higher price-to-book ratios and higher forecasted
growth values. The Russell 1000 Growth Index is a trademark/service mark of the Frank THE MOST RECENT MONTH-END PERFORMANCE
Russell Company. Russell--REGISTERED TRADEMARK-- is a trademark of the Frank Russell DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
Company. PRODUCT CHARGES, IS AVAILABLE ON THIS
INVESCO AIM AUTOMATED INFORMATION LINE,
The LIPPER VUF MULTI-CAP GROWTH FUNDS CATEGORY AVERAGE represents an average of all 866 702 4402. AS MENTIONED ABOVE, FOR THE
of the variable insurance underlying funds in the Lipper Multi-Cap Growth Funds MOST RECENT MONTH-END PERFORMANCE
category. These funds typically have an above-average price-to-earnings ratio, INCLUDING VARIABLE PRODUCT CHARGES, PLEASE
price-to- book ratio, and three-year sales-per-share growth value, compared to the S&P CONTACT YOUR VARIABLE PRODUCT ISSUER OR
Composite 1500 Index. FINANCIAL ADVISOR.
The Fund is not managed to track the performance of any particular index, including
the indexes defined here, and consequently, the performance of the Fund may deviate
significantly from the performance of the indexes.
A direct investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends, and they do not reflect sales charges.
Performance of the peer group reflects fund expenses; performance of a market index
does not.
=======================================================================================
SERIES II SHARES INCEPTION DATE IS AUGUST NET ASSET VALUE. INVESTMENT RETURN AND
21, 2001. RETURNS SINCE THAT DATE ARE PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU
HISTORICAL. ALL OTHER RETURNS ARE THE MAY HAVE A GAIN OR LOSS WHEN YOU SELL
BLENDED RETURNS OF THE HISTORICAL SHARES.
PERFORMANCE OF SERIES II SHARES SINCE
THEIR INCEPTION AND THE RESTATED THE TOTAL ANNUAL FUND OPERATING EXPENSE
HISTORICAL PERFORMANCE OF SERIES I SHARES RATIO SET FORTH IN THE MOST RECENT FUND
(FOR PERIODS PRIOR TO INCEPTION OF SERIES PROSPECTUS AS OF THE DATE OF THIS REPORT
II SHARES) ADJUSTED TO REFLECT THE RULE FOR SERIES I AND SERIES II SHARES WAS
12B-1 FEES APPLICABLE TO SERIES II SHARES. 0.92% AND 1.17%, RESPECTIVELY. THE EXPENSE
THE INCEPTION DATE OF SERIES I SHARES IS RATIOS PRESENTED ABOVE MAY VARY FROM THE
MAY 5, 1993. THE PERFORMANCE OF THE FUND'S EXPENSE RATIOS PRESENTED IN OTHER SECTIONS
SERIES I AND SERIES II SHARE CLASSES WILL OF THIS REPORT THAT ARE BASED ON EXPENSES
DIFFER PRIMARILY DUE TO DIFFERENT CLASS INCURRED DURING THE PERIOD COVERED BY THIS
EXPENSES. REPORT.
THE PERFORMANCE DATA QUOTED REPRESENT AIM V.I. CAPITAL APPRECIATION FUND, A
PAST PERFORMANCE AND CANNOT GUARANTEE SERIES PORTFOLIO OF AIM VARIABLE INSURANCE
COMPARABLE FUTURE RESULTS; CURRENT FUNDS, IS CURRENTLY OFFERED THROUGH
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE INSURANCE COMPANIES ISSUING VARIABLE
CONTACT YOUR VARIABLE PRODUCT ISSUER OR PRODUCTS. YOU CANNOT PURCHASE SHARES OF
FINANCIAL ADVISOR FOR THE MOST RECENT THE FUND DIRECTLY. PERFORMANCE FIGURES
MONTH-END VARIABLE PRODUCT PERFORMANCE. GIVEN REPRESENT THE FUND AND ARE NOT
PERFORMANCE FIGURES REFLECT FUND EXPENSES, INTENDED TO REFLECT ACTUAL VARIABLE
REINVESTED DISTRIBUTIONS AND CHANGES IN PRODUCT VALUES. THEY DO NOT REFLECT SALES
CHARGES, EXPENSES AND
AIM V.I. CAPITAL APPRECIATION FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-97.17%
AEROSPACE & DEFENSE-8.17%
General Dynamics Corp. 83,450 $ 4,622,295
- ------------------------------------------------------------------------------
Goodrich Corp. 55,982 2,797,421
- ------------------------------------------------------------------------------
Honeywell International Inc. 198,262 6,225,427
- ------------------------------------------------------------------------------
Lockheed Martin Corp. 134,790 10,870,813
- ------------------------------------------------------------------------------
Raytheon Co. 275,937 12,259,881
- ------------------------------------------------------------------------------
Rockwell Collins, Inc. 87,240 3,640,525
- ------------------------------------------------------------------------------
United Technologies Corp. 230,031 11,952,411
==============================================================================
52,368,773
==============================================================================
AIR FREIGHT & LOGISTICS-0.50%
Expeditors International of Washington, Inc. 95,567 3,186,204
==============================================================================
APPAREL RETAIL-1.02%
Gap, Inc. (The) 397,086 6,512,210
==============================================================================
APPLICATION SOFTWARE-2.09%
Adobe Systems Inc.(b) 385,014 10,895,896
- ------------------------------------------------------------------------------
Intuit Inc.(b) 88,399 2,489,316
==============================================================================
13,385,212
==============================================================================
BIOTECHNOLOGY-1.92%
Biogen Idec Inc.(b) 42,960 1,939,644
- ------------------------------------------------------------------------------
Gilead Sciences, Inc.(b) 221,201 10,361,055
==============================================================================
12,300,699
==============================================================================
COMMUNICATIONS EQUIPMENT-6.26%
Cisco Systems, Inc.(b) 336,176 6,266,321
- ------------------------------------------------------------------------------
Nokia Corp.-ADR (Finland) 314,505 4,585,483
- ------------------------------------------------------------------------------
QUALCOMM Inc. 299,767 13,549,468
- ------------------------------------------------------------------------------
Research In Motion Ltd. (Canada)(b) 221,085 15,708,089
==============================================================================
40,109,361
==============================================================================
COMPUTER HARDWARE-3.13%
Apple Inc.(b) 74,540 10,616,732
- ------------------------------------------------------------------------------
International Business Machines Corp. 90,267 9,425,680
==============================================================================
20,042,412
==============================================================================
CONSTRUCTION & ENGINEERING-0.61%
Fluor Corp. 76,028 3,899,476
==============================================================================
DATA PROCESSING & OUTSOURCED SERVICES-2.48%
MasterCard, Inc.-Class A 68,732 11,499,551
- ------------------------------------------------------------------------------
Visa Inc.-Class A 71,075 4,425,129
==============================================================================
15,924,680
==============================================================================
DEPARTMENT STORES-1.07%
Kohl's Corp.(b) 110,363 4,718,018
- ------------------------------------------------------------------------------
Macy's Inc. 181,110 2,129,854
==============================================================================
6,847,872
==============================================================================
DIVERSIFIED METALS & MINING-0.38%
BHP Billiton Ltd. (Australia) 87,889 2,408,437
==============================================================================
EDUCATION SERVICES-1.46%
Apollo Group, Inc.-Class A(b) 132,131 9,397,157
==============================================================================
ELECTRONIC COMPONENTS-0.65%
Corning Inc. 258,158 4,146,018
==============================================================================
ENVIRONMENTAL & FACILITIES SERVICES-1.67%
Waste Management, Inc. 380,380 10,711,501
==============================================================================
FERTILIZERS & AGRICULTURAL CHEMICALS-1.34%
Monsanto Co. 60,200 4,475,268
- ------------------------------------------------------------------------------
Mosaic Co. (The) 45,551 2,017,909
- ------------------------------------------------------------------------------
Potash Corp. of Saskatchewan Inc. (Canada) 22,902 2,131,031
==============================================================================
8,624,208
==============================================================================
FOOD RETAIL-2.28%
Kroger Co. (The) 661,828 14,593,307
==============================================================================
FOOTWEAR-0.50%
NIKE, Inc.-Class B 61,460 3,182,399
==============================================================================
GAS UTILITIES-0.33%
EQT Corp. 61,571 2,149,444
==============================================================================
HEALTH CARE EQUIPMENT-8.98%
Baxter International Inc. 415,642 22,012,400
- ------------------------------------------------------------------------------
Becton, Dickinson and Co. 321,448 22,922,457
- ------------------------------------------------------------------------------
Medtronic, Inc. 296,262 10,336,581
- ------------------------------------------------------------------------------
Varian Medical Systems, Inc.(b) 66,372 2,332,312
==============================================================================
57,603,750
==============================================================================
HEALTH CARE SERVICES-0.53%
Express Scripts, Inc.(b) 49,775 3,422,031
==============================================================================
HOME IMPROVEMENT RETAIL-1.46%
Home Depot, Inc. (The) 203,025 4,797,481
- ------------------------------------------------------------------------------
Lowe's Cos., Inc. 236,722 4,594,774
==============================================================================
9,392,255
==============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. CAPITAL APPRECIATION FUND
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS-4.85%
Clorox Co. (The) 91,813 $ 5,125,920
- ------------------------------------------------------------------------------
Colgate-Palmolive Co. 141,320 9,996,977
- ------------------------------------------------------------------------------
Procter & Gamble Co. (The) 312,360 15,961,596
==============================================================================
31,084,493
==============================================================================
HUMAN RESOURCE & EMPLOYMENT SERVICES-0.31%
Robert Half International, Inc. 83,454 1,971,183
==============================================================================
HYPERMARKETS & SUPER CENTERS-1.74%
Costco Wholesale Corp. 104,268 4,765,048
- ------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 132,448 6,415,781
==============================================================================
11,180,829
==============================================================================
INDUSTRIAL MACHINERY-0.21%
Valmont Industries, Inc. 18,402 1,326,416
==============================================================================
INTEGRATED OIL & GAS-1.77%
Exxon Mobil Corp. 91,137 6,371,387
- ------------------------------------------------------------------------------
Occidental Petroleum Corp. 76,175 5,013,077
==============================================================================
11,384,464
==============================================================================
INTERNET RETAIL-0.45%
Priceline.com Inc.(b) 25,867 2,885,464
==============================================================================
INTERNET SOFTWARE & SERVICES-2.65%
eBay Inc.(b) 127,085 2,176,966
- ------------------------------------------------------------------------------
Google Inc.-Class A(b) 31,289 13,191,130
- ------------------------------------------------------------------------------
VeriSign, Inc.(b) 86,361 1,595,951
==============================================================================
16,964,047
==============================================================================
INVESTMENT BANKING & BROKERAGE-0.50%
Charles Schwab Corp. (The) 182,357 3,198,542
==============================================================================
IT CONSULTING & OTHER SERVICES-3.12%
Accenture Ltd.-Class A 323,915 10,838,196
- ------------------------------------------------------------------------------
Amdocs Ltd.(b) 129,355 2,774,665
- ------------------------------------------------------------------------------
Cognizant Technology Solutions Corp.-Class A(b) 238,485 6,367,549
==============================================================================
19,980,410
==============================================================================
LIFE SCIENCES TOOLS & SERVICES-0.25%
Thermo Fisher Scientific, Inc.(b) 39,879 1,625,867
==============================================================================
MANAGED HEALTH CARE-0.75%
UnitedHealth Group Inc. 191,497 4,783,595
==============================================================================
OIL & GAS DRILLING-0.43%
Transocean Ltd.(b) 37,581 2,791,893
==============================================================================
OIL & GAS EQUIPMENT & SERVICES-1.17%
Baker Hughes Inc. 47,936 1,746,788
- ------------------------------------------------------------------------------
Cameron International Corp.(b) 106,594 3,016,610
- ------------------------------------------------------------------------------
Schlumberger Ltd. 29,389 1,590,239
- ------------------------------------------------------------------------------
Weatherford International Ltd.(b) 60,056 1,174,695
==============================================================================
7,528,332
==============================================================================
OIL & GAS EXPLORATION & PRODUCTION-1.35%
Apache Corp. 38,024 2,743,432
- ------------------------------------------------------------------------------
Devon Energy Corp. 76,742 4,182,439
- ------------------------------------------------------------------------------
XTO Energy, Inc. 44,901 1,712,524
==============================================================================
8,638,395
==============================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-0.30%
JPMorgan Chase & Co. 56,120 1,914,253
==============================================================================
PACKAGED FOODS & MEATS-2.88%
General Mills, Inc. 143,520 8,039,990
- ------------------------------------------------------------------------------
Kellogg Co. 224,075 10,435,173
==============================================================================
18,475,163
==============================================================================
PHARMACEUTICALS-6.08%
Abbott Laboratories 274,060 12,891,782
- ------------------------------------------------------------------------------
Johnson & Johnson 369,045 20,961,756
- ------------------------------------------------------------------------------
Shire PLC (United Kingdom) 372,410 5,135,423
==============================================================================
38,988,961
==============================================================================
PROPERTY & CASUALTY INSURANCE-2.42%
ACE Ltd. (Switzerland) 172,729 7,639,804
- ------------------------------------------------------------------------------
Chubb Corp. (The) 198,112 7,900,706
==============================================================================
15,540,510
==============================================================================
PUBLISHING-0.25%
Morningstar, Inc.(b) 39,217 1,616,917
==============================================================================
RAILROADS-0.71%
Norfolk Southern Corp. 58,271 2,195,069
- ------------------------------------------------------------------------------
Union Pacific Corp. 45,391 2,363,055
==============================================================================
4,558,124
==============================================================================
RESTAURANTS-1.64%
Krispy Kreme Doughnuts Inc.-Wts., expiring
03/02/12(c) 1,194 48
- ------------------------------------------------------------------------------
McDonald's Corp. 129,525 7,446,392
- ------------------------------------------------------------------------------
Yum! Brands, Inc. 91,282 3,043,342
==============================================================================
10,489,782
==============================================================================
SEMICONDUCTORS-3.18%
Altera Corp. 281,826 4,588,127
- ------------------------------------------------------------------------------
Intel Corp. 304,149 5,033,666
- ------------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co. Ltd.-ADR
(Taiwan) 305,152 2,871,481
- ------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. CAPITAL APPRECIATION FUND
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
SEMICONDUCTORS-(CONTINUED)
Texas Instruments Inc. 148,241 $ 3,157,533
- ------------------------------------------------------------------------------
Xilinx, Inc. 233,131 4,769,860
==============================================================================
20,420,667
==============================================================================
SOFT DRINKS-4.15%
Coca-Cola Co. (The) 234,640 11,260,374
- ------------------------------------------------------------------------------
PepsiCo, Inc. 278,952 15,331,202
==============================================================================
26,591,576
==============================================================================
SPECIALIZED FINANCE-1.38%
CME Group Inc. 11,763 3,659,587
- ------------------------------------------------------------------------------
IntercontinentalExchange Inc.(b) 45,556 5,204,317
==============================================================================
8,863,904
==============================================================================
SYSTEMS SOFTWARE-4.75%
Check Point Software Technologies Ltd. (Israel)(b) 181,061 4,249,502
- ------------------------------------------------------------------------------
McAfee Inc.(b) 63,000 2,657,970
- ------------------------------------------------------------------------------
Microsoft Corp. 933,788 22,196,141
- ------------------------------------------------------------------------------
Symantec Corp.(b) 86,027 1,338,580
==============================================================================
30,442,193
==============================================================================
TRADING COMPANIES & DISTRIBUTORS-0.50%
W.W. Grainger, Inc. 38,929 3,187,507
==============================================================================
WIRELESS TELECOMMUNICATION SERVICES-2.55%
China Mobile Ltd. (China) 297,711 2,980,932
- ------------------------------------------------------------------------------
KDDI Corp. (Japan) 2,521 13,364,351
==============================================================================
16,345,283
==============================================================================
Total Common Stocks & Other Equity Interests
(Cost $642,343,879) 622,986,176
==============================================================================
MONEY MARKET FUNDS-2.93%
Liquid Assets Portfolio-Institutional Class(d) 9,372,127 9,372,127
- ------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(d) 9,372,127 9,372,127
==============================================================================
Total Money Market Funds (Cost $18,744,254) 18,744,254
==============================================================================
TOTAL INVESTMENTS-100.10% (Cost $661,088,133) 641,730,430
==============================================================================
OTHER ASSETS LESS LIABILITIES-(0.10)% (612,802)
==============================================================================
NET ASSETS-100.00% $641,117,628
______________________________________________________________________________
==============================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
Wts. - Warrants
</Table>
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) Non-income producing security.
(c) Non-income producing security acquired through a corporate action.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
PORTFOLIO COMPOSITION
By sector, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
Information Technology 28.3%
- -------------------------------------------------------------------------
Health Care 18.5
- -------------------------------------------------------------------------
Consumer Staples 15.9
- -------------------------------------------------------------------------
Industrials 12.7
- -------------------------------------------------------------------------
Consumer Discretionary 7.9
- -------------------------------------------------------------------------
Energy 4.7
- -------------------------------------------------------------------------
Financials 4.6
- -------------------------------------------------------------------------
Telecommunication Services 2.6
- -------------------------------------------------------------------------
Materials 1.7
- -------------------------------------------------------------------------
Utilities 0.3
- -------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities 2.8
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost
$642,343,879) $ 622,986,176
- -------------------------------------------------------
Investments in affiliated money market
funds, at value and cost 18,744,254
=======================================================
Total investments, at value (Cost
$661,088,133) 641,730,430
=======================================================
Foreign currencies, at value (Cost
$133,461) 133,842
- -------------------------------------------------------
Receivables for:
Investments sold 987,903
- -------------------------------------------------------
Fund shares sold 276,020
- -------------------------------------------------------
Dividends 448,714
- -------------------------------------------------------
Investment for trustee deferred
compensation and retirement plans 102,242
- -------------------------------------------------------
Other assets 387
=======================================================
Total assets 643,679,538
_______________________________________________________
=======================================================
LIABILITIES:
Payables for:
Investments purchased 1,191,918
- -------------------------------------------------------
Fund shares reacquired 556,696
- -------------------------------------------------------
Accrued fees to affiliates 485,933
- -------------------------------------------------------
Accrued other operating expenses 79,239
- -------------------------------------------------------
Trustee deferred compensation and
retirement plans 248,124
=======================================================
Total liabilities 2,561,910
=======================================================
Net assets applicable to shares
outstanding $ 641,117,628
_______________________________________________________
=======================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,070,722,451
- -------------------------------------------------------
Undistributed net investment income 6,090,017
- -------------------------------------------------------
Undistributed net realized gain (loss) (416,337,882)
- -------------------------------------------------------
Unrealized appreciation (depreciation) (19,356,958)
=======================================================
$ 641,117,628
_______________________________________________________
=======================================================
NET ASSETS:
Series I $ 468,761,892
_______________________________________________________
=======================================================
Series II $ 172,355,736
_______________________________________________________
=======================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Series I 27,021,395
_______________________________________________________
=======================================================
Series II 10,118,056
_______________________________________________________
=======================================================
Series I:
Net asset value per share $ 17.35
_______________________________________________________
=======================================================
Series II:
Net asset value per share $ 17.03
_______________________________________________________
=======================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding
taxes of $43,022) $ 6,164,271
- ------------------------------------------------------
Dividends from affiliated money market
funds 116,271
======================================================
Total investment income 6,280,542
======================================================
EXPENSES:
Advisory fees 1,904,031
- ------------------------------------------------------
Administrative services fees 777,849
- ------------------------------------------------------
Distribution fees -- Series II 203,094
- ------------------------------------------------------
Transfer agent fees 44,554
- ------------------------------------------------------
Trustees' and officers' fees and
benefits 21,820
- ------------------------------------------------------
Other 51,328
======================================================
Total expenses 3,002,676
======================================================
Less: Fees waived and expense offset
arrangement(s) (21,817)
======================================================
Net expenses 2,980,859
======================================================
Net investment income 3,299,683
======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (includes net
gains (losses) from securities
sold to affiliates of $(129,552)) (71,592,985)
- ------------------------------------------------------
Foreign currencies (4,793)
======================================================
(71,597,778)
======================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 82,345,171
- ------------------------------------------------------
Foreign currencies (22,603)
======================================================
82,322,568
======================================================
Net realized and unrealized gain 10,724,790
======================================================
Net increase in net assets resulting
from operations $ 14,024,473
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. CAPITAL APPRECIATION FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- --------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 3,299,683 $ 3,196,615
- --------------------------------------------------------------------------------------------------------
Net realized gain (loss) (71,597,778) (106,704,909)
- --------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 82,322,568 (443,131,750)
========================================================================================================
Net increase (decrease) in net assets resulting from operations 14,024,473 (546,640,044)
========================================================================================================
Share transactions-net:
Series I (33,658,315) (183,737,135)
- --------------------------------------------------------------------------------------------------------
Series II (8,121,894) (36,720,561)
========================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (41,780,209) (220,457,696)
========================================================================================================
Net increase (decrease) in net assets (27,755,736) (767,097,740)
========================================================================================================
NET ASSETS:
Beginning of period 668,873,364 1,435,971,104
========================================================================================================
End of period (includes undistributed net investment income of
$6,090,017 and $2,790,334, respectively) $641,117,628 $ 668,873,364
________________________________________________________________________________________________________
========================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Capital Appreciation Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
AIM V.I. CAPITAL APPRECIATION FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
Reported net realized foreign currency gains or losses arise from (i)
sales of foreign currencies, (ii) currency gains or losses realized
between the trade and settlement dates on securities transactions, and
(iii) the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency gains and losses arise from changes in the fair values of
assets and liabilities, other than investments in securities at fiscal
period end, resulting from changes in exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
J. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed,
AIM V.I. CAPITAL APPRECIATION FUND
realized gains (losses) are recorded. Realized and unrealized gains
(losses) on the contracts are included in the Statement of Operations. The
maximum risks associated with foreign currency contracts include failure
of the counterparty to meet the terms of the contract and the value of the
foreign currency changing unfavorably. These risks may be in excess of the
amounts reflected in the Statement of Assets and Liabilities.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
First $250 million 0.65%
- -------------------------------------------------------------------
Over $250 million 0.60%
___________________________________________________________________
===================================================================
</Table>
Through December 31, 2009, the Advisor has contractually agreed to waive
advisory fees to the extent necessary so that the advisory fees payable by the
Fund (based on the Fund's average daily net assets) do not exceed the annual
rate of:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
First $250 million 0.695%
- -------------------------------------------------------------------
Next $750 million 0.625%
- -------------------------------------------------------------------
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%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 1.30% and Series
II shares to 1.45% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, 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. These credits are used to pay certain expenses incurred by the Fund. The
Advisor did not waive fees and/or reimburse expenses during the period under
this expense limitation.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash (excluding investments of cash
collateral from securities lending) in such affiliated money market funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$21,335.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $75,571 for accounting and fund
administrative services and reimbursed $702,278 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays
AIM V.I. CAPITAL APPRECIATION FUND
IADI compensation at the annual rate of 0.25% of the Fund's average daily net
assets of Series II shares. Of the Plan payments, up to 0.25% of the average
daily net assets of the Series II shares may be paid to insurance companies who
furnish continuing personal shareholder services to customers who purchase and
own Series II shares of the Fund. For the six months ended June 30, 2009,
expenses incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- ----------------------------------------------------------------------------------------------------------------------
Equity Securities $620,822,219 $20,908,211 $-- $641,730,430
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
NOTE 4--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS
The Fund is permitted to purchase or sell securities from or to certain other
AIM Funds under specified conditions outlined in procedures adopted by the Board
of Trustees of the Trust. The procedures have been designed to ensure that any
purchase or sale of securities by the Fund from or to another fund or portfolio
that is or could be considered an affiliate by virtue of having a common
investment advisor (or affiliated investment advisors), common Trustees and/or
common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined
under the procedures, each transaction is effected at the current market price.
Pursuant to these procedures, for the six months ended June 30, 2009, the Fund
engaged in securities purchases of $678,906 and securities sales of $240,023,
which resulted in net realized gains (losses) of $(129,552).
NOTE 5--EXPENSE OFFSET ARRANGEMENT
The expense offset arrangement is comprised of custodian credits which result
from periodic overnight cash balances at the custodian. For the six months ended
June 30, 2009, the Fund received credits from this arrangement, which resulted
in the reduction of the Fund's total expenses of $482.
NOTE 6--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $2,264
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 7--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the custodian bank
can be compensated by earning the additional interest; or (ii) compensate by
paying the custodian bank at a rate agreed upon by the custodian bank and
Invesco Aim, not to exceed the contractually agreed upon rate.
AIM V.I. CAPITAL APPRECIATION FUND
NOTE 8--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions. Under these limitation rules, the Fund is limited to utilizing
$185,737,883 of capital loss carryforward in the fiscal year ending December 31,
2009.
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
December 31, 2009 $ 8,262,478
- -----------------------------------------------------------------------------------------------
December 31, 2010 140,535,267
- -----------------------------------------------------------------------------------------------
December 31, 2011 56,312,952
===============================================================================================
Total capital loss carryforward $205,110,697
_______________________________________________________________________________________________
===============================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code. To
the extent that unrealized gains as of the dates May 1, 2006, the date of the
reorganization of AIM V.I. Aggressive Growth Fund and V.I. Growth Fund into
the Fund and November 6, 2006, the date of the reorganization of AIM V.I.
Demographic Trends Fund into the Fund are realized on securities held in each
fund at such dates of the reorganizations, the capital loss carryforward may
be further limited for up to five years from the dates of the reorganizations.
On April 27, 2007, 1,144,589 Series I and II shares of the Fund valued at
$56,570,503 were redeemed by a significant shareholder and settled through a
redemption-in-kind transaction, which resulted in a realized gain of
$11,904,147 to the Fund for book purposes. From a federal income tax
perspective, the realized gains are not recognized.
NOTE 9--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $246,930,597 and
$247,909,221, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 45,608,034
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (73,660,171)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $(28,052,137)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $669,782,567.
</Table>
NOTE 10--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- -------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
--------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 701,625 $ 11,419,079 1,708,428 $ 40,436,878
- -------------------------------------------------------------------------------------------------------------------------
Series II 488,710 7,856,731 1,300,851 26,652,962
=========================================================================================================================
Reacquired:
Series I (2,806,751) (45,077,394) (9,585,390) (224,174,013)
- -------------------------------------------------------------------------------------------------------------------------
Series II (1,014,494) (15,978,625) (2,724,387) (63,373,523)
=========================================================================================================================
Net increase (decrease) in share activity (2,630,910) $(41,780,209) (9,300,498) $(220,457,696)
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 50% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and/or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
AIM V.I. CAPITAL APPRECIATION FUND
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
(LOSSES)
NET ASSET NET ON SECURITIES DIVIDENDS
VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET NET ASSET NET ASSETS,
BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT VALUE, END TOTAL END OF PERIOD
OF PERIOD (LOSS) UNREALIZED) OPERATIONS INCOME OF PERIOD RETURN(a) (000S OMITTED)
- ------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $16.89 $ 0.09(c) $ 0.37 $ 0.46 $ -- $17.35 2.72% $ 468,762
Year ended 12/31/08 29.37 0.09(c) (12.57) (12.48) -- 16.89 (42.49) 492,079
Year ended 12/31/07 26.22 0.01 3.14 3.15 -- 29.37 12.01 1,086,677
Year ended 12/31/06 24.67 0.01 1.55 1.56 (0.01) 26.22 6.34 1,204,559
Year ended 12/31/05 22.69 0.03 1.97 2.00 (0.02) 24.67 8.79 822,899
Year ended 12/31/04 21.28 0.02(e) 1.39 1.41 -- 22.69 6.62 886,990
- ------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 16.61 0.07(c) 0.35 0.42 -- 17.03 2.53 172,356
Year ended 12/31/08 28.95 0.03(c) (12.37) (12.34) -- 16.61 (42.63) 176,794
Year ended 12/31/07 25.91 (0.07) 3.11 3.04 -- 28.95 11.73 349,294
Year ended 12/31/06 24.43 (0.05) 1.53 1.48 -- 25.91 6.06 371,316
Year ended 12/31/05 22.50 (0.03) 1.96 1.93 -- 24.43 8.58 339,190
Year ended 12/31/04 21.16 (0.02)(e) 1.36 1.34 -- 22.50 6.33 136,982
______________________________________________________________________________________________________________________________
==============================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS)
AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
ABSORBED ABSORBED NET ASSETS TURNOVER(b)
- ----------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 0.90%(d) 0.91%(d) 1.14%(d) 42%
Year ended 12/31/08 0.91 0.91 0.37 103
Year ended 12/31/07 0.88 0.88 0.03 71
Year ended 12/31/06 0.91 0.91 0.06 120
Year ended 12/31/05 0.89 0.89 0.11 97
Year ended 12/31/04 0.91 0.91 0.09(e) 74
- ----------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 1.15(d) 1.16(d) 0.89(d) 42
Year ended 12/31/08 1.16 1.16 0.12 103
Year ended 12/31/07 1.13 1.13 (0.22) 71
Year ended 12/31/06 1.16 1.16 (0.19) 120
Year ended 12/31/05 1.14 1.14 (0.14) 97
Year ended 12/31/04 1.16 1.16 (0.16)(e) 74
________________________________________________________________________________________
========================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Total returns are not annualized for periods less than one
year, if applicable and do not reflect charges assessed in connection with
a variable product, which if included would reduce total returns.
(b) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(c) Calculated using average shares outstanding.
(d) Ratios are annualized and based on average daily net assets (000's omitted)
of $455,282 and $163,822 for Series I and Series II shares, respectively.
(e) Net investment income (loss) per share and the ratio of net investment
income (loss) to average net assets include a special cash dividend
received of $3.00 per share owned of Microsoft Corp. on December 2, 2004.
Net investment income (loss) per share and the ratio of net investment
income (loss) to average net assets excluding the special dividend are
$(0.04) and (0.17)% and $(0.08) and (0.42)% for Series I and Series II
shares, respectively.
AIM V.I. CAPITAL APPRECIATION FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,027.20 $4.52 $1,020.33 $4.51 0.90%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,025.30 5.77 1,019.09 5.76 1.15
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. CAPITAL APPRECIATION FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM In addition to their meetings particular factor that was controlling.
Variable Insurance Funds is required under throughout the year, the Sub-Committees Each Trustee may have evaluated the
the Investment Company Act of 1940 to meet at designated contract renewal information provided differently from
approve annually the renewal of the AIM meetings each year to conduct an in-depth another Trustee and attributed different
V.I. Capital Appreciation Fund (the Fund) review of the performance, fees, expenses weight to the various factors. The
investment advisory agreement with Invesco and other matters related to their Trustees recognized that the advisory
Aim Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract arrangements and resulting advisory fees
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive for the Fund and the other AIM Funds are
for Mutual Funds (the sub-advisory comparative performance and fee data the result of years of review and
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an negotiation between the Trustees and
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Invesco Aim, that the Trustees may focus
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and to a greater extent on certain aspects of
Limited, Invesco Australia Limited, supervision of the Senior Officer who also these arrangements in some years than in
Invesco Global Asset Management (N.A.), prepares a separate analysis of this others, and that the Trustees'
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each Sub- deliberations and conclusions in a
Institutional (N.A.), Inc., Invesco Senior Committee then makes recommendations to particular year may be based in part on
Secured Management, Inc. and Invesco the Investments Committee regarding the their deliberations and conclusions
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. regarding these same arrangements
Sub-Advisers). During contract renewal The Investments Committee considers each throughout the year and in prior years.
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes
Board as a whole, and the disinterested or its own recommendations regarding the fees The discussion below serves as a
"independent" Trustees voting separately, and expenses of the AIM Funds to the full summary of the Senior Officer's
approved the continuance of the Fund's Board. The Investments Committee also independent written evaluation with
investment advisory agreement and the considers each Sub-Committee's respect to the Fund's investment advisory
sub-advisory contracts for another year, recommendations in making its annual agreement as well as a discussion of the
effective July 1, 2009. In doing so, the recommendation to the Board whether to material factors and related conclusions
Board determined that the Fund's approve the continuance of each AIM Fund's that formed the basis for the Board's
investment advisory agreement and the investment advisory agreement and approval of the Fund's investment advisory
sub-advisory contracts are in the best sub-advisory contracts for another year. agreement and sub-advisory contracts.
interests of the Fund and its shareholders Unless otherwise stated, information set
and that the compensation to Invesco Aim The independent Trustees met separately forth below is as of June 17, 2009, and
and the Affiliated Sub-Advisers under the during their evaluation of the Fund's does not reflect any changes that may have
Fund's investment advisory agreement and investment advisory agreement and occurred since that date, including but
sub-advisory contracts is fair and sub-advisory contracts with independent not limited to changes to the Fund's
reasonable. legal counsel. The independent Trustees performance, advisory fees, expense
were also assisted in their annual limitations and/or fee waivers.
THE BOARD'S FUND EVALUATION PROCESS evaluation of the Fund's investment
advisory agreement by the Senior Officer. FACTORS AND CONCLUSIONS AND SUMMARY OF
The Board's Investments Committee has One responsibility of the Senior Officer INDEPENDENT WRITTEN FEE EVALUATION
established three Sub-Committees that are is to manage the process by which the AIM
responsible for overseeing the management Funds' proposed management fees are A. Nature, Extent and Quality of
of a number of the series portfolios of negotiated during the annual contract Services Provided by Invesco Aim
the AIM Funds. This Sub-Committee renewal process to ensure that they are
structure permits the Trustees to focus on negotiated in a manner that is at arms' The Board reviewed the advisory services
the performance of the AIM Funds that have length and reasonable. Accordingly, the provided to the Fund by Invesco Aim under
been assigned to them. The Sub-Committees Senior Officer must either supervise a the Fund's investment advisory agreement,
meet throughout the year to review the competitive bidding process or prepare an the performance of Invesco Aim in
performance of their assigned funds, and independent written evaluation. The Senior providing these services, and the
the Sub-Committees review monthly and Officer recommended that an independent credentials and experience of the officers
quarterly comparative performance written evaluation be provided and, at the and employees of Invesco Aim who provide
information and periodic asset flow data direction of the Board, prepared an these services. The Board's review of the
for their assigned funds. These materials independent written evaluation. qualifications of Invesco Aim to provide
are prepared under the direction and these services included the Board's
supervision of the independent Senior During the annual contract renewal consideration of Invesco Aim's portfolio
Officer, an officer of the AIM Funds who process, the Board considered the factors and product review process, various back
reports directly to the independent discussed below in evaluating the fairness office support functions provided by
Trustees. Over the course of each year, and reasonableness of the Fund's Invesco Aim and its affiliates, and
the Sub-Committees meet with portfolio investment advisory agreement and Invesco Aim's equity and fixed income
managers for their assigned funds and sub-advisory contracts. The Board trading operations. The Board concluded
other members of management and review considered all of the information provided that the nature, extent and quality of the
with these individuals the performance, to them, including information provided at advisory services provided to the Fund by
investment objective(s), policies, their meetings throughout the year as part Invesco Aim are appropriate and that
strategies and limitations of these funds. of their ongoing oversight of the Fund, Invesco Aim currently is providing
and did not identify any satisfactory advisory services in
accordance with the terms of the Fund's
investment advisory
AIM V.I. CAPITAL APPRECIATION FUND continued
agreement. In addition, based on their C. Fund Performance managed by Invesco Aim or an Affiliated
ongoing meetings throughout the year with Sub-Adviser, at a common asset level. The
the Fund's portfolio manager or managers, The Board considered fund performance as a Board noted that the Fund's contractual
the Board concluded that these individuals relevant factor in considering whether to advisory fee rate was below the median
are competent and able to continue to approve the investment advisory agreement. contractual advisory fee of funds in its
carry out their responsibilities under the The Board did not view fund performance as expense group. The Board also reviewed the
Fund's investment advisory agreement. a relevant factor in considering whether methodology used by Lipper in determining
to approve the sub-advisory contracts for contractual fee rates, which includes
In determining whether to continue the the Fund, as no Affiliated Sub-Adviser using audited financial data from the most
Fund's investment advisory agreement, the currently manages assets of the Fund. recent annual report of each fund in the
Board considered the prior relationship expense group that was publicly available
between Invesco Aim and the Fund, as well The Board compared the Fund's as of the end of the past calendar year.
as the Board's knowledge of Invesco Aim's performance during the past one, three and The Board noted that some comparative data
operations, and concluded that it is five calendar years to the performance of was at least one year old and that other
beneficial to maintain the current all funds in the Lipper performance data did not reflect the market downturn
relationship, in part, because of such universe that are not managed by Invesco that occurred in the fourth quarter of
knowledge. The Board also considered the Aim or an Affiliated Sub-Adviser and 2008.
steps that Invesco Aim and its affiliates against the Lipper VA Underlying Funds --
continue to take to improve the quality Multi-Cap Growth Index and the Lipper VA The Board also compared the Fund's
and efficiency of the services they Underlying Funds -- Large-Cap Growth effective fee rate (the advisory fee after
provide to the AIM Funds in the areas of Index. The Board noted that the Fund's any advisory fee waivers and before any
investment performance, product line performance was in the fourth quintile of expense limitations/waivers) to the
diversification, distribution, fund its performance universe for the one, advisory fee rates of other domestic
operations, shareholder services and three and five year periods (the first clients of Invesco Aim and its affiliates
compliance. The Board concluded that the quintile being the best performing funds with investment strategies comparable to
quality and efficiency of the services and the fifth quintile being the worst those of the Fund, including two mutual
Invesco Aim and its affiliates provide to performing funds). The Board noted that funds advised by Invesco Aim and four
the AIM Funds in each of these areas the Fund's performance was below the mutual funds sub-advised by an Invesco Aim
support the Board's approval of the performance of the Lipper VA Underlying affiliate. The Board noted that the Fund's
continuance of the Fund's investment Funds -- Large-Cap Growth Index for the rate was: (i) below the effective fee rate
advisory agreement. one, three and five year periods. The for one mutual fund and above the rate for
Board also noted that the Fund's the other mutual fund advised by Invesco
B. Nature, Extent and Quality of performance was above the performance of Aim; and (ii) above the sub-adviser
Services Provided by Affiliated the Lipper VA Underlying Funds -- effective fee rates for the domestic
Sub-Advisers Multi-Cap Growth Index for the one and mutual funds sub-advised by an Invesco Aim
three periods and below the performance of affiliate.
The Board reviewed the services provided that Index for the five year period. The
by the Affiliated Sub-Advisers under the Board noted that Invesco Aim made changes The Board noted that Invesco Aim
sub-advisory contracts and the credentials to the Fund's portfolio management team in contractually agreed to waive advisory
and experience of the officers and 2008, which need more time to be evaluated fees of the Fund through December 31,
employees of the Affiliated Sub-Advisers before a conclusion can be reached that 2009, and proposes to let that waiver
who provide these services. The Board the changes have adequately addressed the expire as it has not resulted in any fee
concluded that the nature, extent and Fund's underperformance. Although the reductions for the past fiscal year of the
quality of the services provided by the independent written evaluation of the Fund. The Board also noted that Invesco
Affiliated Sub-Advisers are appropriate. Fund's Senior Officer only considered Fund Aim has contractually agreed to waive fees
The Board noted that the Affiliated performance through the most recent and/or limit expenses of the Fund through
Sub-Advisers, which have offices and calendar year, the Board also reviewed at least April 30, 2010 in an amount
personnel that are geographically more recent Fund performance and this necessary to limit total annual operating
dispersed in financial centers around the review did not change their conclusions. expenses to a specified percentage of
world, can provide research and other The Board noted that, in response to the average daily net assets for each class of
information and make recommendations on Board's focus on fund performance, Invesco the Fund. The Board noted that at the
the markets and economies of various Aim has taken a number of actions intended current expense ratio for the Fund, this
countries and securities of companies to improve the investment process for the expense waiver does not have any impact.
located in such countries or on various funds.
types of investments and investment The Board also considered the services
techniques. The Board concluded that the D. Advisory and Sub-Advisory Fees and provided by the Affiliated Sub-Advisers
sub-advisory contracts benefit the Fund Fee Waivers pursuant to the sub-advisory contracts and
and its shareholders by permitting Invesco the services provided by Invesco Aim
Aim to utilize the additional resources The Board compared the Fund's contractual pursuant to the Fund's advisory agreement,
and talent of the Affiliated Sub-Advisers advisory fee rate to the contractual as well as the allocation of fees between
in managing the Fund. advisory fee rates of funds in the Fund's Invesco Aim and the Affiliated
Lipper expense group that are not Sub-Advisers pursuant to the sub-advisory
contracts. The Board noted that the
AIM V.I. CAPITAL APPRECIATION FUND continued
sub-advisory fees have no direct effect on fee waivers for affiliated money market The Board concluded that Invesco Aim's and
the Fund or its shareholders, as they are funds have reduced the profitability of the Affiliated Sub-Advisers' soft dollar
paid by Invesco Aim to the Affiliated Invesco Aim and its affiliates. The Board arrangements are appropriate. The Board
Sub-Advisers, and that Invesco Aim and the concluded that the Fund's fees are fair also concluded that, based on their review
Affiliated Sub-Advisers are affiliates. and reasonable, and that the level of and representations made by the Chief
profits realized by Invesco Aim and its Compliance Officer of Invesco Aim, these
After taking account of the Fund's affiliates from providing services to the arrangements are consistent with
contractual advisory fee rate, the Fund is not excessive in light of the regulatory requirements.
contractual sub-advisory fee rate, the nature, quality and extent of the services
comparative advisory fee information and provided. The Board considered whether The Board considered the fact that the
the fee waivers/expense limitations Invesco Aim is financially sound and has Fund's uninvested cash and cash collateral
discussed above and other relevant the resources necessary to perform its from any securities lending arrangements
factors, the Board concluded that the obligations under the Fund's investment may be invested in money market funds
Fund's advisory fees are fair and advisory agreement, and concluded that advised by Invesco Aim pursuant to
reasonable. Invesco Aim has the financial resources procedures approved by the Board. The
necessary to fulfill these obligations. Board noted that Invesco Aim will receive
E. Economies of Scale and Breakpoints The Board also considered whether each advisory fees from these affiliated money
Affiliated Sub-Adviser is financially market funds attributable to such
The Board considered the extent to which sound and has the resources necessary to investments, although Invesco Aim has
there are economies of scale in the perform its obligations under the contractually agreed to waive through at
provision of advisory services to the sub-advisory contracts, and concluded that least June 30, 2010, the advisory fees
Fund. The Board also considered whether each Affiliated Sub-Adviser has the payable by the Fund in an amount equal to
the Fund benefits from such economies of financial resources necessary to fulfill 100% of the net advisory fee Invesco Aim
scale through contractual breakpoints in these obligations. receives from the affiliated money market
the Fund's advisory fee schedule. The funds with respect to the Fund's
Board noted that the Fund's contractual G. Collateral Benefits to Invesco Aim investment in the affiliated money market
advisory fee schedule includes one and its Affiliates funds of uninvested cash, but not cash
breakpoint and that the level of the collateral. The Board concluded that the
Fund's advisory fees, as a percentage of The Board considered various other Fund's investment of uninvested cash and
the Fund's net assets, has decreased as benefits received by Invesco Aim and its cash collateral from any securities
net assets increased because of the affiliates resulting from Invesco Aim's lending arrangements in the affiliated
breakpoint. Based on this information, the relationship with the Fund, including the money market funds is in the best
Board concluded that the Fund's advisory fees received by Invesco Aim and its interests of the Fund and its
fees appropriately reflect economies of affiliates for their provision of shareholders.
scale at current asset levels. The Board administrative, transfer agency and
also noted that the Fund shares directly distribution services to the Fund. The
in economies of scale through lower fees Board considered the performance of
charged by third party service providers Invesco Aim and its affiliates in
based on the combined size of all of the providing these services and the
AIM Funds and affiliates. organizational structure employed by
Invesco Aim and its affiliates to provide
F. Profitability and Financial these services. The Board also considered
Resources that these services are provided to the
Fund pursuant to written contracts that
The Board reviewed information from are reviewed and approved on an annual
Invesco Aim concerning the costs of the basis by the Board. The Board concluded
advisory and other services that Invesco that Invesco Aim and its affiliates are
Aim and its affiliates provide to the Fund providing these services in a satisfactory
and the profitability of Invesco Aim and manner and in accordance with the terms of
its affiliates in providing these their contracts, and are qualified to
services. The Board also reviewed continue to provide these services to the
information concerning the financial Fund.
condition of Invesco Aim and its
affiliates. The Board reviewed with The Board considered the benefits
Invesco Aim the methodology used to realized by Invesco Aim and the Affiliated
prepare the profitability information. The Sub-Advisers as a result of portfolio
Board considered the overall profitability brokerage transactions executed through
of Invesco Ltd., the ultimate parent of "soft dollar" arrangements. The Board
Invesco Aim and the Affiliated noted that soft dollar arrangements shift
Sub-Advisers, and of Invesco Aim, as well the payment obligation for research and
as the profitability of Invesco Aim in execution services from Invesco Aim and
connection with managing the Fund. The the Affiliated Sub-Advisers to the funds
Board noted that Invesco Aim continues to and therefore may reduce Invesco Aim's and
operate at a net profit, although the the Affiliated Sub-Advisers' expenses.
reduction of assets under management as a
result of market movements and the
increase in voluntary
AIM V.I. CAPITAL APPRECIATION FUND
[INVESCO AIM LOGO] AIM V.I. CAPITAL DEVELOPMENT FUND
-SERVICE MARK- Semiannual Report to Shareholders - June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal
year, at the quarter-ends. For the second and fourth quarters, the lists appear
in the Fund's semiannual and annual reports to shareholders. For the first and
third quarters, the Fund files the lists with the Securities and Exchange
Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the
Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at
the SEC Public Reference Room in Washington, D.C. You can obtain information on
the operation of the Public Reference Room, including information about
duplicating fee charges, by calling 202 942 8090 or 800 732 0330, or by
electronic request at the following E-mail address: publicinfo@sec.gov. The SEC
file numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent
portfolio holdings, as filed on Form N-Q, have also been made available to
insurance companies issuing variable annuity contracts and variable life
insurance policies ("variable products") that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, from our Client Services department at 800 410 4246 or on the
Invesco Aim Web site, invescoaim.com. On the home page, scroll down and click on
Proxy Policy. The information is also available on the SEC Web site, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio
securities during the 12 months ended June 30, 2009, is available at our Web
site. Go to invescoaim.com, access the About Us tab, click on Required Notices
and then click on Proxy Voting Activity. Next, select the Fund from the
drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009,
Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco
Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc.
will be merged into Invesco Institutional (N.A.), Inc., and the consolidated
adviser firm will be renamed Invesco Advisers, Inc. Additional information will
be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND
PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN MORE COMPLETE
INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH
CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
PERFORMANCE SUMMARY
FUND VS. INDEXES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer
charges. If variable product issuer charges were included, returns would be
lower.
Series I Shares 12.48%
Series II Shares 12.27
S&P 500 Index* (Broad Market Index) 3.19
Russell Midcap Growth Index* (Style-Specific Index) 16.61
Lipper VUF Mid-Cap Growth Funds Index* (Peer Group Index) 16.11
*Lipper Inc.
The S&P 500--REGISTERED TRADEMARK-- 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 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 Growth Index is a
trademark/ service mark of the Frank Russell Company. Russell--REGISTERED
TRADEMARK-- is a trademark of the Frank Russell Company.
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 Fund is not managed to track the performance of any particular index,
including the indexes defined here, and consequently, the performance of the
Fund may deviate significantly from the performance of the indexes.
A direct investment cannot be made in an index. Unless otherwise
indicated, index results include reinvested dividends, and they do not reflect
sales charges. Performance of the peer group reflects fund expenses; performance
of a market index does not.
AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
SERIES I SHARES
Inception (5/1/98) 1.97%
10 Year 2.81
5 Years -1.57
1 Year -32.05
SERIES II SHARES
10 Years 2.55%
5 Years -1.81
1 Year -32.23
SERIES II SHARES' INCEPTION DATE IS AUGUST 21, 2001. RETURNS SINCE THAT DATE ARE
HISTORICAL. ALL OTHER RETURNS ARE THE BLENDED RETURNS OF THE HISTORICAL
PERFORMANCE OF SERIES II SHARES SINCE THEIR INCEPTION AND THE RESTATED
HISTORICAL PERFORMANCE OF SERIES I SHARES (FOR PERIODS PRIOR TO INCEPTION OF
SERIES II SHARES) ADJUSTED TO REFLECT THE RULE 12B-1 FEES APPLICABLE TO SERIES
II SHARES. THE INCEPTION DATE OF SERIES I SHARES IS MAY 1, 1998.
THE PERFORMANCE OF THE FUND'S SERIES I AND SERIES II SHARE CLASSES WILL
DIFFER PRIMARILY DUE TO DIFFERENT CLASS EXPENSES.
THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT
GUARANTEE COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER.
PLEASE CONTACT YOUR VARIABLE PRODUCT ISSUER OR FINANCIAL ADVISOR FOR THE MOST
RECENT MONTH-END VARIABLE PRODUCT PERFORMANCE. PERFORMANCE FIGURES REFLECT FUND
EXPENSES, REINVESTED DISTRIBUTIONS AND CHANGES IN NET ASSET VALUE. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS
WHEN YOU SELL SHARES.
THE NET ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT
FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR SERIES I AND SERIES II SHARES
WAS 1.11% AND 1.36%, RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND OPERATING EXPENSE
RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT
FOR SERIES I AND SERIES II SHARES WAS 1.12% AND 1.37%, RESPECTIVELY. THE EXPENSE
RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER
SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD
COVERED BY THIS REPORT.
AIM V.I. CAPITAL DEVELOPMENT FUND, A SERIES PORTFOLIO OF AIM VARIABLE
INSURANCE FUNDS, IS CURRENTLY OFFERED THROUGH INSURANCE COMPANIES ISSUING
VARIABLE PRODUCTS. YOU CANNOT PURCHASE SHARES OF THE FUND DIRECTLY. PERFORMANCE
FIGURES GIVEN REPRESENT THE FUND AND ARE NOT INTENDED TO REFLECT ACTUAL VARIABLE
PRODUCT VALUES. THEY DO NOT REFLECT SALES CHARGES, EXPENSES AND FEES ASSESSED IN
CONNECTION WITH A VARIABLE PRODUCT. SALES CHARGES, EXPENSES AND FEES, WHICH ARE
DETERMINED BY THE VARIABLE PRODUCT ISSUERS, WILL VARY AND WILL LOWER THE TOTAL
RETURN.
THE MOST RECENT MONTH-END PERFORMANCE DATA AT THE FUND LEVEL, EXCLUDING
VARIABLE PRODUCT CHARGES, IS AVAILABLE ON THE INVESCO AIM AUTOMATED INFORMATION
LINE, 866 702 4402. AS MENTIONED ABOVE, FOR THE MOST RECENT MONTH-END
PERFORMANCE INCLUDING VARIABLE PRODUCT CHARGES, PLEASE CONTACT YOUR VARIABLE
PRODUCT ISSUER OR FINANCIAL ADVISOR.
1 Total annual operating expenses less any contractual fee waivers and/or
expense reimbursements by the advisor in effect through at least April 30,
2010. See current prospectus for more information.
2 Total annual operating expenses less contractual advisory fee waivers by
the advisor in effect through at least June 30, 2010. See current
prospectus for more information.
AIM V.I. CAPITAL DEVELOPMENT FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
SHARES VALUE
- ----------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-99.42%
AEROSPACE & DEFENSE-0.97%
Goodrich Corp. 28,802 $ 1,439,236
============================================================================
AIR FREIGHT & LOGISTICS-0.95%
C.H. Robinson Worldwide, Inc. 26,971 1,406,538
============================================================================
APPAREL RETAIL-3.05%
Aeropostale, Inc.(b) 42,286 1,449,141
- ----------------------------------------------------------------------------
American Eagle Outfitters, Inc. 99,524 1,410,255
- ----------------------------------------------------------------------------
Ross Stores, Inc. 42,885 1,655,361
============================================================================
4,514,757
============================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-2.17%
Carter's, Inc.(b) 41,700 1,026,237
- ----------------------------------------------------------------------------
Coach, Inc. 30,602 822,582
- ----------------------------------------------------------------------------
Hanesbrands, Inc.(b) 91,269 1,369,947
============================================================================
3,218,766
============================================================================
APPLICATION SOFTWARE-3.77%
Adobe Systems Inc.(b) 53,415 1,511,645
- ----------------------------------------------------------------------------
ANSYS, Inc.(b) 26,385 822,157
- ----------------------------------------------------------------------------
Autodesk, Inc.(b) 58,137 1,103,440
- ----------------------------------------------------------------------------
Solera Holdings Inc.(b) 84,171 2,137,943
============================================================================
5,575,185
============================================================================
ASSET MANAGEMENT & CUSTODY BANKS-4.02%
Affiliated Managers Group, Inc.(b) 41,770 2,430,597
- ----------------------------------------------------------------------------
Northern Trust Corp. 27,090 1,454,191
- ----------------------------------------------------------------------------
State Street Corp. 43,791 2,066,935
============================================================================
5,951,723
============================================================================
AUTOMOTIVE RETAIL-0.51%
Advance Auto Parts, Inc. 18,203 755,242
============================================================================
BIOTECHNOLOGY-1.24%
Grifols S.A. (Spain) 47,786 843,691
- ----------------------------------------------------------------------------
United Therapeutics Corp.(b) 11,901 991,710
============================================================================
1,835,401
============================================================================
CASINOS & GAMING-0.88%
Scientific Games Corp.-Class A(b) 82,411 1,299,621
============================================================================
COAL & CONSUMABLE FUELS-0.42%
CONSOL Energy Inc. 18,166 616,917
============================================================================
COMMUNICATIONS EQUIPMENT-0.26%
3Com Corp.(b) 82,783 389,908
- ----------------------------------------------------------------------------
Lantronix Inc.-Wts. expiring 02/09/11(c) 576 0
============================================================================
389,908
============================================================================
COMPUTER & ELECTRONICS RETAIL-0.98%
Best Buy Co., Inc. 43,524 1,457,619
============================================================================
COMPUTER STORAGE & PERIPHERALS-3.29%
NetApp, Inc.(b) 87,975 1,734,867
- ----------------------------------------------------------------------------
QLogic Corp.(b) 111,087 1,408,583
- ----------------------------------------------------------------------------
Western Digital Corp.(b) 64,879 1,719,294
============================================================================
4,862,744
============================================================================
CONSTRUCTION & ENGINEERING-0.89%
Quanta Services, Inc.(b) 25,855 598,026
- ----------------------------------------------------------------------------
Shaw Group Inc. (The)(b) 26,345 722,117
============================================================================
1,320,143
============================================================================
CONSUMER FINANCE-0.83%
Discover Financial Services 120,038 1,232,790
============================================================================
DATA PROCESSING & OUTSOURCED SERVICES-1.87%
Alliance Data Systems Corp.(b) 35,904 1,478,886
- ----------------------------------------------------------------------------
Hewitt Associates, Inc.-Class A(b) 43,039 1,281,701
============================================================================
2,760,587
============================================================================
DEPARTMENT STORES-1.89%
Kohl's Corp.(b) 33,991 1,453,115
- ----------------------------------------------------------------------------
Nordstrom, Inc. 67,422 1,341,024
============================================================================
2,794,139
============================================================================
DISTRIBUTORS-1.09%
LKQ Corp.(b) 97,860 1,609,797
============================================================================
DIVERSIFIED METALS & MINING-1.98%
Freeport-McMoRan Copper & Gold Inc.(b) 28,850 1,445,674
- ----------------------------------------------------------------------------
Southern Copper Corp. (Peru) 72,857 1,489,197
============================================================================
2,934,871
============================================================================
DIVERSIFIED SUPPORT SERVICES-1.31%
Copart, Inc.(b) 55,916 1,938,608
============================================================================
DRUG RETAIL-1.09%
Shoppers Drug Mart Corp. (Canada) 37,605 1,616,298
============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. CAPITAL DEVELOPMENT FUND
<Table>
<Caption>
SHARES VALUE
- ----------------------------------------------------------------------------
EDUCATION SERVICES-2.80%
Apollo Group, Inc.-Class A(b) 24,268 $ 1,725,940
- ----------------------------------------------------------------------------
Capella Education Co.(b) 13,389 802,671
- ----------------------------------------------------------------------------
ITT Educational Services, Inc.(b) 16,059 1,616,499
============================================================================
4,145,110
============================================================================
ELECTRONIC COMPONENTS-0.92%
Amphenol Corp.-Class A 43,152 1,365,329
============================================================================
ENVIRONMENTAL & FACILITIES SERVICES-1.52%
Republic Services, Inc. 92,265 2,252,189
============================================================================
FERTILIZERS & AGRICULTURAL CHEMICALS-0.77%
Potash Corp. of Saskatchewan Inc. (Canada) 12,214 1,136,513
============================================================================
GENERAL MERCHANDISE STORES-0.85%
Family Dollar Stores, Inc. 44,297 1,253,605
============================================================================
HEALTH CARE DISTRIBUTORS-0.58%
McKesson Corp. 19,517 858,748
============================================================================
HEALTH CARE EQUIPMENT-1.71%
Covidien PLC (Ireland) 44,270 1,657,469
- ----------------------------------------------------------------------------
ResMed Inc.(b) 210,407 879,807
============================================================================
2,537,276
============================================================================
HEALTH CARE FACILITIES-2.27%
Psychiatric Solutions, Inc.(b) 74,218 1,687,717
- ----------------------------------------------------------------------------
VCA Antech, Inc.(b) 62,621 1,671,981
============================================================================
3,359,698
============================================================================
HEALTH CARE SERVICES-2.90%
Express Scripts, Inc.(b) 27,379 1,882,306
- ----------------------------------------------------------------------------
Fresenius Medical Care AG & Co. KGaA-ADR (Germany) 37,338 1,680,210
- ----------------------------------------------------------------------------
Omnicare, Inc. 28,208 726,638
============================================================================
4,289,154
============================================================================
HOME ENTERTAINMENT SOFTWARE-1.00%
Activision Blizzard, Inc.(b) 117,336 1,481,954
============================================================================
HOTELS, RESORTS & CRUISE LINES-0.48%
Marriott International, Inc.-Class A 32,098 708,403
============================================================================
HOUSEHOLD APPLIANCES-1.01%
Stanley Works (The) 44,206 1,495,931
============================================================================
HOUSEHOLD PRODUCTS-0.55%
Church & Dwight Co., Inc. 15,002 814,759
============================================================================
HOUSEWARES & SPECIALTIES-1.28%
Jarden Corp.(b) 100,772 1,889,475
============================================================================
HUMAN RESOURCE & EMPLOYMENT SERVICES-1.10%
Robert Half International, Inc. 68,799 1,625,032
============================================================================
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS-0.59%
KGEN Power Corp. (Acquired 01/12/07; Cost
$2,219,196)(b)(d) 158,514 871,827
============================================================================
INDUSTRIAL MACHINERY-0.50%
Graco Inc. 33,584 739,520
============================================================================
INVESTMENT BANKING & BROKERAGE-4.47%
Charles Schwab Corp. (The) 85,995 1,508,352
- ----------------------------------------------------------------------------
Lazard Ltd.-Class A 54,630 1,470,640
- ----------------------------------------------------------------------------
Morgan Stanley 53,855 1,535,406
- ----------------------------------------------------------------------------
TD Ameritrade Holding Corp.(b) 120,015 2,105,063
============================================================================
6,619,461
============================================================================
INVESTMENT COMPANIES-EXCHANGE TRADED FUNDS-1.08%
iShares Nasdaq Biotechnology Index Fund 22,028 1,602,757
============================================================================
IT CONSULTING & OTHER SERVICES-2.41%
Amdocs Ltd.(b) 58,383 1,252,315
- ----------------------------------------------------------------------------
Cognizant Technology Solutions Corp.-Class A(b) 86,642 2,313,342
============================================================================
3,565,657
============================================================================
LIFE SCIENCES TOOLS & SERVICES-1.79%
Pharmaceutical Product Development, Inc. 50,708 1,177,440
- ----------------------------------------------------------------------------
Thermo Fisher Scientific, Inc.(b) 35,938 1,465,192
============================================================================
2,642,632
============================================================================
MANAGED HEALTH CARE-0.75%
Aetna Inc. 31,745 795,212
- ----------------------------------------------------------------------------
Aveta, Inc. (Acquired 12/21/05-02/21/06; Cost
$2,162,718)(b)(d) 157,251 314,502
============================================================================
1,109,714
============================================================================
MARINE-0.56%
Genco Shipping & Trading Ltd.(b) 38,308 832,050
============================================================================
METAL & GLASS CONTAINERS-2.05%
Crown Holdings, Inc.(b) 63,777 1,539,577
- ----------------------------------------------------------------------------
Pactiv Corp.(b) 69,155 1,500,663
============================================================================
3,040,240
============================================================================
OIL & GAS DRILLING-1.06%
Noble Corp. 51,764 1,565,861
============================================================================
OIL & GAS EQUIPMENT & SERVICES-3.81%
Baker Hughes Inc. 40,209 1,465,216
- ----------------------------------------------------------------------------
BJ Services Co. 91,643 1,249,094
- ----------------------------------------------------------------------------
Core Laboratories N.V. (Netherlands) 17,075 1,488,086
- ----------------------------------------------------------------------------
Weatherford International Ltd.(b) 73,785 1,443,235
============================================================================
5,645,631
============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. CAPITAL DEVELOPMENT FUND
<Table>
<Caption>
SHARES VALUE
- ----------------------------------------------------------------------------
OIL & GAS EXPLORATION & PRODUCTION-3.86%
Continental Resources, Inc.(b) 76,864 $ 2,132,976
- ----------------------------------------------------------------------------
Range Resources Corp. 43,956 1,820,218
- ----------------------------------------------------------------------------
Southwestern Energy Co.(b) 45,373 1,762,741
============================================================================
5,715,935
============================================================================
PERSONAL PRODUCTS-1.08%
Estee Lauder Cos. Inc. (The)-Class A 48,863 1,596,354
============================================================================
PHARMACEUTICALS-0.53%
Shire PLC-ADR (United Kingdom) 19,011 788,576
============================================================================
REAL ESTATE SERVICES-0.49%
Jones Lang LaSalle Inc. 22,002 720,125
============================================================================
RESEARCH & CONSULTING SERVICES-2.27%
Equifax Inc. 56,021 1,462,148
- ----------------------------------------------------------------------------
IHS Inc.-Class A(b) 38,204 1,905,234
============================================================================
3,367,382
============================================================================
SECURITY & ALARM SERVICES-1.45%
Corrections Corp. of America(b) 126,717 2,152,922
============================================================================
SEMICONDUCTOR EQUIPMENT-3.36%
ASML Holding N.V.-New York Shares (Netherlands) 77,226 1,671,943
- ----------------------------------------------------------------------------
KLA-Tencor Corp. 70,597 1,782,574
- ----------------------------------------------------------------------------
Lam Research Corp.(b) 58,225 1,513,850
============================================================================
4,968,367
============================================================================
SEMICONDUCTORS-2.69%
Altera Corp. 61,655 1,003,743
- ----------------------------------------------------------------------------
Marvell Technology Group Ltd.(b) 105,397 1,226,821
- ----------------------------------------------------------------------------
ON Semiconductor Corp.(b) 255,351 1,751,708
============================================================================
3,982,272
============================================================================
STEEL-1.00%
Nucor Corp. 33,451 1,486,228
============================================================================
SYSTEMS SOFTWARE-2.85%
Check Point Software Technologies Ltd. (Israel)(b) 86,559 2,031,540
- ----------------------------------------------------------------------------
McAfee Inc.(b) 51,701 2,181,265
============================================================================
4,212,805
============================================================================
TIRES & RUBBER-0.98%
Goodyear Tire & Rubber Co. (The)(b) 128,749 1,449,714
============================================================================
TRADING COMPANIES & DISTRIBUTORS-1.94%
Fastenal Co. 40,430 1,341,063
- ----------------------------------------------------------------------------
W.W. Grainger, Inc. 18,738 1,534,267
============================================================================
2,875,330
============================================================================
TRUCKING-3.31%
Con-way Inc. 47,820 1,688,524
- ----------------------------------------------------------------------------
Heartland Express, Inc. 100,328 1,476,828
- ----------------------------------------------------------------------------
J.B. Hunt Transport Services, Inc. 57,029 1,741,096
============================================================================
4,906,448
============================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.34%
American Tower Corp.-Class A(b) 62,680 1,976,300
============================================================================
Total Common Stocks & Other Equity Interests
(Cost $135,640,246) 147,178,174
============================================================================
MONEY MARKET FUNDS-0.02%
Liquid Assets Portfolio-Institutional Class(e) 13,976 13,976
- ----------------------------------------------------------------------------
Premier Portfolio-Institutional Class(e) 13,976 13,976
============================================================================
Total Money Market Funds (Cost $27,952) 27,952
============================================================================
TOTAL INVESTMENTS-99.44% (Cost $135,668,198) 147,206,126
============================================================================
OTHER ASSETS LESS LIABILITIES-0.56% 829,201
============================================================================
NET ASSETS-100.00% $148,035,327
____________________________________________________________________________
============================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
Wts. - Warrants
</Table>
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) Non-income producing security.
(c) Non-income producing security acquired through a corporate action.
(d) Security purchased or received in a transaction exempt from registration
under the Securities Act of 1933, as amended. The security may be resold
pursuant to an exemption from registration under the 1933 Act, typically
to qualified institutional buyers. The aggregate value of these securities
at June 30, 2009 was $1,186,329, which represented 0.80% of the Fund's Net
Assets.
(e) The money market fund and the Fund are affiliated by having the same
investment advisor.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. CAPITAL DEVELOPMENT FUND
PORTFOLIO COMPOSITION
By sector, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
Information Technology 22.4%
- -------------------------------------------------------------------------
Consumer Discretionary 18.0
- -------------------------------------------------------------------------
Industrials 16.8
- -------------------------------------------------------------------------
Health Care 12.9
- -------------------------------------------------------------------------
Financials 9.8
- -------------------------------------------------------------------------
Energy 9.1
- -------------------------------------------------------------------------
Materials 5.8
- -------------------------------------------------------------------------
Consumer Staples 2.7
- -------------------------------------------------------------------------
Telecommunication Services 1.3
- -------------------------------------------------------------------------
Utilities 0.6
- -------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities 0.6
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. CAPITAL DEVELOPMENT FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $135,640,246) $147,178,174
- --------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 27,952
================================================================================
Total investments, at value (Cost $135,668,198) 147,206,126
================================================================================
Receivables for:
Investments sold 2,488,235
- --------------------------------------------------------------------------------
Fund shares sold 43,888
- --------------------------------------------------------------------------------
Dividends 75,351
- --------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 21,796
================================================================================
Total assets 149,835,396
________________________________________________________________________________
================================================================================
LIABILITIES:
Payables for:
Investments purchased 1,273,327
- --------------------------------------------------------------------------------
Fund shares reacquired 298,768
- --------------------------------------------------------------------------------
Accrued fees to affiliates 148,818
- --------------------------------------------------------------------------------
Accrued other operating expenses 37,932
- --------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 41,224
================================================================================
Total liabilities 1,800,069
================================================================================
Net assets applicable to shares outstanding $148,035,327
________________________________________________________________________________
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $224,289,188
- --------------------------------------------------------------------------------
Undistributed net investment income (loss) (421,014)
- --------------------------------------------------------------------------------
Undistributed net realized gain (loss) (87,370,737)
- --------------------------------------------------------------------------------
Unrealized appreciation 11,537,890
================================================================================
$148,035,327
________________________________________________________________________________
================================================================================
NET ASSETS:
Series I $ 66,205,436
________________________________________________________________________________
================================================================================
Series II $ 81,829,891
________________________________________________________________________________
================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 7,420,000
________________________________________________________________________________
================================================================================
Series II 9,411,755
________________________________________________________________________________
================================================================================
Series I:
Net asset value per share $ 8.92
________________________________________________________________________________
================================================================================
Series II:
Net asset value per share $ 8.69
________________________________________________________________________________
================================================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding
taxes of $14,396) $ 507,206
- ------------------------------------------------------
Dividends from affiliated money market
funds 20,502
======================================================
Total investment income 527,708
======================================================
EXPENSES:
Advisory fees 542,473
- ------------------------------------------------------
Administrative services fees 202,370
- ------------------------------------------------------
Custodian fees 7,029
- ------------------------------------------------------
Distribution fees -- Series II 98,704
- ------------------------------------------------------
Transfer agent fees 14,586
- ------------------------------------------------------
Trustees' and officers' fees and
benefits 12,635
- ------------------------------------------------------
Other 27,179
======================================================
Total expenses 904,976
======================================================
Less: Fees waived (7,428)
======================================================
Net expenses 897,548
======================================================
Net investment income (loss) (369,840)
======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (includes net
gains (losses) from securities
sold to affiliates of $(221,066)) (23,832,718)
- ------------------------------------------------------
Foreign currencies (42,126)
======================================================
(23,874,844)
======================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 41,446,327
- ------------------------------------------------------
Foreign currencies (84)
======================================================
41,446,243
======================================================
Net realized and unrealized gain 17,571,399
======================================================
Net increase in net assets resulting
from operations $ 17,201,559
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. CAPITAL DEVELOPMENT FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- --------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (369,840) $ (1,261,640)
- --------------------------------------------------------------------------------------------------------
Net realized gain (loss) (23,874,844) (60,191,471)
- --------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 41,446,243 (79,981,636)
========================================================================================================
Net increase (decrease) in net assets resulting from operations 17,201,559 (141,434,747)
========================================================================================================
Distributions to shareholders from net realized gains:
Series I -- (12,491,698)
- --------------------------------------------------------------------------------------------------------
Series II -- (16,383,949)
========================================================================================================
Total distributions from net realized gains -- (28,875,647)
========================================================================================================
Share transactions-net:
Series I (3,748,963) (13,664,818)
- --------------------------------------------------------------------------------------------------------
Series II (7,876,243) (14,156,607)
========================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (11,625,206) (27,821,425)
========================================================================================================
Net increase (decrease) in net assets 5,576,353 (198,131,819)
________________________________________________________________________________________________________
========================================================================================================
NET ASSETS:
Beginning of period 142,458,974 340,590,793
========================================================================================================
End of period (includes undistributed net investment income (loss) of
$(421,014) and $(51,174), respectively) $148,035,327 $ 142,458,974
________________________________________________________________________________________________________
========================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. CAPITAL DEVELOPMENT FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Capital Development Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
AIM V.I. CAPITAL DEVELOPMENT FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
Reported net realized foreign currency gains or losses arise from (i)
sales of foreign currencies, (ii) currency gains or losses realized
between the trade and settlement dates on securities transactions, and
(iii) the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency gains and losses arise from changes in the fair values of
assets and liabilities, other than investments in securities at fiscal
period end, resulting from changes in exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
J. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed,
AIM V.I. CAPITAL DEVELOPMENT FUND
realized gains (losses) are recorded. Realized and unrealized gains
(losses) on the contracts are included in the Statement of Operations. The
maximum risks associated with foreign currency contracts include failure
of the counterparty to meet the terms of the contract and the value of the
foreign currency changing unfavorably. These risks may be in excess of the
amounts reflected in the Statement of Assets and Liabilities.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
First $350 million 0.75%
- -------------------------------------------------------------------
Over $350 million 0.625%
___________________________________________________________________
===================================================================
</Table>
Through at least April 30, 2010, the Advisor has contractually agreed to waive
advisory fees to the extent necessary so that the advisory fees payable by the
Fund (based on the Fund's average daily net assets) do not exceed the annual
rate of:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
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%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 1.30% and Series
II shares to 1.45% of average daily net assets, through at least April 30, 2010.
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 operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, 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. These credits are used to pay certain expenses incurred by the Fund. The
Advisor did not waive fees and/or reimburse expenses during the period under
this expense limitation.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash in such affiliated money market
funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$7,428.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $24,795 for accounting and fund
administrative services and reimbursed $177,575 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
AIM V.I. CAPITAL DEVELOPMENT FUND
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
======================================================================================================================
Equity Securities $146,019,797 $871,827 $314,502 $147,206,126
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
NOTE 4--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS
The Fund is permitted to purchase or sell securities from or to certain other
AIM Funds under specified conditions outlined in procedures adopted by the Board
of Trustees of the Trust. The procedures have been designed to ensure that any
purchase or sale of securities by the Fund from or to another fund or portfolio
that is or could be considered an affiliate by virtue of having a common
investment advisor (or affiliated investment advisors), common Trustees and/or
common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined
under the procedures, each transaction is effected at the current market price.
Pursuant to these procedures, for the six months ended June 30, 2009, the Fund
engaged in securities purchases of $742,152 and securities sales of $1,242,501,
which resulted in net realized gains (losses) of $(221,066).
NOTE 5--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $1,604
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 6--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the custodian bank
can be compensated by earning the additional interest; or (ii) compensate by
paying the custodian bank at a rate agreed upon by the custodian bank and
Invesco Aim, not to exceed the contractually agreed upon rate.
AIM V.I. CAPITAL DEVELOPMENT FUND
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
December 31, 2016 $50,024,391
_______________________________________________________________________________________________
===============================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $97,536,074 and
$103,712,607, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- -----------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $18,607,316
- -----------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (8,747,809)
===============================================================================================
Net unrealized appreciation of investment securities $ 9,859,507
_______________________________________________________________________________________________
===============================================================================================
Cost of investments for tax purposes is $137,346,619.
</Table>
NOTE 9--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- ------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 1,720,115 $ 13,652,058 785,197 $ 11,424,370
- ------------------------------------------------------------------------------------------------------------------------
Series II 994,745 7,840,601 1,469,827 22,038,946
========================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 1,624,408 12,491,698
- ------------------------------------------------------------------------------------------------------------------------
Series II -- -- 2,184,526 16,383,949
========================================================================================================================
Reacquired:
Series I (2,111,902) (17,401,021) (2,542,695) (37,580,886)
- ------------------------------------------------------------------------------------------------------------------------
Series II (1,979,082) (15,716,844) (3,554,464) (52,579,502)
========================================================================================================================
Net increase (decrease) in share activity (1,376,124) $(11,625,206) (33,201) $(27,821,425)
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 69% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
AIM V.I. CAPITAL DEVELOPMENT FUND
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
(LOSSES)
NET ASSET NET ON SECURITIES DISTRIBUTIONS
VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET NET ASSET NET ASSETS,
BEGINNING INCOME REALIZED AND INVESTMENT REALIZED VALUE, END TOTAL END OF PERIOD
OF PERIOD (LOSS) UNREALIZED) OPERATIONS GAINS OF PERIOD RETURN(a) (000S OMITTED)
- ---------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $ 7.93 $(0.02)(c) $ 1.01 $ 0.99 $ -- $ 8.92 12.48% $ 66,205
Year ended 12/31/08 18.85 (0.05)(c) (8.88) (8.93) (1.99) 7.93 (47.03) 61,986
Year ended 12/31/07 18.43 (0.10)(c) 2.14 2.04 (1.62) 18.85 10.84 149,776
Year ended 12/31/06 16.09 (0.07) 2.73 2.66 (0.32) 18.43 16.52 148,668
Year ended 12/31/05 14.68 (0.04) 1.45 1.41 -- 16.09 9.61 117,674
Year ended 12/31/04 12.71 (0.03)(c) 2.00 1.97 -- 14.68 15.50 112,028
- ---------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 7.74 (0.02)(c) 0.97 0.95 -- 8.69 12.27 81,830
Year ended 12/31/08 18.53 (0.09)(c) (8.71) (8.80) (1.99) 7.74 (47.13) 80,473
Year ended 12/31/07 18.19 (0.15)(c) 2.11 1.96 (1.62) 18.53 10.55 190,815
Year ended 12/31/06 15.92 (0.10) 2.69 2.59 (0.32) 18.19 16.26 128,990
Year ended 12/31/05 14.57 (0.07) 1.42 1.35 -- 15.92 9.27 83,388
Year ended 12/31/04 12.64 (0.06)(c) 1.99 1.93 -- 14.57 15.27 71,339
_________________________________________________________________________________________________________________________________
=================================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS)
AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
ABSORBED ABSORBED NET ASSETS TURNOVER(b)
- ----------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 1.10%(d) 1.11%(d) (0.37)%(d) 70%
Year ended 12/31/08 1.10 1.11 (0.38) 99
Year ended 12/31/07 1.05 1.06 (0.47) 109
Year ended 12/31/06 1.08 1.09 (0.48) 119
Year ended 12/31/05 1.09 1.09 (0.22) 125
Year ended 12/31/04 1.10 1.10 (0.21) 93
- ----------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 1.35(d) 1.36(d) (0.62)(d) 70
Year ended 12/31/08 1.35 1.36 (0.63) 99
Year ended 12/31/07 1.30 1.31 (0.72) 109
Year ended 12/31/06 1.33 1.34 (0.73) 119
Year ended 12/31/05 1.34 1.34 (0.47) 125
Year ended 12/31/04 1.35 1.35 (0.46) 93
________________________________________________________________________________________
========================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Total returns are not annualized for periods less than one
year, if applicable and do not reflect charges assessed in connection with
a variable product, which if included would reduce total returns.
(b) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(c) Calculated using average shares outstanding.
(d) Ratios are annualized and based on average daily net assets (000's omitted)
of $66,241 and $79,618 for Series I and Series II, respectively.
AIM V.I. CAPITAL DEVELOPMENT FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,124.80 $5.80 $1,019.34 $5.51 1.10%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,122.70 7.11 1,018.10 6.76 1.35
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. CAPITAL DEVELOPMENT FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM Variable Insurance Funds is required
under the Investment Company Act of 1940 to approve annually the renewal of the
AIM V.I. Capital Development Fund (the Fund) investment advisory agreement with
Invesco Aim Advisors, Inc. (Invesco Aim) and the Master Intergroup Sub-Advisory
Contract for Mutual Funds (the sub-advisory contracts) with Invesco Asset
Management Deutschland GmbH, Invesco Asset Management Limited, 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 Ltd.
(collectively, the Affiliated Sub-Advisers). During contract renewal meetings
held on June 16-17, 2009, the Board as a whole, and the disinterested or
"independent" Trustees voting separately, approved the continuance of the Fund's
investment advisory agreement and the sub-advisory contracts for another year,
effective July 1, 2009. In doing so, the Board determined that the Fund's
investment advisory agreement and the sub-advisory contracts are in the best
interests of the Fund and its shareholders and that the compensation to Invesco
Aim and the Affiliated Sub-Advisers under the Fund's investment advisory
agreement and sub-advisory contracts is fair and reasonable.
THE BOARD'S FUND EVALUATION PROCESS
The Board's Investments Committee has established three Sub-Committees that are
responsible for overseeing the management of a number of the series portfolios
of the AIM Funds. This SubCommittee structure permits the Trustees to focus on
the performance of the AIM Funds that have been assigned to them. The
Sub-Committees meet throughout the year to review the performance of their
assigned funds, and the Sub-Committees review monthly and quarterly comparative
performance information and periodic asset flow data for their assigned funds.
These materials are prepared under the direction and supervision of the
independent Senior Officer, an officer of the AIM Funds who reports directly to
the independent Trustees. Over the course of each year, the Sub-Committees meet
with portfolio managers for their assigned funds and other members of management
and review with these individuals the performance, investment objective(s),
policies, strategies and limitations of these funds.
In addition to their meetings throughout the year, the Sub-Committees meet
at designated contract renewal meetings each year to conduct an in-depth review
of the performance, fees, expenses and other matters related to their assigned
funds. During the contract renewal process, the Trustees receive comparative
performance and fee data regarding the AIM Funds prepared by an independent
company, Lipper, Inc. (Lipper), under the direction and supervision of the
Senior Officer who also prepares a separate analysis of this information for the
Trustees. Each Sub-Committee then makes recommendations to the Investments
Committee regarding the fees and expenses of their assigned funds. The
Investments Committee considers each Sub-Committee's recommendations and makes
its own recommendations regarding the fees and expenses of the AIM Funds to the
full Board. The Investments Committee also considers each Sub-Committee's
recommendations in making its annual recommendation to the Board whether to
approve the continuance of each AIM Fund's investment advisory agreement and
sub-advisory contracts for another year.
The independent Trustees met separately during their evaluation of the
Fund's investment advisory agreement and sub-advisory contracts with independent
legal counsel. The independent Trustees were also assisted in their annual
evaluation of the Fund's investment advisory agreement by the Senior Officer.
One responsibility of the Senior Officer is to manage the process by which the
AIM Funds' proposed management fees are negotiated during the annual contract
renewal process to ensure that they are negotiated in a manner that is at arms'
length and reasonable. Accordingly, the Senior Officer must either supervise a
competitive bidding process or prepare an independent written evaluation. The
Senior Officer recommended that an independent written evaluation be provided
and, at the direction of the Board, prepared an independent written evaluation.
During the annual contract renewal process, the Board considered the
factors discussed below in evaluating the fairness and reasonableness of the
Fund's investment advisory agreement and sub-advisory contracts. The Board
considered all of the information provided to them, including information
provided at their meetings throughout the year as part of their ongoing
oversight of the Fund, and did not identify any particular factor that was
controlling. Each Trustee may have evaluated the information provided
differently from another Trustee and attributed different weight to the various
factors. The Trustees recognized that the advisory arrangements and resulting
advisory fees for the Fund and the other AIM Funds are the result of years of
review and negotiation between the Trustees and Invesco Aim, that the Trustees
may focus to a greater extent on certain aspects of these arrangements in some
years than in others, and that the Trustees' deliberations and conclusions in a
particular year may be based in part on their deliberations and conclusions
regarding these same arrangements throughout the year and in prior years.
The discussion below serves as a summary of the Senior Officer's
independent written evaluation with respect to the Fund's investment advisory
agreement as well as a discussion of the material factors and related
conclusions that formed the basis for the Board's approval of the Fund's
investment advisory agreement and sub-advisory contracts. Unless otherwise
stated, information set forth below is as of June 17, 2009, and does not reflect
any changes that may have occurred since that date, including but not limited to
changes to the Fund's performance, advisory fees, expense limitations and/or fee
waivers.
FACTORS AND CONCLUSIONS AND SUMMARY OF INDEPENDENT WRITTEN FEE EVALUATION
A. Nature, Extent and Quality of Services Provided by Invesco Aim
The Board reviewed the advisory services provided to the Fund by Invesco Aim
under the Fund's investment advisory agreement, the performance of Invesco Aim
in providing these services, and the credentials and experience of the officers
and employees of Invesco Aim who provide these services. The Board's review of
the qualifications of Invesco Aim to provide these services included the Board's
consideration of Invesco Aim's portfolio and product review process, various
back office support functions provided by Invesco Aim and its affiliates, and
Invesco Aim's equity and fixed income trading operations. The Board concluded
that the nature, extent and quality of the advisory services provided to the
Fund by Invesco Aim are appropriate and that Invesco Aim currently is providing
satisfactory advisory services in accordance with the terms of the Fund's
investment advisory agreement. In addition, based on their
AIM V.I. CAPITAL DEVELOPMENT FUND continued
ongoing meetings throughout the year with the Fund's portfolio manager or
managers, the Board concluded that these individuals are competent and able to
continue to carry out their responsibilities under the Fund's investment
advisory agreement.
In determining whether to continue the Fund's investment advisory
agreement, the Board considered the prior relationship between Invesco Aim and
the Fund, as well as the Board's knowledge of Invesco Aim's operations, and
concluded that it is beneficial to maintain the current relationship, in part,
because of such knowledge. The Board also considered the steps that Invesco Aim
and its affiliates continue to take to improve the quality and efficiency of the
services they provide to the AIM Funds in the areas of investment performance,
product line diversification, distribution, fund operations, shareholder
services and compliance. The Board concluded that the quality and efficiency of
the services Invesco Aim and its affiliates provide to the AIM Funds in each of
these areas support the Board's approval of the continuance of the Fund's
investment advisory agreement.
B. Nature, Extent and Quality of Services Provided by Affiliated
Sub-Advisers
The Board reviewed the services provided by the Affiliated Sub-Advisers under
the sub-advisory contracts and the credentials and experience of the officers
and employees of the Affiliated Sub-Advisers who provide these services. The
Board concluded that the nature, extent and quality of the services provided by
the Affiliated Sub-Advisers are appropriate. The Board noted that the Affiliated
Sub-Advisers, which have offices and personnel that are geographically dispersed
in financial centers around the world, can provide research and other
information and make recommendations on the markets and economies of various
countries and securities of companies located in such countries or on various
types of investments and investment techniques. The Board concluded that the
sub-advisory contracts benefit the Fund and its shareholders by permitting
Invesco Aim to utilize the additional resources and talent of the Affiliated
Sub-Advisers in managing the Fund.
C. Fund Performance
The Board considered fund performance as a relevant factor in considering
whether to approve the investment advisory agreement. The Board did not view
fund performance as a relevant factor in considering whether to approve the
sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently
manages assets of the Fund.
The Board compared the Fund's performance during the past one, three and
five calendar years to the performance of all funds in the Lipper performance
universe that are not managed by Invesco Aim or an Affiliated Sub-Adviser and
against the Lipper VA Underlying Funds - Mid-Cap Growth Index. The Board noted
that the Fund's performance was in the fourth quintile of its performance
universe for the one and three year periods and the third quintile for the five
year period (the first quintile being the best performing funds and the fifth
quintile being the worst performing funds). The Board noted that the Fund's
performance was below the performance of the Index for the one, three and five
year periods. The Board noted that Invesco Aim indicated that much of the
underperformance was concentrated in the second half of 2007 as a result of
financial sector stock selection. Although the independent written evaluation of
the Fund's Senior Officer only considered Fund performance through the most
recent calendar year, the Board also reviewed more recent Fund performance and
this review did not change their conclusions. The Board noted that, in response
to the Board's focus on fund performance, Invesco Aim has taken a number of
actions intended to improve the investment process for the funds.
D. Advisory and Sub-Advisory Fees and Fee Waivers
The Board compared the Fund's contractual advisory fee rate to the contractual
advisory fee rates of funds in the Fund's Lipper expense group that are not
managed by Invesco Aim or an Affiliated Sub-Adviser, at a common asset level.
The Board noted that the Fund's contractual advisory fee rate was below the
median contractual advisory fee rate of funds in its expense group. The Board
also reviewed the methodology used by Lipper in determining contractual fee
rates, which includes using audited financial data from the most recent annual
report of each fund in the expense group that was publicly available as of the
end of the past calendar year. The Board noted that some comparative data was at
least one year old and that other data did not reflect the market downturn that
occurred in the fourth quarter of 2008.
The Board also compared the Fund's effective fee rate (the advisory fee
after any advisory fee waivers and before any expense limitations/waivers) to
the advisory fee rates of other domestic clients of Invesco Aim and its
affiliates with investment strategies comparable to those of the Fund, including
one mutual fund advised by Invesco. The Board noted that the Fund's rate was
above the effective fee rate for the other mutual fund.
Additionally, the Board compared the Fund's effective fee rate to the
effective fee rate paid by a separately managed account/wrap account advised by
an Invesco Aim affiliate. The Board noted that the Fund's rate was above the
rate for the separately managed account/wrap account. The Board considered that
management of the separately managed account/wrap account by the Invesco Aim
affiliate involves different levels of services and different operational and
regulatory requirements than Invesco Aim's management of the Fund. The Board
concluded that these differences are appropriately reflected in the fee
structure for the Fund.
The Board noted that Invesco Aim contractually agreed at last year's June
meeting to waive advisory fees of the Fund through at least April 30, 2010, and
that this fee waiver includes breakpoints based on net asset levels. The Board
also noted that Invesco Aim has contractually agreed to waive fees and/or limit
expenses of the Fund through at least April 30, 2010 in an amount necessary to
limit total annual operating expenses to a specified percentage of average daily
net assets for each class of the Fund. The Board noted that at the current
expense ratio for the Fund, the expense waiver is not having any impact.
The Board also considered the services provided by the Affiliated
Sub-Advisers pursuant to the sub-advisory contracts and the services provided by
Invesco Aim pursuant to the Fund's advisory agreement, as well as the allocation
of fees between Invesco Aim and the Affiliated Sub-Advisers pursuant to the
sub-advisory contracts. The Board noted that the sub-advisory fees have no
direct effect on the Fund or its shareholders, as they are paid by Invesco Aim
to the Affiliated Sub-Advisers, and that Invesco Aim and the Affiliated
Sub-Advisers are affiliates.
AIM V.I. CAPITAL DEVELOPMENT FUND continued
After taking account of the Fund's contractual advisory fee rate, the
contractual sub-advisory fee rate, the comparative advisory fee information and
the fee waivers/expense limitations discussed above and other relevant factors,
the Board concluded that the Fund's advisory and sub-advisory fees are fair and
reasonable.
E. Economies of Scale and Breakpoints
The Board considered the extent to which there are economies of scale in the
provision of advisory services to the Fund. The Board also considered whether
the Fund benefits from such economies of scale through contractual breakpoints
in the Fund's advisory fee schedule. The Board noted that the Fund's contractual
advisory fee schedule includes one breakpoint, but that due to the Fund's asset
level at the end of the past calendar year, the Fund is not currently benefiting
from the breakpoint. Based on this information, the Board concluded that the
Fund's advisory fees appropriately reflect economies of scale at current asset
levels. The Board also noted that the Fund shares directly in economies of scale
through lower fees charged by third party service providers based on the
combined size of all of the AIM Funds and affiliates.
F. Profitability and Financial Resources
The Board reviewed information from Invesco Aim concerning the costs of the
advisory and other services that Invesco Aim and its affiliates provide to the
Fund and the profitability of Invesco Aim and its affiliates in providing these
services. The Board also reviewed information concerning the financial condition
of Invesco Aim and its affiliates. The Board reviewed with Invesco Aim the
methodology used to prepare the profitability information. The Board considered
the overall profitability of Invesco Ltd., the ultimate parent of Invesco Aim
and the Affiliated Sub-Advisers, and of Invesco Aim, as well as the
profitability of Invesco Aim in connection with managing the Fund. The Board
noted that Invesco Aim continues to operate at a net profit, although the
reduction of assets under management as a result of market movements and the
increase in voluntary fee waivers for affiliated money market funds have reduced
the profitability of Invesco Aim and its affiliates. The Board concluded that
the Fund's fees are fair and reasonable, and that the level of profits realized
by Invesco Aim and its affiliates from providing services to the Fund is not
excessive in light of the nature, quality and extent of the services provided.
The Board considered whether Invesco Aim is financially sound and has the
resources necessary to perform its obligations under the Fund's investment
advisory agreement, and concluded that Invesco Aim has the financial resources
necessary to fulfill these obligations. The Board also considered whether each
Affiliated Sub-Adviser is financially sound and has the resources necessary to
perform its obligations under the sub-advisory contracts, and concluded that
each Affiliated Sub-Adviser has the financial resources necessary to fulfill
these obligations.
G. Collateral Benefits to Invesco Aim and its Affiliates
The Board considered various other benefits received by Invesco Aim and its
affiliates resulting from Invesco Aim's relationship with the Fund, including
the fees received by Invesco Aim and its affiliates for their provision of
administrative, transfer agency and distribution services to the Fund. The Board
considered the performance of Invesco Aim and its affiliates in providing these
services and the organizational structure employed by Invesco Aim and its
affiliates to provide these services. The Board also considered that these
services are provided to the Fund pursuant to written contracts that are
reviewed and approved on an annual basis by the Board. The Board concluded that
Invesco Aim and its affiliates are providing these services in a satisfactory
manner and in accordance with the terms of their contracts, and are qualified to
continue to provide these services to the Fund.
The Board considered the benefits realized by Invesco Aim and the
Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed
through "soft dollar" arrangements. The Board noted that soft dollar
arrangements shift the payment obligation for research and execution services
from Invesco Aim and the Affiliated Sub-Advisers to the funds and therefore may
reduce Invesco Aim's and the Affiliated Sub-Advisers' expenses. The Board
concluded that Invesco Aim's and the Affiliated Sub-Advisers' soft dollar
arrangements are appropriate. The Board also concluded that, based on their
review and representations made by the Chief Compliance Officer of Invesco Aim,
these arrangements are consistent with regulatory requirements.
The Board considered the fact that the Fund's uninvested cash and cash
collateral from any securities lending arrangements may be invested in money
market funds advised by Invesco Aim pursuant to procedures approved by the
Board. The Board noted that Invesco Aim will receive advisory fees from these
affiliated money market funds attributable to such investments, although Invesco
Aim has contractually agreed to waive through at least June 30, 2010, the
advisory fees payable by the Fund in an amount equal to 100% of the net advisory
fee Invesco Aim receives from the affiliated money market funds with respect to
the Fund's investment in the affiliated money market funds of uninvested cash,
but not cash collateral. The Board concluded that the Fund's investment of
uninvested cash and cash collateral from any securities lending arrangements in
the affiliated money market funds is in the best interests of the Fund and its
shareholders.
AIM V.I. CAPITAL DEVELOPMENT FUND
[INVESCO AIM LOGO] AIM V.I. CORE EQUITY FUND
--SERVICE MARK-- Semiannual Report to Shareholders o June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund
files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the SEC
Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by
calling 202 942 8090 or 800 732 0330, or by electronic request at the following E-mail address: publicinfo@sec.gov. The SEC file
numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent portfolio holdings, as filed on Form N-Q, have also been
made available to insurance companies issuing variable annuity contracts and variable life insurance policies ("variable products")
that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, from our Client Services department at 800 410 4246 or on the Invesco Aim Web site,
invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site,
sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2009, is
available at our Web site. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting
Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. will be merged into
Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc. Additional information
will be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN
MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
SERIES I SHARES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer Inception (5/2/94) 6.43%
charges. If variable product issuer charges were included, returns would be lower. 10 Years -1.38
5 Years 0.62
Series I Shares 6.08% 1 Year -20.61
Series II Shares 5.91
S&P 500 Index(Triangle) (Broad Market Index) 3.19 SERIES II SHARES
Russell 1000 Index(Triangle) (Style-Specific Index) 4.32 10 Years -1.62%
Lipper VUF Large-Cap Core Funds Index(Triangle) (Peer Group Index) 5.48 5 Years 0.36
1 Year -20.83
(Triangle) Lipper Inc. ==========================================
The S&P 500 --REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index ARE NOT INTENDED TO REFLECT ACTUAL
covering all major areas of the U.S. economy. It is not the 500 largest companies, but VARIABLE PRODUCT VALUES. THEY DO NOT
rather the most widely held 500 companies chosen with respect to market size, liquidity REFLECT SALES CHARGES, EXPENSES AND FEES
and their industry. ASSESSED IN CONNECTION WITH A VARIABLE
PRODUCT. SALES CHARGES, EXPENSES AND FEES,
The RUSSELL 1000 --REGISTERED TRADEMARK-- INDEX is comprised of 1,000 of the largest WHICH ARE DETERMINED BY THE VARIABLE
capitalized U.S. domiciled companies whose common stock is traded in the United States. PRODUCT ISSUERS, WILL VARY AND WILL LOWER
The Russell 1000 Index is a trademark/service mark of the Frank Russell Company. THE TOTAL RETURN.
RUSSELL --REGISTERED TRADEMARK-- is a trademark of the Frank Russell Company.
THE MOST RECENT MONTH-END PERFORMANCE
The LIPPER VUF LARGE-CAP CORE FUNDS INDEX is an equally weighted representation of DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
the largest variable insurance underlying funds in the Lipper Large-Cap Core Funds PRODUCT CHARGES, IS AVAILABLE ON THIS
category. These funds typically have an average price-to-earnings ratio, price-to-book INVESCO AIM AUTOMATED INFORMATION LINE,
ratio, and three-year sales-per-share growth value, compared to the S&P 500 Index. 866 702 4402. AS MENTIONED ABOVE, FOR THE
MOST RECENT MONTH-END PERFORMANCE
The Fund is not managed to track the performance of any particular index, including INCLUDING VARIABLE PRODUCT CHARGES, PLEASE
the indexes defined here, and consequently, the performance of the Fund may deviate CONTACT YOUR VARIABLE PRODUCT ISSUER OR
significantly from the performance of the indexes. FINANCIAL ADVISOR.
A direct investment cannot be made in an index. Unless otherwise indicated, index (1) Total annual operating expenses less
results include reinvested dividends, and they do not reflect sales charges. any contractual fee waivers and/or
Performance of the peer group reflects fund expenses; performance of a market index expense reimbursements by the advisor
does not. in effect through at least April 30,
======================================================================================= 2010. See current prospectus for more
information.
SERIES II SHARES' INCEPTION DATE IS NET ASSET VALUE. INVESTMENT RETURN AND
OCTOBER 24, 2001. RETURNS SINCE THAT DATE PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU (2) Total annual operating expenses less
ARE HISTORICAL. ALL OTHER RETURNS ARE THE MAY HAVE A GAIN OR LOSS WHEN YOU SELL contractual advisory fee waivers by
BLENDED RETURNS OF THE HISTORICAL SHARES. the advisor in effect through at least
PERFORMANCE OF THE FUND'S SERIES II SHARES June 30, 2010. See current prospectus
SINCE THEIR INCEPTION AND THE RESTATED THE NET ANNUAL FUND OPERATING EXPENSE for more information.
HISTORICAL PERFORMANCE OF SERIES I SHARES RATIO SET FORTH IN THE MOST RECENT FUND
(FOR PERIODS PRIOR TO INCEPTION OF THE PROSPECTUS AS OF THE DATE OF THIS REPORT
SERIES II SHARES) ADJUSTED TO REFLECT THE FOR SERIES I AND SERIES II SHARES WAS
RULE 12B-1 FEES APPLICABLE TO THE SERIES 0.90% AND 1.15%, RESPECTIVELY.(1, 2) THE
II SHARES. THE INCEPTION DATE OF SERIES I TOTAL ANNUAL FUND OPERATING EXPENSE RATIO
SHARES IS MAY 2, 1994. SET FORTH IN THE MOST RECENT FUND
PROSPECTUS AS OF THE DATE OF THIS REPORT
THE PERFORMANCE OF THE FUND'S SERIES I FOR SERIES I AND SERIES II SHARES WAS
AND SERIES II SHARE CLASSES WILL DIFFER 0.91% AND 1.16%, RESPECTIVELY. THE EXPENSE
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES. RATIOS PRESENTED ABOVE MAY VARY FROM THE
EXPENSE RATIOS PRESENTED IN OTHER SECTIONS
THE PERFORMANCE DATA QUOTED REPRESENT OF THIS REPORT THAT ARE BASED ON EXPENSES
PAST PERFORMANCE AND CANNOT GUARANTEE INCURRED DURING THE PERIOD COVERED BY THIS
COMPARABLE FUTURE RESULTS; CURRENT REPORT.
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE
CONTACT YOUR VARIABLE PRODUCT ISSUER OR AIM V.I. CORE EQUITY FUND, A SERIES
FINANCIAL ADVISOR FOR THE MOST RECENT PORTFOLIO OF AIM VARIABLE INSURANCE FUNDS,
MONTH-END VARIABLE PRODUCT PERFORMANCE. IS CURRENTLY OFFERED THROUGH INSURANCE
PERFORMANCE FIGURES REFLECT FUND EXPENSES, COMPANIES ISSUING VARIABLE PRODUCTS. YOU
REINVESTED DISTRIBUTIONS AND CHANGES IN CANNOT PURCHASE SHARES OF THE FUND
DIRECTLY. PERFORMANCE FIGURES GIVEN
REPRESENT THE FUND AND
AIM V.I. CORE EQUITY FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-88.41%
AEROSPACE & DEFENSE-3.19%
Lockheed Martin Corp. 129,229 $ 10,422,319
- ---------------------------------------------------------------------------------
Northrop Grumman Corp. 291,219 13,302,884
- ---------------------------------------------------------------------------------
United Technologies Corp. 360,019 18,706,587
=================================================================================
42,431,790
=================================================================================
AIR FREIGHT & LOGISTICS-1.17%
United Parcel Service, Inc.-Class B 309,898 15,491,801
=================================================================================
ASSET MANAGEMENT & CUSTODY BANKS-1.46%
Legg Mason, Inc. 796,811 19,426,252
=================================================================================
BIOTECHNOLOGY-0.58%
Amgen Inc.(b) 146,308 7,745,545
=================================================================================
CABLE & SATELLITE-2.44%
Comcast Corp.-Class A 2,238,371 32,433,996
=================================================================================
COMMUNICATIONS EQUIPMENT-6.16%
Cisco Systems, Inc.(b) 1,196,295 22,298,939
- ---------------------------------------------------------------------------------
Motorola, Inc.(b) 3,817,321 25,308,838
- ---------------------------------------------------------------------------------
Nokia Oyj-ADR (Finland) 2,348,568 34,242,121
=================================================================================
81,849,898
=================================================================================
COMPUTER HARDWARE-1.17%
Fujitsu Ltd. (Japan) 2,865,000 15,523,068
=================================================================================
COMPUTER STORAGE & PERIPHERALS-1.05%
EMC Corp.(b) 1,070,212 14,019,777
=================================================================================
CONSUMER FINANCE-1.95%
American Express Co. 1,113,030 25,866,817
=================================================================================
DATA PROCESSING & OUTSOURCED SERVICES-1.80%
Automatic Data Processing, Inc. 677,181 23,999,295
=================================================================================
DIVERSIFIED BANKS-1.79%
U.S. Bancorp 664,618 11,909,954
- ---------------------------------------------------------------------------------
Wells Fargo & Co. 490,119 11,890,287
=================================================================================
23,800,241
=================================================================================
DIVERSIFIED METALS & MINING-0.44%
Freeport-McMoRan Copper & Gold, Inc.(b) 117,000 5,862,870
=================================================================================
DRUG RETAIL-1.49%
Walgreen Co. 671,652 19,746,569
=================================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.88%
Agilent Technologies, Inc.(b) 1,229,534 24,971,836
=================================================================================
ELECTRONIC MANUFACTURING SERVICES-1.23%
Tyco Electronics Ltd. (Switzerland) 877,445 16,311,703
=================================================================================
ENVIRONMENTAL & FACILITIES SERVICES-1.44%
Waste Management, Inc. 680,426 19,160,796
=================================================================================
FOOD RETAIL-1.36%
Kroger Co. (The) 818,395 18,045,610
=================================================================================
HEALTH CARE EQUIPMENT-4.41%
Baxter International Inc. 189,679 10,045,400
- ---------------------------------------------------------------------------------
Covidien PLC (Ireland) 507,417 18,997,693
- ---------------------------------------------------------------------------------
Medtronic, Inc. 848,388 29,600,257
=================================================================================
58,643,350
=================================================================================
HEALTH CARE SUPPLIES-1.73%
Alcon, Inc. 197,578 22,942,757
=================================================================================
HYPERMARKETS & SUPER CENTERS-1.62%
Wal-Mart Stores, Inc. 445,064 21,558,900
=================================================================================
INDUSTRIAL CONGLOMERATES-5.53%
3M Co. 533,061 32,036,966
- ---------------------------------------------------------------------------------
Koninklijke (Royal) Philips Electronics N.V.
(Netherlands) 716,523 13,244,754
- ---------------------------------------------------------------------------------
Tyco International Ltd. (Switzerland) 1,085,605 28,204,018
=================================================================================
73,485,738
=================================================================================
INDUSTRIAL GASES-1.13%
Air Products and Chemicals, Inc. 232,985 15,048,501
=================================================================================
INDUSTRIAL MACHINERY-1.23%
Danaher Corp. 264,037 16,301,644
=================================================================================
INSURANCE BROKERS-0.85%
Marsh & McLennan Cos., Inc. 563,201 11,337,236
=================================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.81%
AT&T Inc. 435,927 10,828,427
=================================================================================
LIFE SCIENCES TOOLS & SERVICES-1.35%
Thermo Fisher Scientific, Inc.(b) 440,214 17,947,525
=================================================================================
MANAGED HEALTH CARE-1.47%
WellPoint Inc.(b) 385,000 19,592,650
=================================================================================
OFFICE ELECTRONICS-0.85%
Xerox Corp. 1,734,243 11,237,895
=================================================================================
OIL & GAS EQUIPMENT & SERVICES-3.04%
Baker Hughes Inc. 366,469 13,354,130
- ---------------------------------------------------------------------------------
BJ Services Co. 1,432,237 19,521,390
- ---------------------------------------------------------------------------------
Tenaris S.A.-ADR (Argentina) 276,838 7,485,700
=================================================================================
40,361,220
=================================================================================
OIL & GAS EXPLORATION & PRODUCTION-3.99%
Apache Corp. 192,048 13,856,263
- ---------------------------------------------------------------------------------
Chesapeake Energy Corp. 374,108 7,418,562
- ---------------------------------------------------------------------------------
EOG Resources, Inc. 212,415 14,427,227
- ---------------------------------------------------------------------------------
XTO Energy, Inc. 456,080 17,394,891
=================================================================================
53,096,943
=================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. CORE EQUITY FUND
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------------
OIL & GAS STORAGE & TRANSPORTATION-0.90%
Williams Cos., Inc. (The) 766,925 $ 11,971,699
=================================================================================
PACKAGED FOODS & MEATS-2.37%
Cadbury PLC (United Kingdom) 3,694,698 31,555,745
=================================================================================
PERSONAL PRODUCTS-1.06%
Avon Products, Inc. 547,806 14,122,439
=================================================================================
PHARMACEUTICALS-8.63%
Allergan, Inc. 404,144 19,229,171
- ---------------------------------------------------------------------------------
Johnson & Johnson 209,632 11,907,098
- ---------------------------------------------------------------------------------
Pfizer Inc. 412,884 6,193,260
- ---------------------------------------------------------------------------------
Roche Holding AG (Switzerland) 139,840 19,006,557
- ---------------------------------------------------------------------------------
Schering-Plough Corp. 736,971 18,512,711
- ---------------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR (Israel) 429,760 21,204,358
- ---------------------------------------------------------------------------------
Wyeth 411,284 18,668,181
=================================================================================
114,721,336
=================================================================================
PROPERTY & CASUALTY INSURANCE-5.03%
Berkshire Hathaway Inc.-Class A(b) 323 29,070,000
- ---------------------------------------------------------------------------------
Progressive Corp. (The)(b) 2,502,361 37,810,675
=================================================================================
66,880,675
=================================================================================
RAILROADS-0.93%
Union Pacific Corp. 237,019 12,339,209
=================================================================================
REGIONAL BANKS-0.91%
PNC Financial Services Group, Inc. 311,465 12,087,957
=================================================================================
SEMICONDUCTORS-2.53%
Intel Corp. 1,012,094 16,750,155
- ---------------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co. Ltd.
(Taiwan) 10,171,000 16,895,421
=================================================================================
33,645,576
=================================================================================
SYSTEMS SOFTWARE-5.93%
Microsoft Corp. 1,380,354 32,811,015
- ---------------------------------------------------------------------------------
Symantec Corp.(b) 2,956,595 46,004,618
=================================================================================
78,815,633
=================================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.51%
Vodafone Group PLC (United Kingdom) 10,417,518 20,133,116
- ---------------------------------------------------------------------------------
Total Common Stocks & Other Equity Interests
(Cost $1,356,622,124) 1,175,344,035
=================================================================================
PREFERRED STOCKS-0.58%
HOUSEHOLD PRODUCTS-0.58%
Henkel AG & Co. KGaA (Germany)-Pfd. (Cost
$13,346,361) 247,757 7,738,299
=================================================================================
MONEY MARKET FUNDS-11.04%
Liquid Assets Portfolio-Institutional Class(c) 73,385,637 73,385,637
- ---------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(c) 73,385,637 73,385,637
=================================================================================
Total Money Market Funds (Cost $146,771,274) 146,771,274
=================================================================================
TOTAL INVESTMENTS-100.03% (Cost $1,516,739,759) 1,329,853,608
=================================================================================
OTHER ASSETS LESS LIABILITIES-(0.03)% (419,660)
=================================================================================
NET ASSETS-100.00% $1,329,433,948
_________________________________________________________________________________
=================================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
Pfd. - Preferred
</Table>
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) Non-income producing security.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
PORTFOLIO COMPOSITION
By sector, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
Information Technology 22.6%
- -------------------------------------------------------------------------
Health Care 18.2
- -------------------------------------------------------------------------
Industrials 13.5
- -------------------------------------------------------------------------
Financials 12.0
- -------------------------------------------------------------------------
Consumer Staples 8.5
- -------------------------------------------------------------------------
Energy 7.9
- -------------------------------------------------------------------------
Consumer Discretionary 2.4
- -------------------------------------------------------------------------
Telecommunication Services 2.3
- -------------------------------------------------------------------------
Materials 1.6
- -------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities 11.0
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. CORE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $1,369,968,485) $1,183,082,334
- ----------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 146,771,274
==================================================================================
Total investments, at value (Cost $1,516,739,759) 1,329,853,608
==================================================================================
Foreign currencies, at value (Cost $4,691,222) 4,679,503
- ----------------------------------------------------------------------------------
Receivables for:
Fund shares sold 11,429,423
- ----------------------------------------------------------------------------------
Dividends 2,160,488
- ----------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 100,948
- ----------------------------------------------------------------------------------
Other assets 191
==================================================================================
Total assets 1,348,224,161
__________________________________________________________________________________
==================================================================================
LIABILITIES:
Payables for:
Investments purchased 16,006,199
- ----------------------------------------------------------------------------------
Fund shares reacquired 1,473,308
- ----------------------------------------------------------------------------------
Amount due custodian 25,192
- ----------------------------------------------------------------------------------
Foreign currency contracts outstanding 17,755
- ----------------------------------------------------------------------------------
Accrued fees to affiliates 801,098
- ----------------------------------------------------------------------------------
Accrued other operating expenses 96,161
- ----------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 370,500
==================================================================================
Total liabilities 18,790,213
==================================================================================
Net assets applicable to shares outstanding $1,329,433,948
__________________________________________________________________________________
==================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,875,674,956
- ----------------------------------------------------------------------------------
Undistributed net investment income 32,956,305
- ----------------------------------------------------------------------------------
Undistributed net realized gain (loss) (392,236,192)
- ----------------------------------------------------------------------------------
Unrealized appreciation (depreciation) (186,961,121)
==================================================================================
$1,329,433,948
__________________________________________________________________________________
==================================================================================
NET ASSETS:
Series I $1,304,336,987
__________________________________________________________________________________
==================================================================================
Series II $ 25,096,961
__________________________________________________________________________________
==================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 62,266,495
__________________________________________________________________________________
==================================================================================
Series II 1,207,577
__________________________________________________________________________________
==================================================================================
Series I:
Net asset value per share $ 20.95
__________________________________________________________________________________
==================================================================================
Series II:
Net asset value per share $ 20.78
__________________________________________________________________________________
==================================================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding
taxes of $609,798) $ 13,952,570
- -------------------------------------------------------
Dividends from affiliated money market
funds (includes securities lending
income of $63,888) 623,679
=======================================================
Total investment income 14,576,249
=======================================================
EXPENSES:
Advisory fees 3,811,761
- -------------------------------------------------------
Administrative services fees 1,626,838
- -------------------------------------------------------
Custodian fees 53,042
- -------------------------------------------------------
Distribution fees -- Series II 28,670
- -------------------------------------------------------
Transfer agent fees 39,652
- -------------------------------------------------------
Trustees' and officers' fees and
benefits 33,866
- -------------------------------------------------------
Other 69,349
=======================================================
Total expenses 5,663,178
=======================================================
Less: Fees waived (87,150)
=======================================================
Net expenses 5,576,028
=======================================================
Net investment income 9,000,221
=======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (98,304,369)
- -------------------------------------------------------
Foreign currencies 542,288
- -------------------------------------------------------
Foreign currency contracts (4,451,400)
=======================================================
(102,213,481)
=======================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 158,499,631
- -------------------------------------------------------
Foreign currencies (72,032)
- -------------------------------------------------------
Foreign currency contracts 2,752,696
=======================================================
161,180,295
=======================================================
Net realized and unrealized gain 58,966,814
=======================================================
Net increase in net assets resulting
from operations $ 67,967,035
_______________________________________________________
=======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. CORE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- ----------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 9,000,221 $ 23,768,262
- ----------------------------------------------------------------------------------------------------------
Net realized gain (loss) (102,213,481) (18,360,869)
- ----------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 161,180,295 (629,967,536)
==========================================================================================================
Net increase (decrease) in net assets resulting from operations 67,967,035 (624,560,143)
==========================================================================================================
Distributions to shareholders from net investment income:
Series I -- (37,970,942)
- ----------------------------------------------------------------------------------------------------------
Series II -- (580,118)
==========================================================================================================
Total distributions from net investment income -- (38,551,060)
==========================================================================================================
Share transactions-net:
Series I (92,555,244) (315,589,332)
- ----------------------------------------------------------------------------------------------------------
Series II (24,113) (32,094)
==========================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (92,579,357) (315,621,426)
==========================================================================================================
Net increase (decrease) in net assets (24,612,322) (978,732,629)
==========================================================================================================
NET ASSETS:
Beginning of period 1,354,046,270 2,332,778,899
==========================================================================================================
End of period (includes undistributed net investment income of
$32,956,305 and $23,956,084, respectively) $1,329,433,948 $1,354,046,270
__________________________________________________________________________________________________________
==========================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. CORE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Core Equity Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
AIM V.I. CORE EQUITY FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. SECURITIES LENDING -- The Fund may lend portfolio securities having a
market value up to one-third of the Fund's total assets. Such loans are
secured by collateral equal to no less than the market value of the loaned
securities determined daily by the securities lending provider. Such
collateral will be cash or debt securities issued or guaranteed by the
U.S. Government or any of its sponsored agencies. Cash collateral received
in connection with these loans is invested in short-term money market
instruments or affiliated money market funds and is shown as such on the
Schedule of Investments. It is the Fund's policy to obtain additional
collateral from or return excess collateral to the borrower by the end of
the next business day, following the valuation date of the securities
loaned. Therefore, the value of the collateral held may be temporarily
less than the value of the securities on loan. Lending securities entails
a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase
the collateral accordingly, and the borrower fails to return the
securities. Upon the failure of the borrower to return the securities,
collateral may be liquidated and the securities may be purchased on the
open market to replace the loaned securities. The Fund could experience
delays and costs in gaining access to the collateral. The Fund bears the
risk of any deficiency in the amount of the collateral available for
return to the borrower due to any loss on the collateral invested.
Dividends received on cash collateral investments for securities lending
transactions, which are net of compensation to counterparties, is included
in Dividends from affiliates on the Statement of Operations. The aggregate
value of securities out on loan is shown as a footnote on the Statement of
Assets and Liabilities, if any.
J. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are
AIM V.I. CORE EQUITY FUND
included with the net realized and unrealized gain or loss from
investments in the Statement of Operations. Reported net realized foreign
currency gains or losses arise from (i) sales of foreign currencies, (ii)
currency gains or losses realized between the trade and settlement dates
on securities transactions, and (iii) the difference between the amounts
of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign currency gains and losses arise
from changes in the fair values of assets and liabilities, other than
investments in securities at fiscal period end, resulting from changes in
exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
K. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed, realized gains (losses) are
recorded. Realized and unrealized gains (losses) on the contracts are
included in the Statement of Operations. The maximum risks associated with
foreign currency contracts include failure of the counterparty to meet the
terms of the contract and the value of the foreign currency changing
unfavorably. These risks may be in excess of the amounts reflected in the
Statement of Assets and Liabilities.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
First $250 million 0.65%
- -------------------------------------------------------------------
Over $250 million 0.60%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 1.30% and Series
II shares to 1.45% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, 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. These credits are used to pay certain expenses incurred by the Fund. To
the extent that the annualized expense ratio does not exceed the expense
limitation, the Advisor will retain its ability to be reimbursed for such fee
waivers or reimbursements prior to the end of each fiscal year. The Advisor did
not waive fees and/or reimburse expenses during the period under this expense
limitation.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash (excluding investments of cash
collateral from securities lending) in such affiliated money market funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$87,150.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $148,700 for accounting and fund
administrative services and reimbursed $1,478,138 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
AIM V.I. CORE EQUITY FUND
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- --------------------------------------------------------------------------------------------------------------------------
Equity Securities $1,224,763,206 $105,090,402 $-- $1,329,853,608
==========================================================================================================================
Other Investments* (17,755) (17,755)
==========================================================================================================================
Total Investments $1,224,745,451 $105,090,402 -- $1,329,835,853
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
* Other Investments includes foreign currency contracts, which are included at
unrealized appreciation/(depreciation).
NOTE 4--DERIVATIVE INVESTMENTS
Effective with the beginning of the Fund's fiscal year, the Fund has adopted the
provisions of FASB Statement No. 161, Disclosures about Derivative Instruments
and Hedging Activities. The standard is intended to improve financial reporting
about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an
entity's financial position and financial performance. The adoption of this
provision has no impact on the results of operations reported in the financial
statements.
VALUE OF DERIVATIVE INSTRUMENTS AT PERIOD-END
The Table below summarizes the value of the Fund's derivative instruments,
detailed by primary risk exposure, held as of June 30, 2009:
<Table>
<Caption>
VALUE
----------------------
RISK EXPOSURE/DERIVATIVE TYPE ASSETS LIABILITIES
- ----------------------------------------------------------------------------------------------------
Currency risk
Foreign Currency Contracts(a) $-- $(17,755)
____________________________________________________________________________________________________
====================================================================================================
</Table>
(a) Values are disclosed on the Statement of Assets and Liabilities under
Foreign currency contracts outstanding.
EFFECT OF DERIVATIVE INSTRUMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009
The table below summarizes the gains (losses) on derivative instruments,
detailed by primary risk exposure, recognized in earnings during the period:
<Table>
<Caption>
LOCATION OF GAIN (LOSS) ON
STATEMENT OF OPERATIONS
---------------------------
FOREIGN CURRENCY CONTRACTS*
- -----------------------------------------------------------------------------------------------------
Realized Gain (Loss)
Currency risk $(4,451,400)
=====================================================================================================
Change in Unrealized Appreciation
Currency risk 2,752,696
=====================================================================================================
Total $(1,698,704)
_____________________________________________________________________________________________________
=====================================================================================================
</Table>
* The average value outstanding of foreign currency contracts during the period
was $ 24,879,099.
AIM V.I. CORE EQUITY FUND
FOREIGN CURRENCY CONTRACTS AT PERIOD-END
<Table>
<Caption>
OPEN FOREIGN CURRENCY CONTRACTS
- -------------------------------------------------------------------------------------------------------------------
CONTRACT TO UNREALIZED
SETTLEMENT ----------------------------------------- APPRECIATION
DATE DELIVER RECEIVE VALUE (DEPRECIATION)
- -------------------------------------------------------------------------------------------------------------------
9/04/09 GBP 16,085,000 USD 26,437,949 $26,455,704 $ (17,755)
===================================================================================================================
</Table>
<Table>
Currency Abbreviations:
GBP - British Pound Sterling
USD - U.S. Dollar
</Table>
NOTE 5--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $3,104
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 6--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the custodian bank
can be compensated by earning the additional interest; or (ii) compensate by
paying the custodian bank at a rate agreed upon by the custodian bank and
Invesco Aim, not to exceed the contractually agreed upon rate.
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions. Under these limitation rules, the Fund is limited to utilizing
$211,670,138 of capital loss carryforward in the fiscal year ending December 31,
2009.
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
December 31, 2009 $ 33,267,817
- -----------------------------------------------------------------------------------------------
December 31, 2010 157,184,467
- -----------------------------------------------------------------------------------------------
December 31, 2011 21,217,854
===============================================================================================
Total capital loss carryforward $211,670,138
_______________________________________________________________________________________________
===============================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $144,097,901 and
$226,726,947, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 79,682,848
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (269,342,506)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $(189,659,658)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $1,519,513,266.
</Table>
AIM V.I. CORE EQUITY FUND
NOTE 9--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- --------------------------------------------------------------------------------------------------------------------------
YEAR ENDED
SIX MONTHS ENDED -----------------------------
JUNE 30, 2009(a) DECEMBER 31, 2008
---------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 2,202,341 $ 43,456,554 4,038,365 $ 99,125,887
- --------------------------------------------------------------------------------------------------------------------------
Series II 174,659 3,283,532 303,531 7,308,692
==========================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 1,942,248 37,970,942
- --------------------------------------------------------------------------------------------------------------------------
Series II -- -- 29,872 580,118
==========================================================================================================================
Reacquired:
Series I (7,296,657) (136,011,798) (17,562,746) (452,686,161)
- --------------------------------------------------------------------------------------------------------------------------
Series II (184,792) (3,307,645) (319,907) (7,920,904)
==========================================================================================================================
Net increase (decrease) in share activity (5,104,449) $ (92,579,357) (11,568,637) $(315,621,426)
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 61% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and/or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
AIM V.I. CORE EQUITY FUND
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
(LOSSES)
NET ASSET ON SECURITIES DIVIDENDS
VALUE, NET (BOTH TOTAL FROM FROM NET NET ASSET NET ASSETS,
BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT VALUE, END TOTAL END OF PERIOD
OF PERIOD INCOME UNREALIZED) OPERATIONS INCOME OF PERIOD RETURN(a) (000S OMITTED)
- ------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $19.75 $0.14(c) $ 1.06 $ 1.20 $ -- $20.95 6.08% $1,304,337
Year ended 12/31/08 29.11 0.33(c) (9.11) (8.78) (0.58) 19.75 (30.14) 1,330,161
Year ended 12/31/07 27.22 0.42(c) 1.80 2.22 (0.33) 29.11 8.12 2,298,007
Year ended 12/31/06 23.45 0.34(c) 3.58 3.92 (0.15) 27.22 16.70 2,699,252
Year ended 12/31/05 22.60 0.24(c) 0.96 1.20 (0.35) 23.45 5.31 1,246,529
Year ended 12/31/04 20.94 0.30(e) 1.58 1.88 (0.22) 22.60 8.97 1,487,462
- ------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 19.62 0.11(c) 1.05 1.16 -- 20.78 5.91 25,097
Year ended 12/31/08 28.88 0.26(c) (9.02) (8.76) (0.50) 19.62 (30.32) 23,885
Year ended 12/31/07 27.02 0.34(c) 1.80 2.14 (0.28) 28.88 7.88 34,772
Year ended 12/31/06 23.33 0.28(c) 3.55 3.83 (0.14) 27.02 16.42 39,729
Year ended 12/31/05 22.48 0.18(c) 0.96 1.14 (0.29) 23.33 5.08 3,858
Year ended 12/31/04 20.85 0.21(e) 1.60 1.81 (0.18) 22.48 8.67 4,173
______________________________________________________________________________________________________________________________
==============================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
WITH FEE WAIVERS FEE WAIVERS INCOME
AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
ABSORBED ABSORBED NET ASSETS TURNOVER(b)
- ---------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 0.89%(d) 0.90%(d) 1.44%(d) 13%
Year ended 12/31/08 0.89 0.90 1.26 36
Year ended 12/31/07 0.87 0.88 1.44 45
Year ended 12/31/06 0.89 0.89 1.35 45
Year ended 12/31/05 0.89 0.89 1.08 52
Year ended 12/31/04 0.91 0.91 1.25(e) 52
- ---------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 1.14(d) 1.15(d) 1.19(d) 13
Year ended 12/31/08 1.14 1.15 1.01 36
Year ended 12/31/07 1.12 1.13 1.19 45
Year ended 12/31/06 1.14 1.14 1.10 45
Year ended 12/31/05 1.14 1.14 0.83 52
Year ended 12/31/04 1.16 1.16 1.00(e) 52
_______________________________________________________________________________________
=======================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Total returns are not annualized for periods less than one
year, if applicable and do not reflect charges assessed in connection with
a variable product, which if included would reduce total returns.
(b) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(c) Calculated using average shares outstanding.
(d) Ratios are annualized and based on average daily net assets (000's omitted)
of $1,237,157 and $23,126 for Series I and Series II shares, respectively.
(e) Net investment income per share and the ratio of net investment income to
average net assets include a special cash dividend received of $3.00 per
share owned of Microsoft Corp. on December 2, 2004. Net investment income
per share and the ratio of net investment income to average net assets
excluding the special dividend are $0.23 and 0.92%, $0.14 and 0.67% for
Series I and Series II shares, respectively.
AIM V.I. CORE EQUITY FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,060.80 $4.55 $1,020.38 $4.46 0.89%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,059.10 5.82 1,019.14 5.71 1.14
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. CORE EQUITY FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM In addition to their meetings particular factor that was controlling.
Variable Insurance Funds is required under throughout the year, the Sub-Committees Each Trustee may have evaluated the
the Investment Company Act of 1940 to meet at designated contract renewal information provided differently from
approve annually the renewal of the AIM meetings each year to conduct an in-depth another Trustee and attributed different
V.I. Core Equity Fund (the Fund) review of the performance, fees, expenses weight to the various factors. The
investment advisory agreement with Invesco and other matters related to their Trustees recognized that the advisory
Aim Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract arrangements and resulting advisory fees
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive for the Fund and the other AIM Funds are
for Mutual Funds (the sub-advisory comparative performance and fee data the result of years of review and
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an negotiation between the Trustees and
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Invesco Aim, that the Trustees may focus
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and to a greater extent on certain aspects of
Limited, Invesco Australia Limited, supervision of the Senior Officer who also these arrangements in some years than in
Invesco Global Asset Management (N.A.), prepares a separate analysis of this others, and that the Trustees'
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each deliberations and conclusions in a
Institutional (N.A.), Inc., Invesco Senior Sub-Committee then makes recommendations particular year may be based in part on
Secured Management, Inc. and Invesco to the Investments Committee regarding the their deliberations and conclusions
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. regarding these same arrangements
Sub-Advisers). During contract renewal The Investments Committee considers each throughout the year and in prior years.
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes
Board as a whole, and the disinterested or its own recommendations regarding the fees The discussion below serves as a
"independent" Trustees voting separately, and expenses of the AIM Funds to the full summary of the Senior Officer's
approved the continuance of the Fund's Board. The Investments Committee also independent written evaluation with
investment advisory agreement and the considers each Sub-Committee's respect to the Fund's investment advisory
sub-advisory contracts for another year, recommendations in making its annual agreement as well as a discussion of the
effective July 1, 2009. In doing so, the recommendation to the Board whether to material factors and related conclusions
Board determined that the Fund's approve the continuance of each Aim Fund's that formed the basis for the Board's
investment advisory agreement and the investment advisory agreement and approval of the Fund's investment advisory
sub-advisory contracts are in the best sub-advisory contracts for another year. agreement and sub-advisory contracts.
interests of the Fund and its shareholders Unless otherwise stated, information set
and that the compensation to Invesco Aim The independent Trustees met separately forth below is as of June 17, 2009, and
and the Affiliated Sub-Advisers under the during their evaluation of the Fund's does not reflect any changes that may have
Fund's investment advisory agreement and investment advisory agreement and occurred since that date, including but
sub-advisory contracts is fair and sub-advisory contracts with independent not limited to changes to the Fund's
reasonable. legal counsel. The independent Trustees performance, advisory fees, expense
were also assisted in their annual limitations and/or fee waivers.
THE BOARD'S FUND EVALUATION PROCESS evaluation of the Fund's investment
advisory agreement by the Senior Officer. FACTORS AND CONCLUSIONS AND SUMMARY OF
The Board's Investments Committee has One responsibility of the Senior Officer INDEPENDENT WRITTEN FEE EVALUATION
established three Sub-Committees that are is to manage the process by which the AIM
responsible for overseeing the management Funds' proposed management fees are A. Nature, Extent and Quality of
of a number of the series portfolios of negotiated during the annual contract Services Provided by Invesco Aim
the AIM Funds. This Sub-Committee renewal process to ensure that they are
structure permits the Trustees to focus on negotiated in a manner that is at arms' The Board reviewed the advisory services
the performance of the AIM Funds that have length and reasonable. Accordingly, the provided to the Fund by Invesco Aim under
been assigned to them. The Sub-Committees Senior Officer must either supervise a the Fund's investment advisory agreement,
meet throughout the year to review the competitive bidding process or prepare an the performance of Invesco Aim in
performance of their assigned funds, and independent written evaluation. The Senior providing these services, and the
the Sub-Committees review monthly and Officer recommended that an independent credentials and experience of the officers
quarterly comparative performance written evaluation be provided and, at the and employees of Invesco Aim who provide
information and periodic asset flow data direction of the Board, prepared an these services. The Board's review of the
for their assigned funds. These materials independent written evaluation. qualifications of Invesco Aim to provide
are prepared under the direction and these services included the Board's
supervision of the independent Senior During the annual contract renewal consideration of Invesco Aim's portfolio
Officer, an officer of the AIM Funds who process, the Board considered the factors and product review process, various back
reports directly to the independent discussed below in evaluating the fairness office support functions provided by
Trustees. Over the course of each year, and reasonableness of the Fund's Invesco Aim and its affiliates, and
the Sub-Committees meet with portfolio investment advisory agreement and Invesco Aim's equity and fixed income
managers for their assigned funds and sub-advisory contracts. The Board trading operations. The Board concluded
other members of management and review considered all of the information provided that the nature, extent and quality of the
with these individuals the performance, to them, including information provided at advisory services provided to the Fund by
investment objective(s), policies, their meetings throughout the year as part Invesco Aim are appropriate and that
strategies and limitations of these funds. of their ongoing oversight of the Fund, Invesco Aim currently is providing
and did not identify any satisfactory advisory services in
accordance with the terms of the Fund's
investment advisory
AIM V.I. CORE EQUITY FUND continued
agreement. In addition, based on their C. Fund Performance not reflect the market downturn that
ongoing meetings throughout the year with occurred in the fourth quarter of 2008.
the Fund's portfolio manager or managers, The Board considered fund performance as a
the Board concluded that these individuals relevant factor in considering whether to The Board also compared the Fund's
are competent and able to continue to approve the investment advisory agreement. effective fee rate (the advisory fee after
carry out their responsibilities under the The Board did not view fund performance as any advisory fee waivers and before any
Fund's investment advisory agreement. a relevant factor in considering whether expense limitations/waivers) to the
to approve the sub-advisory contracts for advisory fee rates of other domestic
In determining whether to continue the the Fund, as no Affiliated Sub-Adviser clients of Invesco Aim and its affiliates
Fund's investment advisory agreement, the currently manages assets of the Fund. with investment strategies comparable to
Board considered the prior relationship those of the Fund, including two mutual
between Invesco Aim and the Fund, as well The Board compared the Fund's funds advised by Invesco Aim. The Board
as the Board's knowledge of Invesco Aim's performance during the past one, three and noted that the Fund's rate was above the
operations, and concluded that it is five calendar years to the performance of effective fee rate for one of the mutual
beneficial to maintain the current all funds in the Lipper performance funds and below the effective fee rate for
relationship, in part, because of such universe that are not managed by Invesco the other mutual fund.
knowledge. The Board also considered the Aim or an Affiliated Sub-Adviser and
steps that Invesco Aim and its affiliates against the Lipper VA Underlying Funds - The Board noted that Invesco Aim
continue to take to improve the quality Large-Cap Core Index. The Board noted that contractually agreed to waive advisory
and efficiency of the services they the Fund's performance was in the first fees of the Fund through December 31, 2009
provide to the AIM Funds in the areas of quintile of its performance universe for and proposed to let this fee waiver expire
investment performance, product line the one, three and five year periods (the as it has not resulted in waivers during
diversification, distribution, fund first quintile being the best performing the last fiscal year of the Fund. The
operations, shareholder services and funds and the fifth quintile being the Board also noted that Invesco Aim has
compliance. The Board concluded that the worst performing funds). The Board noted contractually agreed to waive fees and/or
quality and efficiency of the services that the Fund's performance was above the limit expenses of the Fund through at
Invesco Aim and its affiliates provide to performance of the Index for the one, least April 30, 2010 in an amount
the AIM Funds in each of these areas three and five year periods. Although the necessary to limit total annual operating
support the Board's approval of the independent written evaluation of the expenses to a specified percentage of
continuance of the Fund's investment Fund's Senior Officer only considered Fund average daily net assets for each class of
advisory agreement. performance through the most recent the Fund. The Board noted that at the
calendar year, the Board also reviewed current expense ratio for the Fund, this
B. Nature, Extent and Quality of more recent Fund performance and this expense waiver does not have any impact.
Services Provided by Affiliated review did not change their conclusions.
Sub-Advisers The Board noted that, in response to the The Board also considered the services
Board's focus on fund performance, Invesco provided by the Affiliated Sub-Advisers
The Board reviewed the services provided Aim has taken a number of actions intended pursuant to the sub-advisory contracts and
by the Affiliated Sub-Advisers under the to improve the investment process for the the services provided by Invesco Aim
sub-advisory contracts and the credentials funds. pursuant to the Fund's advisory agreement,
and experience of the officers and as well as the allocation of fees between
employees of the Affiliated Sub-Advisers D. Advisory and Sub-Advisory Fees and Invesco Aim and the Affiliated
who provide these services. The Board Fee Waivers Sub-Advisers pursuant to the sub-advisory
concluded that the nature, extent and contracts. The Board noted that the
quality of the services provided by the The Board compared the Fund's contractual sub-advisory fees have no direct effect on
Affiliated Sub-Advisers are appropriate. advisory fee rate to the contractual the Fund or its shareholders, as they are
The Board noted that the Affiliated advisory fee rates of funds in the Fund's paid by Invesco Aim to the Affiliated
Sub-Advisers, which have offices and Lipper expense group that are not managed Sub-Advisers, and that Invesco Aim and the
personnel that are geographically by Invesco Aim or an Affiliated Affiliated Sub-Advisers are affiliates.
dispersed in financial centers around the Sub-Adviser, at a common asset level. The
world, can provide research and other Board noted that the Fund's contractual After taking account of the Fund's
information and make recommendations on advisory fee rate was at the median contractual advisory fee rate, the
the markets and economies of various contractual advisory fee rate of funds in contractual sub-advisory fee rate, the
countries and securities of companies its expense group. The Board also reviewed comparative advisory fee information
located in such countries or on various the methodology used by Lipper in discussed above and other relevant
types of investments and investment determining contractual fee rates, which factors, the Board concluded that the
techniques. The Board concluded that the includes using audited financial data from Fund's advisory and sub-advisory fees are
sub-advisory contracts benefit the Fund the most recent annual report of each fund fair and reasonable.
and its shareholders by permitting Invesco in the expense group that was publicly
Aim to utilize the additional resources available as of the end of the past E. Economies of Scale and Breakpoints
and talent of the Affiliated Sub-Advisers calendar year. The Board noted that some
in managing the Fund. comparative data was at least one year old The Board considered the extent to which
and that other data did there are economies of scale in the
provision of advisory services to the
Fund. The Board also considered whether
the Fund benefits from such economies
AIM V.I. CORE EQUITY FUND continued
of scale through contractual breakpoints financial resources necessary to fulfill investment in the affiliated money market
in the Fund's advisory fee schedule. The these obligations. funds of uninvested cash, but not cash
Board noted that the Fund's contractual collateral. The Board concluded that the
advisory fee schedule includes one G. Collateral Benefits to Invesco Aim Fund's investment of uninvested cash and
breakpoint and that the level of the and its Affiliates cash collateral from any securities
Fund's advisory fees, as a percentage of lending arrangements in the affiliated
the Fund's net assets, has decreased as The Board considered various other money market funds is in the best
net assets increased because of the benefits received by Invesco Aim and its interests of the Fund and its
breakpoint. Based on this information, the affiliates resulting from Invesco Aim's shareholders.
Board concluded that the Fund's advisory relationship with the Fund, including the
fees appropriately reflect economies of fees received by Invesco Aim and its
scale at current asset levels. The Board affiliates for their provision of
also noted that the Fund shares directly administrative, transfer agency and
in economies of scale through lower fees distribution services to the Fund. The
charged by third party service providers Board considered the performance of
based on the combined size of all of the Invesco Aim and its affiliates in
AIM Funds and affiliates. providing these services and the
organizational structure employed by
F. Profitability and Financial Invesco Aim and its affiliates to provide
Resources these services. The Board also considered
that these services are provided to the
The Board reviewed information from Fund pursuant to written contracts which
Invesco Aim concerning the costs of the are reviewed and approved on an annual
advisory and other services that Invesco basis by the Board. The Board concluded
Aim and its affiliates provide to the Fund that Invesco Aim and its affiliates are
and the profitability of Invesco Aim and providing these services in a satisfactory
its affiliates in providing these manner and in accordance with the terms of
services. The Board also reviewed their contracts, and are qualified to
information concerning the financial continue to provide these services to the
condition of Invesco Aim and its Fund.
affiliates. The Board reviewed with
Invesco Aim the methodology used to The Board considered the benefits
prepare the profitability information. The realized by Invesco Aim and the Affiliated
Board considered the overall profitability Sub-Advisers as a result of portfolio
of Invesco Ltd., the ultimate parent of brokerage transactions executed through
Invesco Aim and the Affiliated "soft dollar" arrangements. The Board
Sub-Advisers, and of Invesco Aim, as well noted that soft dollar arrangements shift
as the profitability of Invesco Aim in the payment obligation for research and
connection with managing the Fund. The execution services from Invesco Aim and
Board noted that Invesco Aim continues to the Affiliated Sub-Advisers to the funds
operate at a net profit, although the and therefore may reduce Invesco Aim's and
reduction of assets under management as a the Affiliated Sub-Advisers' expenses. The
result of market movements and the Board concluded that Invesco Aim's and the
increase in voluntary fee waivers for Affiliated Sub-Advisers' soft dollar
affiliated money market funds have reduced arrangements are appropriate. The Board
the profitability of Invesco Aim and its also concluded that, based on their review
affiliates. The Board concluded that the and representations made by the Chief
Fund's fees are fair and reasonable, and Compliance Officer of Invesco Aim, these
that the level of profits realized by arrangements are consistent with
Invesco Aim and its affiliates from regulatory requirements.
providing services to the Fund is not
excessive in light of the nature, quality The Board considered the fact that the
and extent of the services provided. The Fund's uninvested cash and cash collateral
Board considered whether Invesco Aim is from any securities lending arrangements
financially sound and has the resources may be invested in money market funds
necessary to perform its obligations under advised by Invesco Aim pursuant to
the Fund's investment advisory agreement, procedures approved by the Board. The
and concluded that Invesco Aim has the Board noted that Invesco Aim will receive
financial resources necessary to fulfill advisory fees from these affiliated money
these obligations. The Board also market funds attributable to such
considered whether each Affiliated investments, although Invesco Aim has
Sub-Adviser is financially sound and has contractually agreed to waive through at
the resources necessary to perform its least June 30, 2010, the advisory fees
obligations under the sub-advisory payable by the Fund in an amount equal to
contracts, and concluded that each 100% of the net advisory fee Invesco Aim
Affiliated Sub-Adviser has the receives from the affiliated money market
funds with respect to the Fund's
AIM V.I. CORE EQUITY FUND
[INVESCO AIM LOGO] AIM V.I. DIVERSIFIED INCOME FUND
--SERVICE MARK-- Semiannual Report to Shareholders o June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund
files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the SEC
Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by
calling 202 942 8090 or 800 732 0330, or by electronic request at the following E-mail address: publicinfo@sec.gov. The SEC file
numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent portfolio holdings, as filed on Form N-Q, have also been
made available to insurance companies issuing variable annuity contracts and variable life insurance policies ("variable products")
that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, from our Client Services department at 800 410 4246 or on the Invesco Aim Web site,
invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site,
sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2009, is
available at our Web site. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting
Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. will be merged into
Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc. Additional information
will be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN
MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
SERIES I SHARES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer Inception (5/5/93) 3.28%
charges. If variable product issuer charges were included, returns would be lower. 10 Years 1.40
5 Years -0.36
Series I Shares 1.71% 1 Year -12.27
Series II Shares 1.55
Barclays Capital U.S. Aggregate Index(Triangle)* (Broad Market Index) 1.90 SERIES II SHARES
Barclays Capital U.S. Credit Index(Triangle)* (Style-Specific Index) 6.87 10 Years 1.14%
Lipper VUF Corporate Debt BBB-Rated Funds Index(Triangle) (Peer Group Index) 6.97 5 Years -0.60
1 Year -12.48
(Triangle) Lipper Inc. ==========================================
* Effective 11/3/08, Lehman Brothers indexes were rebranded as Barclays Capital FEES ASSESSED IN CONNECTION WITH A
indexes. VARIABLE PRODUCT. SALES CHARGES, EXPENSES
AND FEES, WHICH ARE DETERMINED BY THE
The BARCLAYS CAPITAL U.S. AGGREGATE INDEX covers U.S. investment-grade fixed-rate bonds VARIABLE PRODUCT ISSUERS, WILL VARY AND
with components for government and corporate securities, mortgage pass-throughs and WILL LOWER THE TOTAL RETURN.
asset-backed securities.
THE MOST RECENT MONTH-END PERFORMANCE
The BARCLAYS CAPITAL U.S. CREDIT INDEX is an unmanaged index that consists of DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
publicly issued, SEC-registered U.S. corporate and specified foreign debentures and PRODUCT CHARGES, IS AVAILABLE ON THE
secured notes that meet the specified maturity, liquidity and quality requirements. INVESCO AIM AUTOMATED INFORMATION LINE,
866 702 4402. AS MENTIONED ABOVE, FOR THE
The LIPPER VUF CORPORATE DEBT BBB-RATED FUNDS INDEX is an equally weighted MOST RECENT MONTH-END PERFORMANCE
representation of the largest variable insurance underlying funds in the Lipper INCLUDING VARIABLE PRODUCT CHARGES, PLEASE
Corporate Debt BBB-Rated Funds category. These funds invest at least 65% of their CONTACT YOUR VARIABLE PRODUCT ISSUER OR
assets in corporate and government debt issues rated in the top four grades. FINANCIAL ADVISOR.
The Fund is not managed to track the performance of any particular index, including HAD THE ADVISOR NOT WAIVED FEES AND/OR
the indexes defined here, and consequently, the performance of the Fund may deviate REIMBURSED EXPENSES, PERFORMANCE WOULD
significantly from the performance of the indexes. HAVE BEEN LOWER.
A direct investment cannot be made in an index. Unless otherwise indicated, index (1) Total annual operating expenses less
results include reinvested dividends, and they do not reflect sales charges. any contractual fee waivers and/or
Performance of the peer group reflects fund expenses; performance of a market index expense reimbursements by the advisor
does not. in effect through at least April 30,
======================================================================================= 2010. See current prospectus for more
information.
SERIES II SHARES' INCEPTION DATE IS YOU MAY HAVE A GAIN OR LOSS WHEN YOU
MARCH 14, 2002. RETURNS SINCE THAT DATE SELL SHARES.
ARE HISTORICAL. ALL OTHER RETURNS ARE THE
BLENDED RETURNS OF THE HISTORICAL THE NET ANNUAL FUND OPERATING EXPENSE
PERFORMANCE OF SERIES II SHARES SINCE RATIO SET FORTH IN THE MOST RECENT FUND
THEIR INCEPTION AND THE RESTATED PROSPECTUS AS OF THE DATE OF THIS REPORT
HISTORICAL PERFORMANCE OF SERIES I SHARES FOR SERIES I AND SERIES II SHARES WAS
(FOR PERIODS PRIOR TO INCEPTION OF SERIES 0.75% AND 1.00%, RESPECTIVELY.(1) THE
II SHARES) ADJUSTED TO REFLECT THE RULE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO
12B-1 FEES APPLICABLE TO SERIES II SHARES. SET FORTH IN THE MOST RECENT FUND
THE INCEPTION DATE OF SERIES I SHARES IS PROSPECTUS AS OF THE DATE OF THIS REPORT
MAY 5, 1993. FOR SERIES I AND SERIES II SHARES WAS
1.31% AND 1.56%, RESPECTIVELY. THE EXPENSE
THE PERFORMANCE OF THE FUND'S SERIES I RATIOS PRESENTED ABOVE MAY VARY FROM THE
AND SERIES II SHARE CLASSES WILL DIFFER EXPENSE RATIOS PRESENTED IN OTHER SECTIONS
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES. OF THIS REPORT THAT ARE BASED ON EXPENSES
INCURRED DURING THE PERIOD COVERED BY THIS
THE PERFORMANCE DATA QUOTED REPRESENT REPORT.
PAST PERFORMANCE AND CANNOT GUARANTEE
COMPARABLE FUTURE RESULTS; CURRENT AIM V.I. DIVERSIFIED INCOME FUND, A
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE SERIES PORTFOLIO OF AIM VARIABLE INSURANCE
CONTACT YOUR VARIABLE PRODUCT ISSUER OR FUNDS, IS CURRENTLY OFFERED THROUGH
FINANCIAL ADVISOR FOR THE MOST RECENT INSURANCE COMPANIES ISSUING VARIABLE
MONTH-END VARIABLE PRODUCT PERFORMANCE. PRODUCTS. YOU CANNOT PURCHASE SHARES OF
PERFORMANCE FIGURES REFLECT FUND EXPENSES, THE FUND DIRECTLY. PERFORMANCE FIGURES
REINVESTED DISTRIBUTIONS AND CHANGES IN GIVEN REPRESENT THE FUND AND ARE NOT
NET ASSET VALUE. INVESTMENT RETURN AND INTENDED TO REFLECT ACTUAL VARIABLE
PRINCIPAL VALUE WILL FLUCTUATE SO THAT PRODUCT VALUES. THEY DO NOT REFLECT SALES
CHARGES, EXPENSES AND
AIM V.I. DIVERSIFIED INCOME FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
BONDS & NOTES-78.98%
AEROSPACE & DEFENSE-1.49%
Alliant Techsystems Inc.,
Sr. Sub. Unsec. Gtd. Notes,
6.75%, 04/01/16 $ 25,000 $ 23,187
- -----------------------------------------------------------------------------
BAE Systems Holdings Inc.,
Sr. Unsec. Gtd. Notes,
4.95%, 06/01/14(b) 65,000 65,127
- -----------------------------------------------------------------------------
6.38%, 06/01/19(b) 90,000 91,998
- -----------------------------------------------------------------------------
BE Aerospace, Inc.,
Sr. Unsec. Unsub. Notes,
8.50%, 07/01/18 25,000 23,625
- -----------------------------------------------------------------------------
Honeywell International Inc.,
Sr. Unsec. Unsub. Notes,
5.00%, 02/15/19 140,000 142,945
=============================================================================
346,882
=============================================================================
AGRICULTURAL PRODUCTS-1.77%
Bunge Limited Finance Corp.,
Sr. Unsec. Gtd. Notes,
8.50%, 06/15/19 140,000 146,973
- -----------------------------------------------------------------------------
Cargill Inc.,
Sr. Unsec. Notes,
7.35%, 03/06/19(b) 250,000 265,558
=============================================================================
412,531
=============================================================================
AIRLINES-1.73%
American Airlines,
-Series 1999-1, Class A-2, Sec. Notes, Pass
Through Ctfs.,
7.02%, 10/15/09 65,000 64,756
- -----------------------------------------------------------------------------
-Series 2009-1A, Sec. Pass Through Ctfs.,
10.38%, 07/02/19 45,000 45,619
- -----------------------------------------------------------------------------
Continental Airlines Inc.,
Pass Through Ctfs.,
9.00%, 07/08/16 120,000 120,600
- -----------------------------------------------------------------------------
Southwest Airlines Co.,
Sr. Unsec. Unsub. Bonds,
7.38%, 03/01/27 190,000 172,930
=============================================================================
403,905
=============================================================================
ALTERNATIVE CARRIERS-0.21%
Level 3 Financing Inc.,
Sr. Unsec. Gtd. Unsub. Global Notes,
9.25%, 11/01/14 60,000 49,800
=============================================================================
ALUMINUM-0.67%
Novelis Inc. (Canada),
Sr. Unsec. Gtd. Global Notes,
7.25%, 02/15/15 205,000 156,825
=============================================================================
APPAREL RETAIL-0.37%
Limited Brands Inc.,
Sr. Notes,
8.50%, 06/15/19(b) 25,000 24,313
- -----------------------------------------------------------------------------
TJX Cos., Inc. (The),
Sr. Unsec. Notes,
6.95%, 04/15/19 55,000 61,950
=============================================================================
86,263
=============================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-0.21%
Liz Claiborne Inc.,
Sr. Notes,
6.00%, 06/15/14(b) 50,000 49,760
=============================================================================
ASSET MANAGEMENT & CUSTODY BANKS-0.53%
Bank of New York Mellon Corp. (The),
Sr. Unsec. Notes,
4.30%, 05/15/14 50,000 51,197
- -----------------------------------------------------------------------------
5.45%, 05/15/19 70,000 72,012
=============================================================================
123,209
=============================================================================
AUTOMOTIVE RETAIL-0.49%
AutoZone Inc.,
Sr. Unsec. Notes,
5.75%, 01/15/15 115,000 115,343
=============================================================================
BREWERS-1.30%
Anheuser-Busch InBev Worldwide Inc.,
Sr. Unsec. Gtd. Unsub. Notes,
7.20%, 01/15/14(b) 140,000 149,439
- -----------------------------------------------------------------------------
8.20%, 01/15/39(b) 140,000 154,706
=============================================================================
304,145
=============================================================================
BROADCASTING-1.61%
COX Communications Inc.,
Sr. Unsec. Bonds,
8.38%, 03/01/39(b) 75,000 83,470
- -----------------------------------------------------------------------------
Sr. Unsec. Notes,
9.38%, 01/15/19(b) 140,000 166,871
- -----------------------------------------------------------------------------
COX Enterprises Inc.,
Sr. Unsec. Notes,
7.88%, 09/15/10(b) 120,000 124,411
=============================================================================
374,752
=============================================================================
BUILDING PRODUCTS-0.48%
Owens Corning Inc.,
Unsec. Gtd. Sub. Notes,
9.00%, 06/15/19 115,000 111,981
=============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. DIVERSIFIED INCOME FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
CABLE & SATELLITE-1.46%
Comcast Corp.,
Sr. Unsec. Gtd. Notes,
6.55%, 07/01/39 $200,000 $ 200,612
- -----------------------------------------------------------------------------
Sr. Unsec. Gtd. Unsub. Global Notes,
5.70%, 05/15/18 120,000 120,176
- -----------------------------------------------------------------------------
XM Satellite Radio Inc.,
Sr. Sec. Notes,
11.25%, 06/15/13(b) 20,000 19,925
=============================================================================
340,713
=============================================================================
CASINOS & GAMING-1.09%
International Game Technology,
Sr. Unsec. Unsub. Global Notes,
7.50%, 06/15/19 60,000 60,542
- -----------------------------------------------------------------------------
MGM Mirage,
Sr. Sec. Notes,
11.13%, 11/15/17(b) 160,000 170,800
- -----------------------------------------------------------------------------
Sr. Unsec. Gtd. Unsub. Notes,
8.50%, 09/15/10 25,000 23,000
=============================================================================
254,342
=============================================================================
COMMUNICATIONS EQUIPMENT-0.60%
Corning Inc.,
Sr. Unsec. Unsub. Notes,
6.63%, 05/15/19 85,000 86,240
- -----------------------------------------------------------------------------
Nokia Corp. (Finland),
Sr. Unsec. Global Notes,
6.63%, 05/15/39 50,000 52,527
=============================================================================
138,767
=============================================================================
COMPUTER HARDWARE-0.25%
Hewlett-Packard Co.,
Sr. Unsec. Global Notes,
4.75%, 06/02/14 55,000 57,540
=============================================================================
COMPUTER STORAGE & PERIPHERALS-0.48%
Seagate Technology International,
Sr. Sec. Gtd. Notes,
10.00%, 05/01/14(b) 105,000 110,775
=============================================================================
CONSUMER FINANCE-0.38%
Ford Motor Credit Co. LLC,
Sr. Unsec. Notes,
8.00%, 12/15/16 115,000 89,125
=============================================================================
DIVERSIFIED BANKS-4.92%
Barclays Bank PLC (United Kingdom),
Sr. Unsec. Unsub. Global Notes,
6.75%, 05/22/19 155,000 155,699
- -----------------------------------------------------------------------------
Centura Capital Trust I,
Jr. Gtd. Sub. Trust Pfd. Capital Securities,
8.85%, 06/01/27(b) 500,000 451,151
- -----------------------------------------------------------------------------
Lloyds TSB Bank PLC (United Kingdom),
Sr. Unsec. Floating Rate Medium-Term Euro Notes,
4.61%, 04/17/14(c) 81,000 80,650
- -----------------------------------------------------------------------------
National Bank of Canada (Canada),
Unsec. Sub. Floating Rate Euro Notes,
1.94%, 08/29/87(c) 200,000 89,556
- -----------------------------------------------------------------------------
Standard Chartered PLC (United Kingdom),
Sr. Notes,
5.50%, 11/18/14(b) 170,000 172,751
- -----------------------------------------------------------------------------
Wachovia Corp.-Series G,
Sr. Unsec. Medium-Term Notes,
5.50%, 05/01/13 50,000 51,777
- -----------------------------------------------------------------------------
Wells Fargo & Co.,
Sr. Unsec. Unsub. Global Notes,
4.38%, 01/31/13 145,000 146,278
=============================================================================
1,147,862
=============================================================================
DIVERSIFIED CAPITAL MARKETS-0.40%
UBS AG (Switzerland),
Sr. Unsec. Medium-Term Notes,
5.75%, 04/25/18 100,000 92,355
=============================================================================
DIVERSIFIED CHEMICALS-0.27%
Ashland Inc.,
Sr. Unsec. Gtd. Notes,
9.13%, 06/01/17(b) 60,000 63,000
=============================================================================
DRUG RETAIL-0.98%
CVS Caremark Corp.,
Unsec. Notes,
6.60%, 03/15/19 190,000 202,956
- -----------------------------------------------------------------------------
Rite Aid Corp.,
Sr. Sec. Notes,
9.75%, 06/12/16(b) 25,000 25,250
=============================================================================
228,206
=============================================================================
ELECTRIC UTILITIES-4.05%
Carolina Power & Light Co.,
Sec. First Mortgage Bonds,
5.30%, 01/15/19 40,000 41,903
- -----------------------------------------------------------------------------
DCP Midstream LLC,
Notes,
9.70%, 12/01/13(b) 100,000 110,486
- -----------------------------------------------------------------------------
Sr. Unsec. Notes,
7.88%, 08/16/10 200,000 208,554
- -----------------------------------------------------------------------------
Sr. Unsec. Unsub. Notes,
9.75%, 03/15/19(b) 110,000 123,009
- -----------------------------------------------------------------------------
Indiana Michigan Power Co.,
Sr. Notes,
7.00%, 03/15/19 140,000 151,507
- -----------------------------------------------------------------------------
PPL Electric Utilities Corp.,
Sec. First Mortgage Bonds,
6.25%, 05/15/39 45,000 47,986
- -----------------------------------------------------------------------------
Tenaska Alabama Partners L.P.,
Sr. Sec. Mortgage Notes,
7.00%, 06/30/21(b) 116,776 100,719
- -----------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. DIVERSIFIED INCOME FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
ELECTRIC UTILITIES-(CONTINUED)
Virginia Electric & Power Co.,
Sr. Unsec. Notes,
5.00%, 06/30/19 $ 55,000 $ 55,536
- -----------------------------------------------------------------------------
Westar Energy Inc.,
Sr. Sec. First Mortgage Notes,
7.13%, 08/01/09 105,000 105,340
=============================================================================
945,040
=============================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-0.11%
Belden Inc.,
Sr. Sub. Gtd. Notes,
9.25%, 06/15/19(b) 25,000 24,625
=============================================================================
ENVIRONMENTAL & FACILITIES SERVICES-0.32%
Waste Management Inc.,
Sr. Unsec. Gtd. Notes,
6.38%, 03/11/15 55,000 57,581
- -----------------------------------------------------------------------------
7.38%, 03/11/19 15,000 16,296
=============================================================================
73,877
=============================================================================
HEALTH CARE FACILITIES-0.11%
HCA, Inc.,
Sr. Sec. Gtd. Global Notes,
9.25%, 11/15/16 25,000 24,750
=============================================================================
HEALTH CARE SERVICES-1.52%
Express Scripts Inc.,
Sr. Unsec. Global Notes,
5.25%, 06/15/12 45,000 46,505
- -----------------------------------------------------------------------------
6.25%, 06/15/14 65,000 68,516
- -----------------------------------------------------------------------------
7.25%, 06/15/19 40,000 43,778
- -----------------------------------------------------------------------------
Orlando Lutheran Towers Inc.,
Putable Bonds,
7.75%, 07/01/11 45,000 44,466
- -----------------------------------------------------------------------------
8.00%, 07/01/17 125,000 126,513
- -----------------------------------------------------------------------------
US Oncology Inc.,
Sr. Sec. Notes,
9.13%, 08/15/17(b) 25,000 25,000
=============================================================================
354,778
=============================================================================
HOTELS, RESORTS & CRUISE LINES-1.11%
Starwood Hotels & Resorts Worldwide, Inc.,
Sr. Unsec. Notes,
7.88%, 10/15/14 185,000 176,822
- -----------------------------------------------------------------------------
Wyndham Worldwide Corp.,
Sr. Unsec. Global Notes,
6.00%, 12/01/16 105,000 82,162
=============================================================================
258,984
=============================================================================
HYPERMARKETS & SUPER CENTERS-0.15%
Wal-Mart Stores Inc.,
Sr. Unsec. Notes,
3.00%, 02/03/14 35,000 34,635
=============================================================================
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS-0.71%
AES Corp. (The),
Sr. Unsec. Notes,
9.75%, 04/15/16(b) 115,000 117,012
- -----------------------------------------------------------------------------
NRG Energy, Inc.,
Sr. Unsec. Gtd. Notes,
7.38%, 02/01/16 25,000 23,750
- -----------------------------------------------------------------------------
Sr. Unsec. Gtd. Unsub. Notes,
7.38%, 01/15/17 25,000 23,750
=============================================================================
164,512
=============================================================================
INDUSTRIAL CONGLOMERATES-0.61%
Hutchison Whampoa International Ltd. (Cayman
Islands),
Sr. Unsec. Gtd. Notes,
7.63%, 04/09/19(b) 130,000 143,279
=============================================================================
INSURANCE BROKERS-0.82%
Marsh & McLennan Cos. Inc.,
Sr. Unsec. Notes,
5.15%, 09/15/10 75,000 75,592
- -----------------------------------------------------------------------------
9.25%, 04/15/19 100,000 114,760
=============================================================================
190,352
=============================================================================
INTEGRATED OIL & GAS-0.30%
Husky Energy Inc. (Canada),
Sr. Unsec. Unsub. Global Notes,
7.25%, 12/15/19 65,000 70,819
=============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-6.95%
AT&T Inc.,
Sr. Unsec. Unsub. Global Notes,
6.55%, 02/15/39 70,000 71,130
- -----------------------------------------------------------------------------
British Telecommunications PLC (United Kingdom),
Sr. Unsec. Unsub. Global Notes,
9.13%, 12/15/10 250,000 265,816
- -----------------------------------------------------------------------------
Koninklijke KPN N.V. (Netherlands),
Sr. Unsec. Unsub. Global Notes,
8.00%, 10/01/10 400,000 419,893
- -----------------------------------------------------------------------------
Telefonica Europe B.V. (Netherlands),
Unsec. Gtd. Unsub. Global Notes,
7.75%, 09/15/10 200,000 210,998
- -----------------------------------------------------------------------------
Telemar Norte Leste S.A. (Brazil),
Sr. Unsec. Notes,
9.50%, 04/23/19(b) 125,000 136,563
- -----------------------------------------------------------------------------
Verizon Communications Inc.,
Sr. Unsec. Global Notes,
6.35%, 04/01/19 65,000 68,000
- -----------------------------------------------------------------------------
Verizon Wireless Capital LLC,
Notes,
3.75%, 05/20/11(b) 120,000 122,400
- -----------------------------------------------------------------------------
Sr. Unsec. Unsub. Notes,
7.38%, 11/15/13(b) 140,000 156,949
- -----------------------------------------------------------------------------
8.50%, 11/15/18(b) 140,000 169,509
=============================================================================
1,621,258
=============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. DIVERSIFIED INCOME FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
INVESTMENT BANKING & BROKERAGE-8.46%
Bear Stearns Cos. LLC (The),
Sr. Unsec. Unsub. Floating Rate Notes,
1.51%, 07/19/10(c) $260,000 $ 260,322
- -----------------------------------------------------------------------------
Goldman Sachs Group Inc. (The),
Sr. Medium-Term Notes,
6.00%, 05/01/14 50,000 52,388
- -----------------------------------------------------------------------------
Sr. Unsec. Global Notes,
7.50%, 02/15/19 105,000 112,466
- -----------------------------------------------------------------------------
Unsec. Sub. Global Notes,
6.75%, 10/01/37 140,000 123,800
- -----------------------------------------------------------------------------
Jefferies Group Inc.,
Sr. Unsec. Notes,
6.45%, 06/08/27 400,000 299,681
- -----------------------------------------------------------------------------
Merrill Lynch & Co. Inc.,
Sr. Unsec. Medium-Term Notes,
6.88%, 04/25/18 265,000 241,863
- -----------------------------------------------------------------------------
-Series C, Sr. Unsec. Medium-Term Global Notes,
5.45%, 02/05/13 200,000 195,302
- -----------------------------------------------------------------------------
Morgan Stanley,
Sr. Unsec. Global Notes,
7.30%, 05/13/19 230,000 240,285
- -----------------------------------------------------------------------------
Sr. Unsec. Medium-Term Global Notes,
6.00%, 05/13/14 315,000 320,890
- -----------------------------------------------------------------------------
-Series F, Sr. Unsec. Medium-Term Global Notes,
5.95%, 12/28/17 130,000 125,203
=============================================================================
1,972,200
=============================================================================
LIFE & HEALTH INSURANCE-2.62%
Americo Life Inc., Notes,
7.88%, 05/01/13(b) 95,000 62,143
- -----------------------------------------------------------------------------
MetLife Inc.,
Sr. Unsec. Notes,
6.75%, 06/01/16 155,000 158,115
- -----------------------------------------------------------------------------
Unsec. Global Notes,
7.72%, 02/15/19 180,000 192,515
- -----------------------------------------------------------------------------
Prudential Financial Inc.,
Jr. Unsec. Sub. Global Notes,
8.88%, 06/15/38 130,000 109,823
- -----------------------------------------------------------------------------
Sr. Notes,
7.38%, 06/15/19 90,000 88,485
=============================================================================
611,081
=============================================================================
METAL & GLASS CONTAINERS-0.21%
Owens-Brockway Glass Container Inc.,
Sr. Gtd. Notes,
7.38%, 05/15/16 (Acquired 05/07/09; Cost
$48,362)(b) 50,000 48,250
=============================================================================
MORTGAGE BACKED SECURITIES-0.83%
U.S. Bank N.A.,
Sr. Unsec. Medium-Term Global Notes,
5.92%, 05/25/12 191,703 194,275
=============================================================================
MOVIES & ENTERTAINMENT-0.35%
Cinemark USA Inc.,
Sr. Gtd. Notes,
8.63%, 06/15/19(b) 25,000 24,687
- -----------------------------------------------------------------------------
Time Warner Cable Inc.,
Sr. Unsec. Gtd. Unsub. Global Notes,
6.75%, 07/01/18 55,000 57,370
=============================================================================
82,057
=============================================================================
MULTI-LINE INSURANCE-3.23%
American Financial Group Inc.,
Sr. Notes,
9.88%, 06/15/19 465,000 462,429
- -----------------------------------------------------------------------------
Liberty Mutual Group Inc.,
Sr. Unsec. Notes,
5.75%, 03/15/14(b) 100,000 79,476
- -----------------------------------------------------------------------------
Nationwide Mutual Insurance Co.,
Unsec. Sub. Notes,
5.81%, 12/15/24(b) 350,000 212,154
=============================================================================
754,059
=============================================================================
OFFICE ELECTRONICS-0.47%
Xerox Corp.,
Sr. Notes,
8.25%, 05/15/14 105,000 109,234
=============================================================================
OIL & GAS DRILLING-0.36%
Pride International Inc.,
Sr. Unsec. Notes,
8.50%, 06/15/19 85,000 84,363
=============================================================================
OIL & GAS EXPLORATION & PRODUCTION-3.74%
Anadarko Petroleum Corp.,
Sr. Unsec. Global Notes,
5.75%, 06/15/14 250,000 254,838
- -----------------------------------------------------------------------------
Sr. Unsec. Notes,
7.63%, 03/15/14 195,000 211,502
- -----------------------------------------------------------------------------
Chesapeake Energy Corp.,
Sr. Unsec. Gtd. Global Notes,
6.38%, 06/15/15 25,000 22,375
- -----------------------------------------------------------------------------
Cimarex Energy Co.,
Sr. Unsec. Gtd. Notes,
7.13%, 05/01/17 25,000 22,250
- -----------------------------------------------------------------------------
EOG Resources Inc.,
Sr. Unsec. Notes,
5.63%, 06/01/19 60,000 63,011
- -----------------------------------------------------------------------------
Petroleos Mexicanos (Mexico),
Notes,
8.00%, 05/03/19(b) 125,000 134,410
- -----------------------------------------------------------------------------
Quicksilver Resources Inc.,
Sr. Notes,
11.75%, 01/01/16 25,000 25,875
- -----------------------------------------------------------------------------
XTO Energy Inc.,
Sr. Unsec. Unsub. Notes,
5.75%, 12/15/13 130,000 137,456
=============================================================================
871,717
=============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. DIVERSIFIED INCOME FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
OIL & GAS STORAGE & TRANSPORTATION-0.26%
Willams Cos. Inc. (The),
Sr. Unsec. Notes,
8.75%, 01/15/20(b) $ 40,000 $ 41,750
- -----------------------------------------------------------------------------
Williams Partners L.P./Williams Partners Finance
Corp.,
Sr. Unsec. Global Notes,
7.25%, 02/01/17 20,000 18,250
=============================================================================
60,000
=============================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-6.14%
Bank of America Corp.,
Sr. Global Notes,
7.63%, 06/01/19 195,000 196,274
- -----------------------------------------------------------------------------
-Series L, Sr. Unsec. Unsub. Medium Term Notes,
7.38%, 05/15/14 195,000 201,966
- -----------------------------------------------------------------------------
General Electric Capital Corp.,
-Series A, Sr. Unsec. Unsub. Medium-Term Global
Notes,
6.88%, 01/10/39 380,000 345,192
- -----------------------------------------------------------------------------
JPMorgan Chase & Co.,
Sr. Unsec. Global Notes,
4.75%, 05/01/13 15,000 15,332
- -----------------------------------------------------------------------------
Sr. Unsec. Notes,
4.65%, 06/01/14 345,000 344,467
- -----------------------------------------------------------------------------
Sr. Unsec. Unsub. Global Notes,
6.30%, 04/23/19 220,000 224,285
- -----------------------------------------------------------------------------
Pemex Finance Ltd. (Mexico)
-Series 1999-2, Class A1, Sr. Unsec. Global
Bonds,
9.69%, 08/15/09 33,500 33,741
- -----------------------------------------------------------------------------
Twin Reefs Pass-Through Trust,
Floating Rate Pass Through Ctfs., 1.39%
(Acquired 12/07/04-04/03/06; Cost
$130,332)(b)(c)(d)(e) 130,000 423
- -----------------------------------------------------------------------------
Two-Rock Pass-Through Trust (Bermuda),
Floating Rate Pass Through Ctfs., 1.90%
(Acquired 11/10/06; Cost $220,260)(b)(c)(d) 220,000 715
- -----------------------------------------------------------------------------
Windsor Financing LLC,
Sr. Sec. Gtd. Notes,
5.88%, 07/15/17(b) 80,175 70,372
=============================================================================
1,432,767
=============================================================================
PACKAGED FOODS & MEATS-1.81%
ConAgra Foods Inc., Notes,
5.88%, 04/15/14 110,000 117,157
- -----------------------------------------------------------------------------
Kraft Foods Inc.,
Sr. Unsec. Global Notes,
6.13%, 08/23/18 135,000 141,262
- -----------------------------------------------------------------------------
Sr. Unsec. Notes,
6.88%, 01/26/39 135,000 144,052
- -----------------------------------------------------------------------------
Smithfield Foods Inc.,
Sr. Sec. Notes,
10.00%, 07/15/14(b) 20,000 19,850
=============================================================================
422,321
=============================================================================
PAPER PACKAGING-0.02%
Sealed Air Corp.,
Sr. Notes,
7.88%, 06/15/17(b) 5,000 4,984
=============================================================================
PAPER PRODUCTS-0.37%
Clearwater Paper Corp.,
Sr. Unsec. Notes,
10.63%, 06/15/16(b) 25,000 25,687
- -----------------------------------------------------------------------------
Mercer International Inc.,
Sr. Unsec. Global Notes,
9.25%, 02/15/13 140,000 60,200
=============================================================================
85,887
=============================================================================
PERSONAL PRODUCTS-0.45%
Avon Products Inc.,
Sr. Unsec. Notes,
5.63%, 03/01/14 100,000 105,535
=============================================================================
PROPERTY & CASUALTY INSURANCE-0.54%
Chubb Corp.,
Sr. Unsec. Notes,
5.75%, 05/15/18 50,000 52,726
- -----------------------------------------------------------------------------
Travelers Cos. Inc. (The),
Sr. Unsec. Global Notes,
5.90%, 06/02/19 70,000 72,792
=============================================================================
125,518
=============================================================================
REGIONAL BANKS-0.24%
PNC Capital Trust C,
Jr. Unsec. Gtd. Sub. Floating Rate Trust Pfd.
Capital Securities,
1.24%, 06/01/28(c) 100,000 56,942
=============================================================================
REINSURANCE-0.26%
Stingray Pass-Through Trust,
Pass Through Ctfs.,
5.90%, 01/12/15 (Acquired 01/07/05-11/03/05;
Cost $493,840)(b) 500,000 60,000
=============================================================================
RESEARCH & CONSULTING SERVICES-1.10%
Erac USA Finance Co.,
Unsec. Gtd. Notes,
5.80%, 10/15/12(b) 275,000 256,805
=============================================================================
RETAIL REIT'S-0.28%
Simon Property Group L.P.,
Sr. Unsec. Notes,
6.75%, 05/15/14 65,000 65,536
=============================================================================
SECURITY & ALARM SERVICES-0.17%
Geo Group, Inc. (The),
Sr. Unsec. Global Notes,
8.25%, 07/15/13 40,000 39,200
=============================================================================
SEMICONDUCTORS-0.31%
Viasystems Inc.,
Sr. Unsec. Gtd. Global Notes,
10.50%, 01/15/11 80,000 72,000
=============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. DIVERSIFIED INCOME FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
SOVEREIGN DEBT-2.10%
Brazilian Government International Bond (Brazil),
Sr. Global Notes,
5.88%, 01/15/19 $120,000 $ 121,830
- -----------------------------------------------------------------------------
Republic of Peru (Peru),
Sr. Unsec. Unsub. Global Notes,
7.13%, 03/30/19 50,000 53,750
- -----------------------------------------------------------------------------
United Mexican States (Mexico),
Sr. Unsec. Global Notes,
5.88%, 02/17/14 300,000 315,195
=============================================================================
490,775
=============================================================================
SPECIALTY STORES-0.68%
Staples Inc.,
Sr. Unsec. Gtd. Unsub. Notes,
7.75%, 04/01/11 150,000 158,830
=============================================================================
STEEL-1.06%
ArcelorMittal (Luxembourg),
Sr. Unsec. Unsub. Global Notes,
9.00%, 02/15/15 55,000 58,045
- -----------------------------------------------------------------------------
United States Steel Corp.,
Sr. Unsec. Bonds,
6.65%, 06/01/37 80,000 62,253
- -----------------------------------------------------------------------------
Sr. Unsec. Unsub. Notes,
6.05%, 06/01/17 150,000 127,792
=============================================================================
248,090
=============================================================================
SYSTEMS SOFTWARE-0.95%
Oracle Corp.,
Sr. Unsec. Global Notes,
6.13%, 07/08/39 220,000 220,605
=============================================================================
TEXTILES-0.20%
Invista,
Sr. Unsec. Unsub. Notes,
9.25%, 05/01/12(b) 50,000 47,500
=============================================================================
THRIFTS & MORTGAGE FINANCE-0.17%
Countrywide Financial Corp.,
Sr. Unsec. Gtd. Unsub. Medium-Term Global Notes,
5.80%, 06/07/12 40,000 40,250
=============================================================================
TIRES & RUBBER-0.22%
Goodyear Tire & Rubber Co. (The),
Sr. Unsec. Gtd. Unsub. Global Notes,
9.00%, 07/01/15 50,000 50,375
=============================================================================
TOBACCO-0.85%
Philip Morris International Inc.,
Sr. Unsec. Unsub. Global Notes,
5.65%, 05/16/18 190,000 198,328
=============================================================================
TRADING COMPANIES & DISTRIBUTORS-0.92%
GATX Corp.,
Sr. Notes,
8.75%, 05/15/14 150,000 155,535
- -----------------------------------------------------------------------------
RSC Equipment Rental Inc.,
Sr. Sec. Notes,
10.00%, 07/15/17(b) 20,000 20,100
- -----------------------------------------------------------------------------
United Rentals North America, Inc.,
Sr. Unsec. Gtd. Global Notes,
6.50%, 02/15/12 40,000 38,900
=============================================================================
214,535
=============================================================================
TRUCKING-0.10%
Hertz Corp. (The),
Sr. Unsec. Gtd. Global Notes,
8.88%, 01/01/14 25,000 23,188
=============================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.06%
Sprint Capital Corp.,
Sr. Unsec. Gtd. Unsub. Global Notes,
6.88%, 11/15/28 25,000 17,844
- -----------------------------------------------------------------------------
Vodafone Group PLC (United Kingdom),
Sr. Unsec. Global Notes,
7.75%, 02/15/10 220,000 228,167
=============================================================================
246,011
=============================================================================
Total Bonds & Notes (Cost $19,494,047) 18,418,208
=============================================================================
U.S. GOVERNMENT SPONSORED MORTGAGE-BACKED SECURITIES-7.86%
FEDERAL HOME LOAN MORTGAGE CORP. (FHLMC)-2.61%
Pass Through Ctfs.,
8.50%, 03/01/10 32 33
- -----------------------------------------------------------------------------
6.50%, 05/01/16 to 08/01/32 15,966 17,084
- -----------------------------------------------------------------------------
6.00%, 05/01/17 to 12/01/31 72,375 76,426
- -----------------------------------------------------------------------------
5.50%, 09/01/17 57,242 60,485
- -----------------------------------------------------------------------------
7.00%, 08/01/21 93,629 102,293
- -----------------------------------------------------------------------------
Pass Through Ctfs., TBA,
4.50%, 07/01/39(f) 100,000 99,563
- -----------------------------------------------------------------------------
5.00%, 07/01/39(f) 250,000 254,258
=============================================================================
610,142
=============================================================================
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)-5.08%
Pass Through Ctfs.,
7.00%, 02/01/16 to 09/01/32 31,666 34,477
- -----------------------------------------------------------------------------
6.50%, 05/01/16 to 10/01/35 24,084 25,881
- -----------------------------------------------------------------------------
5.00%, 11/01/18 55,939 58,584
- -----------------------------------------------------------------------------
7.50%, 04/01/29 to 10/01/29 94,861 103,531
- -----------------------------------------------------------------------------
8.00%, 04/01/32 6,099 6,646
- -----------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. DIVERSIFIED INCOME FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)-(CONTINUED)
Pass Through Ctfs., TBA,
4.00%, 07/01/24(f) $350,000 $ 350,109
- -----------------------------------------------------------------------------
4.50%, 07/01/24 to 07/01/39(f) 400,000 401,468
- -----------------------------------------------------------------------------
5.00%, 07/01/39(f) 200,000 203,656
=============================================================================
1,184,352
=============================================================================
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA)-0.17%
Pass Through Ctfs.,
7.50%, 06/15/23 12,329 13,539
- -----------------------------------------------------------------------------
8.50%, 11/15/24 6,381 6,914
- -----------------------------------------------------------------------------
7.00%, 07/15/31 to 08/15/31 3,312 3,620
- -----------------------------------------------------------------------------
6.50%, 11/15/31 to 03/15/32 7,406 7,977
- -----------------------------------------------------------------------------
6.00%, 11/15/32 6,589 6,926
=============================================================================
38,976
=============================================================================
Total U.S. Government Sponsored Mortgage-
Backed Securities (Cost $1,823,208) 1,833,470
=============================================================================
ASSET-BACKED SECURITIES-4.86%
COLLATERALIZED MORTGAGE OBLIGATIONS-4.86%
Citicorp Lease Pass-Through Trust
-Series 1999-1, Class A2, Pass Through Ctfs.,
8.04%, 12/15/19(b) 675,000 614,868
- -----------------------------------------------------------------------------
Countrywide Asset-Backed Ctfs.
-Series 2007-4, Class A1B, Pass Through Ctfs.,
5.81%, 09/25/37 117,129 108,068
- -----------------------------------------------------------------------------
Credit Suisse Mortgage Capital Ctfs.
-Series 2009-R2, Class 1A11, Floating Rate Pass
Through Ctfs.,
3.58%, 09/26/34 (Acquired 03/27/09; Cost
$159,427)(b)(c) 183,778 181,940
- -----------------------------------------------------------------------------
Wells Fargo Mortgage Backed Securities
Trust-Series 2004-Z, Class 2A1, Floating Rate
Pass Through Ctfs.,
4.57%, 12/25/34(c) 258,488 227,456
=============================================================================
Total Asset-Backed Securities (Cost
$1,262,571) 1,132,332
=============================================================================
U.S. TREASURY NOTES-4.13%
4.88%, 08/15/09(g) 120,000 120,680
- -----------------------------------------------------------------------------
1.50%, 12/31/13 875,000 842,871
=============================================================================
Total U.S. Treasury Notes (Cost $989,852) 963,551
=============================================================================
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------
PREFERRED STOCKS-3.40%
OFFICE SERVICES & SUPPLIES-3.40%
Pitney Bowes International Holdings Inc.
-Series D, 4.85% Pfd. (Cost $771,274) 8 $ 793,076
=============================================================================
<Caption>
PRINCIPAL
AMOUNT
U.S. GOVERNMENT SPONSORED AGENCY SECURITIES-0.77%
STUDENT LOAN MARKETING ASSOCIATION-0.77%
SLM Corp.,
Series-BED4, Sr. Unsec. Unsub. Floating Rate
Medium-Term Notes,
0.65%, 03/15/10 (Cost $197,173)(c) $200,000 179,144
=============================================================================
MUNICIPAL OBLIGATIONS-0.58%
California (State of) Industry Urban Development
Agency (Project No. 3);
Series 2003, Taxable Allocation RB,
(INS-National Public Finance Guarantee Corp.)
6.10%, 05/01/24(h) 100,000 82,373
- -----------------------------------------------------------------------------
Florida (State of) Development Finance Corp. (Palm
Bay Academy Inc.);
Series 2006 B, Taxable RB,
7.50%, 05/15/17 65,000 53,413
=============================================================================
Total Municipal Obligations (Cost $166,666) 135,786
=============================================================================
<Caption>
SHARES
COMMON STOCKS & OTHER EQUITY INTERESTS-0.08%
BROADCASTING-0.02%
Adelphia Communications Corp.,(i) -- 1,800
- -----------------------------------------------------------------------------
Adelphia Recovery Trust-Series ACC-1(i) 87,412 2,622
=============================================================================
4,422
=============================================================================
CABLE & SATELLITE-0.06%
Time Warner Cable, Inc.-Class A(i) 434 13,745
=============================================================================
Total Common Stocks & Other Equity Interests
(Cost $86,708) 18,167
=============================================================================
MONEY MARKET FUNDS-3.91%
Liquid Assets Portfolio-Institutional Class(j) 455,534 455,534
- -----------------------------------------------------------------------------
Premier Portfolio-Institutional Class(j) 455,534 455,534
=============================================================================
Total Money Market Funds (Cost $911,068) 911,068
=============================================================================
TOTAL INVESTMENTS-104.57% (Cost $25,702,567) 24,384,802
=============================================================================
OTHER ASSETS LESS LIABILITIES-(4.57)% (1,065,902)
=============================================================================
NET ASSETS-100.00% $23,318,900
_____________________________________________________________________________
=============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. DIVERSIFIED INCOME FUND
Investment Abbreviations:
<Table>
Ctfs. - Certificates
Gtd. - Guaranteed
INS - Insurer
Jr. - Junior
Pfd. - Preferred
REIT - Real Estate Investment Trust
RB - Revenue Bonds
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
TBA - To Be Announced
Unsec. - Unsecured
Unsub. - Unsubordinated
</Table>
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) Security purchased or received in a transaction exempt from registration
under the Securities Act of 1933, as amended. The security may be resold
pursuant to an exemption from registration under the 1933 Act, typically
to qualified institutional buyers. The aggregate value of these securities
at June 30, 2009 was $5,324,970, which represented 22.84% of the Fund's
Net Assets.
(c) Interest or dividend rate is redetermined periodically. Rate shown is the
rate in effect on June 30, 2009.
(d) Perpetual bond with no specified maturity date.
(e) Defaulted security. Currently, the issuer is partially or fully in default
with respect to interest payments. The value of this security at June 30,
2009 represented less than 1% of the Fund's Net Assets.
(f) Security purchased on forward commitment basis. This security is subject
to dollar roll transactions. See Note 1J.
(g) All or a portion of the value was pledged as collateral to cover margin
requirements for open futures contracts. See Note 1M and Note 4.
(h) Principal and/or interest payments are secured by the bond insurance
company listed.
(i) Non-income producing security acquired as part of the Adelphia
Communications bankruptcy reorganization.
(j) The money market fund and the Fund are affiliated by having the same
investment advisor.
PORTFOLIO COMPOSITION
By industry, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
Investment Banking & Brokerage 8.5%
- -------------------------------------------------------------------------
Integrated Telecommunication Services 7.0
- -------------------------------------------------------------------------
Other Diversified Financial Services 6.1
- -------------------------------------------------------------------------
Federal National Mortgage Association (FNMA) 5.1
- -------------------------------------------------------------------------
Collateralized Mortgage Obligations 4.9
- -------------------------------------------------------------------------
Diversified Banks 4.9
- -------------------------------------------------------------------------
U.S. Treasury Notes 4.1
- -------------------------------------------------------------------------
Oil & Gas Exploration & Production 3.7
- -------------------------------------------------------------------------
Electric Utilities 3.5
- -------------------------------------------------------------------------
Office Services & Supplies 3.4
- -------------------------------------------------------------------------
Multi-Line Insurance 3.2
- -------------------------------------------------------------------------
Industries each less than 3% of Total Net Assets 46.3
- -------------------------------------------------------------------------
Money Market Funds Plus Assets Less Liabilities (0.7)
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. DIVERSIFIED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $24,791,499) $ 23,473,734
- --------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 911,068
================================================================================
Total investments, at value (Cost $25,702,567) 24,384,802
================================================================================
Receivables for:
Investments sold 269,262
- --------------------------------------------------------------------------------
Collateral for credit default swap agreements 1,100,000
- --------------------------------------------------------------------------------
Fund shares sold 8,289
- --------------------------------------------------------------------------------
Dividends and Interest 279,739
- --------------------------------------------------------------------------------
Principal paydowns 1,555
- --------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 28,771
- --------------------------------------------------------------------------------
Other assets 411
================================================================================
Total assets 26,072,829
________________________________________________________________________________
================================================================================
LIABILITIES:
Payables for:
Investments purchased 1,941,090
- --------------------------------------------------------------------------------
Credit default swap agreements close-out 675,534
- --------------------------------------------------------------------------------
Fund shares reacquired 47,738
- --------------------------------------------------------------------------------
Variation margin 2,422
- --------------------------------------------------------------------------------
Accrued fees to affiliates 7,979
- --------------------------------------------------------------------------------
Accrued other operating expenses 42,838
- --------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 36,328
================================================================================
Total liabilities 2,753,929
================================================================================
Net assets applicable to shares outstanding $ 23,318,900
________________________________________________________________________________
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 44,020,314
- --------------------------------------------------------------------------------
Undistributed net investment income 3,132,615
- --------------------------------------------------------------------------------
Undistributed net realized gain (loss) (22,539,702)
- --------------------------------------------------------------------------------
Unrealized appreciation (depreciation) (1,294,327)
================================================================================
$ 23,318,900
________________________________________________________________________________
================================================================================
NET ASSETS:
Series I $ 22,962,123
________________________________________________________________________________
================================================================================
Series II $ 356,777
________________________________________________________________________________
================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 3,857,197
________________________________________________________________________________
================================================================================
Series II 60,433
________________________________________________________________________________
================================================================================
Series I:
Net asset value per share $ 5.95
________________________________________________________________________________
================================================================================
Series II:
Net asset value per share $ 5.90
________________________________________________________________________________
================================================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Interest $ 798,525
- ------------------------------------------------------
Dividends 42,455
- ------------------------------------------------------
Dividends from affiliated money market
funds 3,843
======================================================
Total investment income 844,823
======================================================
EXPENSES:
Advisory fees 68,868
- ------------------------------------------------------
Administrative services fees 44,572
- ------------------------------------------------------
Custodian fees 7,633
- ------------------------------------------------------
Distribution fees -- Series II 442
- ------------------------------------------------------
Transfer agent fees 4,296
- ------------------------------------------------------
Trustees' and officers' fees and
benefits 10,356
- ------------------------------------------------------
Professional services fees 26,277
- ------------------------------------------------------
Other 13,368
======================================================
Total expenses 175,812
======================================================
Less: Fees waived and expenses
reimbursed (89,966)
======================================================
Net expenses 85,846
======================================================
Net investment income 758,977
======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (6,434,462)
- ------------------------------------------------------
Futures contracts (108,633)
- ------------------------------------------------------
Swap agreements 21,851
======================================================
(6,521,244)
======================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 6,274,093
- ------------------------------------------------------
Futures contracts (244,212)
- ------------------------------------------------------
Swap agreements 26,770
======================================================
6,056,651
======================================================
Net realized and unrealized gain (loss) (464,593)
======================================================
Net increase in net assets resulting
from operations $ 294,384
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. DIVERSIFIED INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- -------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 758,977 $ 2,195,663
- -------------------------------------------------------------------------------------------------------
Net realized gain (loss) (6,521,244) (2,233,230)
- -------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 6,056,651 (5,040,130)
=======================================================================================================
Net increase (decrease) in net assets resulting from operations 294,384 (5,077,697)
=======================================================================================================
Distributions to shareholders from net investment income:
Series I -- (2,560,300)
- -------------------------------------------------------------------------------------------------------
Series II -- (44,345)
=======================================================================================================
Total distributions from net investment income -- (2,604,645)
=======================================================================================================
Share transactions-net:
Series I (1,399,253) (6,708,387)
- -------------------------------------------------------------------------------------------------------
Series II (54,478) (73,155)
=======================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (1,453,731) (6,781,542)
=======================================================================================================
Net increase (decrease) in net assets (1,159,347) (14,463,884)
=======================================================================================================
NET ASSETS:
Beginning of period 24,478,247 38,942,131
=======================================================================================================
End of period (includes undistributed net investment income of
$3,132,615 and $2,373,638, respectively) $23,318,900 $ 24,478,247
_______________________________________________________________________________________________________
=======================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. DIVERSIFIED INCOME FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Diversified Income Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is to achieve a high level of current income.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
A security listed or traded on an exchange (except convertible bonds) is
valued at its 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, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Swap agreements are fair valued using an evaluated quote provided by an
independent pricing service. Evaluated quotes provided by the pricing
service are valued based on a model which may include end of day net
present values, spreads, ratings, industry, and company performance.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
AIM V.I. DIVERSIFIED INCOME FUND
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Paydown gains and losses on mortgage and asset-backed securities are
recorded as adjustments to interest income. Dividend income is recorded on
the ex-dividend date. Bond premiums and discounts are amortized and/or
accreted for financial reporting purposes.
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. LOWER-RATED SECURITIES -- The Fund may invest in lower-quality debt
securities, i.e., "junk bonds". Investments in lower-rated securities or
unrated securities of comparable quality tend to be more sensitive to
economic conditions than higher rated securities. Junk bonds involve a
greater risk of default by the issuer because such securities are
generally unsecured and are often subordinated to other creditors' claims.
J. DOLLAR ROLL AND FORWARD COMMITMENT TRANSACTIONS -- The Fund may engage in
dollar roll and forward commitment transactions with respect to mortgage-
backed securities issued by GNMA, FNMA and FHLMC. These transactions are
often conducted on a to be announced ("TBA") basis. In a TBA mortgage-
backed transaction, the seller does not specify the particular securities
to be delivered. Rather, a Fund agrees to accept any security that meets
specified terms, such as an agreed upon issuer, coupon rate and terms of
the underlying mortgages. TBA mortgage-backed transactions generally
settle once a month on a specific date.
In a dollar roll transaction, the Fund sells a mortgage-backed security
held in the Fund to a financial institution such as a bank or broker-
dealer, and simultaneously agrees to purchase a substantially similar
security (same type, coupon and maturity) from the institution at an
agreed upon price and future date. The mortgage-backed securities to be
purchased will bear the same coupon as those sold, but generally will be
collateralized by different pools of mortgages with different prepayment
histories. Based on the typical structure of dollar roll transactions by
the Fund, the dollar roll transactions are accounted for as financing
transactions in which the Fund receives compensation as either a "fee" or
a "drop". "Fee" income which is agreed upon amongst the parties at the
commencement of the dollar roll and the "drop" which is the difference
between the selling price and the repurchase price of the mortgage-backed
securities are amortized to income. During the period between the sale and
purchase settlement dates, the Fund will not be entitled to
AIM V.I. DIVERSIFIED INCOME FUND
receive interest and principal payments on securities purchased and not
yet settled. Proceeds of the sale may be invested in short-term
instruments, and the income from these investments, together with any
additional fee income received on the sale, could generate income for the
Fund exceeding the yield on the security sold. Dollar roll transactions
are considered borrowings under the 1940 Act.
Forward commitment transactions involve commitments by the Fund to
acquire or sell TBA mortgage-backed securities from/to a financial
institution, such as a bank or broker-dealer at a specified future date
and amount. The TBA mortgage-backed security is marked to market until
settlement and the unrealized appreciation or depreciation is recorded in
the statement of operations.
At the time the Fund enters into the dollar roll or forward commitment
transaction, mortgage-backed securities or other liquid assets held by the
Fund having a dollar value equal to the purchase price or in an amount
sufficient to honor the forward commitment will be segregated.
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 purchase under the
agreement. In the event that the buyer of securities in a dollar roll
transaction files for bankruptcy or becomes insolvent, the Fund's use of
the proceeds from the sale of the securities may be restricted pending a
determination by the other party, or its trustee or receiver, whether to
enforce the Fund's obligation to purchase the securities. The return
earned by the Fund with the proceeds of the dollar roll transaction may
not exceed the return on the securities sold.
Forward commitment transactions involve the risk that a counter-party to
the transaction may fail to complete the transaction. If this occurs, the
Fund may lose the opportunity to purchase or sell the security at the
agreed upon price. Settlement dates of forward commitment transactions may
be a month or more after entering into these transactions and as a result
the market values of the securities may vary from the purchase or sale
prices. Therefore, forward commitment transactions may increase the Fund's
overall interest rate exposure.
K. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
Reported net realized foreign currency gains or losses arise from (i)
sales of foreign currencies, (ii) currency gains or losses realized
between the trade and settlement dates on securities transactions, and
(iii) the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency gains and losses arise from changes in the fair values of
assets and liabilities, other than investments in securities at fiscal
period end, resulting from changes in exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
L. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed, realized gains (losses) are
recorded. Realized and unrealized gains (losses) on the contracts are
included in the Statement of Operations. The maximum risks associated with
foreign currency contracts include failure of the counterparty to meet the
terms of the contract and the value of the foreign currency changing
unfavorably. These risks may be in excess of the amounts reflected in the
Statement of Assets and Liabilities.
M. FUTURES CONTRACTS -- The Fund may enter into futures contracts to manage
exposure to interest rate and equity price movements and currency risks. A
futures contract is an agreement between two parties to purchase or sell a
specified underlying instrument for a fixed price at a future date. The
Fund currently invests only in exchange-traded futures and they are
standardized as to maturity date and underlying financial instrument.
Initial margin deposits required upon entering into futures contracts are
satisfied by the segregation of specific securities as collateral for the
account of the broker (the Fund's agent in acquiring the futures
position). During the period the futures contracts are open, changes in
the value of the contracts are recognized as unrealized gains or losses by
recalculating the value of the contracts on a daily basis. Subsequent or
variation margin payments are received or made depending upon whether
unrealized gains or losses are incurred. These amounts are reflected as
receivables or payables on the Statement of Assets and Liabilities. When
the contracts are closed or expire, the Fund recognizes a realized gain or
loss equal to the difference between the proceeds from, or cost of, the
closing transaction and the Fund's basis in the contract. The net realized
gain (loss) and the change in unrealized gain (loss) on futures contracts
held during the period is included on the Statement of Operations. The
primary risks associated with futures contracts are market risk and the
absence of a liquid secondary market. If the Fund were unable to liquidate
a futures contract and/or enter into an offsetting closing transaction,
the Fund would continue to be subject to market risk with respect to the
value of the contracts and continue to be required to maintain the margin
deposits on the futures contracts. Futures contracts have minimal
counterparty risk since the exchange's clearinghouse, as counterparty to
all exchange traded futures, guarantees the futures against default. Risks
may exceed amounts recognized in the Statement of Assets and Liabilities.
N. SWAP AGREEMENTS -- The Fund may enter into various swap transactions,
including interest rate, index, currency exchange rate and credit default
swap contracts ("CDS") for investment purposes or to manage interest rate,
currency or credit risk.
Interest rate, index, and currency exchange rate swap agreements are
two-party contracts entered into primarily to exchange the returns (or
differentials in rates of returns) earned or realized on particular
predetermined investments or instruments. The gross returns to be
exchanged or "swapped" between the parties are calculated with respect to
a notional amount, i.e., the return on or increase in value of a
particular dollar amount invested at a particular interest rate, in a
particular foreign currency, or in a "basket" of securities representing a
particular index.
AIM V.I. DIVERSIFIED INCOME FUND
A CDS is an agreement between two parties ("Counterparties") to exchange
the credit risk of an issuer. A buyer of a CDS is said to buy protection
by paying a fixed payment over the life of the agreement and in some
situations an upfront payment to the seller of the CDS. If a defined
credit event occurs (such as payment default or bankruptcy), the Fund as a
protection buyer would cease paying its fixed payment, the Fund would
deliver eligible bonds issued by the reference entity to the seller, and
the seller would pay the full notional value, or the "par value", of the
referenced obligation to the Fund. A seller of a CDS is said to sell
protection and thus would receive a fixed payment over the life of the
agreement and an upfront payment, if applicable. If a credit event occurs,
the Fund as a protection seller would cease to receive the fixed payment
stream, the Fund would pay the buyer "par value" or the full notional
value of the referenced obligation, and the Fund would receive the
eligible bonds issued by the reference entity. In turn, these bonds may be
sold in order to realize a recovery value. Alternatively, the seller of
the CDS and its counterparty may agree to net the notional amount and the
market value of the bonds and make a cash payment equal to the difference
to the buyer of protection. If no credit event occurs, the Fund receives
the fixed payment over the life of the agreement. As the seller, the Fund
would effectively add leverage to its portfolio because, in addition to
its total net assets, the Fund would be subject to investment exposure on
the notional amount of the CDS. In connection with these agreements, cash
and securities may be identified as collateral in accordance with the
terms of the respective swap agreements to provide assets of value and
recourse in the event of default under the swap agreement or
bankruptcy/insolvency of a party to the swap agreement. The Fund's maximum
risk of loss from counterparty risk, either as the protection seller or as
the protection buyer, is the value of the contract. The risk may be
mitigated by having a master netting arrangement between the Fund and the
counterparty and by the posting of collateral by the counterparty to cover
the Fund's exposure to the counterparty.
Implied credit spreads represent the current level at which protection
could be bought or sold given the terms of the existing CDS contract and
serve as an indicator of the current status of the payment/performance
risk of the CDS. An implied spread that has widened or increased since
entry into the initial contract may indicate a deteriorating credit
profile and increased risk of default for the reference entity. A
declining or narrowing spread may indicate an improving credit profile or
decreased risk of default for the reference entity. Alternatively, credit
spreads may increase or decrease reflecting the general tolerance for risk
in the credit markets.
Changes in the value of swap agreements are recognized as unrealized
gains (losses) in the Statement of Operations by "marking to market" on a
daily basis to reflect the value of the swap agreement at the end of each
trading day. Payments received or paid at the beginning of the agreement
are reflected as such on the Statement of Assets and Liabilities and may
be referred to as upfront payments. The Fund accrues for the fixed payment
stream and amortizes upfront payments, if any, on swap agreements on a
daily basis with the net amount, recorded as a component of realized gain
(loss) on the Statement of Operations. A liquidation payment received or
made at the termination of a swap agreement is recorded as realized gain
(loss) on the Statement of Operations. The Fund segregates liquid
securities having a value at least equal to the amount of the potential
obligation of a Fund under any swap transaction. Entering into these
agreements involves, to varying degrees, lack of liquidity and elements of
credit, market, and counterparty risk in excess of amounts recognized on
the Statement of Assets and Liabilities. Such risks involve the
possibility that a swap is difficult to sell or liquidate; the
counterparty does not honor its obligations under the agreement and
unfavorable interest rates and market fluctuations.
O. COLLATERAL -- To the extent the Fund has pledged or segregated a security
as collateral and that security is subsequently sold, it is the Fund's
practice to replace such collateral no later than the next business day.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
First $250 million 0.60%
- -------------------------------------------------------------------
Over $250 million 0.55%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 0.75% and Series
II shares to 1.00% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, 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. These credits are used to pay certain expenses incurred by the Fund. To
the extent that the annualized expense ratio does not exceed the expense
limitation, the Advisor will retain its ability to be reimbursed for such fee
waivers or reimbursements prior to the end of each fiscal year.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash in such affiliated money market
funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$68,868 and reimbursed Fund expenses of $21,098.
AIM V.I. DIVERSIFIED INCOME FUND
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $24,795 for accounting and fund
administrative services and reimbursed $19,777 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- ---------------------------------------------------------------------------------------------------------------------
Equity Securities $924,813 $ 2,622 $794,876 $ 1,722,311
- ---------------------------------------------------------------------------------------------------------------------
U.S. Treasury Securities -- 963,551 -- 963,551
- ---------------------------------------------------------------------------------------------------------------------
U.S. Government Sponsored Agency Securities -- 2,012,614 -- 2,012,614
- ---------------------------------------------------------------------------------------------------------------------
Corporate Debt Securities -- 17,927,433 -- 17,927,433
- ---------------------------------------------------------------------------------------------------------------------
Asset Backed Securities -- 950,392 181,940 1,132,332
- ---------------------------------------------------------------------------------------------------------------------
Municipal Obligations -- 135,786 -- 135,786
- ---------------------------------------------------------------------------------------------------------------------
Foreign Government Debt Securities -- 490,775 -- 490,775
- ---------------------------------------------------------------------------------------------------------------------
$24,384,802
- ---------------------------------------------------------------------------------------------------------------------
Other Investments* 23,438 -- -- 23,438
=====================================================================================================================
Total Investments $948,251 $22,483,173 $976,816 $24,408,240
_____________________________________________________________________________________________________________________
=====================================================================================================================
</Table>
* Other Investments includes futures which are included at unrealized
appreciation.
NOTE 4--DERIVATIVE INVESTMENTS
Effective with the beginning of the Fund's fiscal year, the Fund has adopted the
provisions of FASB Statement No. 161, Disclosures about Derivative Instruments
and Hedging Activities. The standard is intended to improve financial reporting
about derivative instruments and hedging activities by requiring
AIM V.I. DIVERSIFIED INCOME FUND
enhanced disclosures to enable investors to better understand their effects on
an entity's financial position and financial performance. The adoption of this
provision has no impact on the results of operations reported in the financial
statements.
VALUE OF DERIVATIVE INSTRUMENTS AT PERIOD-END
The Table below summarizes the value of the Fund's derivative instruments,
detailed by primary risk exposure, held as of June 30, 2009:
<Table>
<Caption>
VALUE
-----------------------
RISK EXPOSURE/DERIVATIVE TYPE ASSETS LIABILITIES
- -----------------------------------------------------------------------------------------------------
Credit Risk
Credit Default Swaps(a) $ -- $(675,534)
- -----------------------------------------------------------------------------------------------------
Interest rate risk
Futures contracts(b) 39,501 (16,063)
=====================================================================================================
$39,501 $(691,597)
_____________________________________________________________________________________________________
=====================================================================================================
</Table>
(a) Values are disclosed on the Statement of Assets and Liabilities under
Credit default swap agreements close-out. Contracts were closed upon the
declaration of bankruptcy by Lehman Brothers Holdings Inc. on September 15,
2008. The Fund had $1,100,000 cash collateral to be returned to the Fund on
settlement of the contracts.
(b) Includes cumulative appreciation (depreciation) of futures contracts. Only
current day's variation margin receivable (payable) is reported within the
Statement of Assets & Liabilities.
EFFECT OF DERIVATIVE INSTRUMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009
The table below summarizes the gains (losses) on derivative instruments,
detailed by primary risk exposure, recognized in earnings during the period:
<Table>
<Caption>
LOCATION OF GAIN (LOSS) ON
STATEMENT OF OPERATIONS
------------------------------
FUTURES* SWAP AGREEMENTS*
- ------------------------------------------------------------------------------------------------------
Realized Gain (Loss)
Credit risk $ -- $21,851
- ------------------------------------------------------------------------------------------------------
Interest rate risk (108,633) --
======================================================================================================
Subtotal $(108,633) $21,851
======================================================================================================
Change in Unrealized Appreciation (Depreciation)
Credit risk $ -- $26,770
- ------------------------------------------------------------------------------------------------------
Interest rate risk (244,212) --
======================================================================================================
Subtotal $(244,212) $26,770
======================================================================================================
Total $(352,845) $48,621
______________________________________________________________________________________________________
======================================================================================================
</Table>
* The average value outstanding of futures contracts and swap agreements during
the period was $3,287,977 and $1,150,000, respectively.
FUTURES CONTRACTS AT PERIOD-END
<Table>
<Caption>
OPEN FUTURES CONTRACTS
- ---------------------------------------------------------------------------------------------------------------------------
UNREALIZED
NUMBER OF MONTH/ APPRECIATION
CONTRACT CONTRACTS COMMITMENT VALUE (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------------------------
U.S. Treasury 5 Year Notes 5 September-2009/Long $ 573,594 $ 4,286
- ---------------------------------------------------------------------------------------------------------------------------
U.S. Treasury 2 Year Notes 16 September-2009/Long 3,459,500 (6,677)
- ---------------------------------------------------------------------------------------------------------------------------
U.S. Treasury 30 Year Bonds 13 September-2009/Long 1,538,672 35,215
- ---------------------------------------------------------------------------------------------------------------------------
Subtotal $5,571,766 $32,824
- ---------------------------------------------------------------------------------------------------------------------------
U.S. Treasury 10 Year Notes 8 September-2009/Short $ (930,125) $(9,386)
===========================================================================================================================
Total $4,641,641 $23,438
___________________________________________________________________________________________________________________________
===========================================================================================================================
</Table>
NOTE 5--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
AIM V.I. DIVERSIFIED INCOME FUND
During the six months ended June 30, 2009, the Fund paid legal fees of $1,453
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 6--CASH BALANCES
The Fund may borrow for leveraging in an amount up to 5% of the Fund's total
assets (excluding the amount borrowed) at the time the borrowing is made. In
doing so, the Fund is permitted to temporarily carry a negative or overdrawn
balance in its account with The State Street Bank and Trust Company, the
custodian bank. To compensate the custodian bank for such overdrafts, the
overdrawn Fund may either (i) leave funds as a compensating balance in the
account so the custodian bank can be compensated by earning the additional
interest; or (ii) compensate by paying the custodian bank at a rate agreed upon
by the custodian bank and Invesco Aim, not to exceed the contractually agreed
upon rate. A Fund may not purchase additional securities when any borrowings
from banks exceeds 5% of the Fund's total assets.
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
December 31, 2009 $ 6,105,068
- -----------------------------------------------------------------------------------------------
December 31, 2010 6,879,052
- -----------------------------------------------------------------------------------------------
December 31, 2014 341,884
- -----------------------------------------------------------------------------------------------
December 31, 2015 221,396
- -----------------------------------------------------------------------------------------------
December 31, 2016 2,197,944
===============================================================================================
Total capital loss carryforward $15,745,344
_______________________________________________________________________________________________
===============================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $26,393,195 and
$26,473,452, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 715,279
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (2,038,509)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $(1,323,230)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $25,708,032.
</Table>
AIM V.I. DIVERSIFIED INCOME FUND
NOTE 9--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- -----------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
------------------------ ---------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
Sold:
Series I 252,398 $ 1,437,593 263,402 $ 1,949,370
- -----------------------------------------------------------------------------------------------------------------------
Series II 398 2,351 5,542 36,732
=======================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 450,757 2,560,300
- -----------------------------------------------------------------------------------------------------------------------
Series II -- -- 7,863 44,345
=======================================================================================================================
Reacquired:
Series I (496,898) (2,836,846) (1,527,553) (11,218,057)
- -----------------------------------------------------------------------------------------------------------------------
Series II (10,101) (56,829) (21,536) (154,232)
=======================================================================================================================
Net increase (decrease) in share activity (254,203) $(1,453,731) (821,525) $ (6,781,542)
_______________________________________________________________________________________________________________________
=======================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 77% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and/or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
AIM V.I. DIVERSIFIED INCOME FUND
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
(LOSSES)
NET ASSET ON SECURITIES DIVIDENDS
VALUE, NET (BOTH TOTAL FROM FROM NET NET ASSET NET ASSETS,
BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT VALUE, END TOTAL END OF PERIOD
OF PERIOD INCOME(a) UNREALIZED) OPERATIONS INCOME OF PERIOD RETURN(b) (000S OMITTED)
- ------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $5.87 $0.19 $(0.11) $ 0.08 $ -- $5.95 1.36% $22,962
Year ended 12/31/08 7.80 0.50 (1.74) (1.24) (0.69) 5.87 (15.59) 24,070
Year ended 12/31/07 8.28 0.51 (0.37) 0.14 (0.62) 7.80 1.72 38,336
Year ended 12/31/06 8.43 0.46 (0.08) 0.38 (0.53) 8.28 4.48 46,743
Year ended 12/31/05 8.74 0.40 (0.15) 0.25 (0.56) 8.43 2.90 55,065
Year ended 12/31/04 8.82 0.36 0.08 0.44 (0.52) 8.74 5.03 65,069
- ------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 5.83 0.18 (0.11) 0.07 -- 5.90 1.20 357
Year ended 12/31/08 7.74 0.48 (1.72) (1.24) (0.67) 5.83 (15.78) 409
Year ended 12/31/07 8.21 0.48 (0.36) 0.12 (0.59) 7.74 1.51 606
Year ended 12/31/06 8.36 0.44 (0.09) 0.35 (0.50) 8.21 4.17 713
Year ended 12/31/05 8.67 0.38 (0.15) 0.23 (0.54) 8.36 2.67 902
Year ended 12/31/04 8.78 0.33 0.08 0.41 (0.52) 8.67 4.69 980
______________________________________________________________________________________________________________________________
==============================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
WITH FEE WAIVERS FEE WAIVERS INCOME
AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
ABSORBED ABSORBED NET ASSETS TURNOVER(c)
- ---------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 0.75%(d) 1.53%(d) 6.73%(d) 121%
Year ended 12/31/08 0.75 1.31 6.83 35
Year ended 12/31/07 0.75 1.17 6.04 67
Year ended 12/31/06 0.75 1.10 5.47 78
Year ended 12/31/05 0.89 1.08 4.54 92
Year ended 12/31/04 1.01 1.01 4.01 113
- ---------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 1.00(d) 1.78(d) 6.48(d) 121
Year ended 12/31/08 1.00 1.56 6.58 35
Year ended 12/31/07 1.00 1.42 5.79 67
Year ended 12/31/06 1.00 1.35 5.22 78
Year ended 12/31/05 1.14 1.33 4.29 92
Year ended 12/31/04 1.26 1.26 3.76 113
_______________________________________________________________________________________
=======================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Total returns are not annualized for periods less than one
year, if applicable, and do not reflect charges assessed in connection with
a variable product, which if included would reduce total returns.
(c) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(d) Ratios are annualized and based on average daily net assets (000's omitted)
of $22,789 and $357 for Series I and Series II shares, respectively.
AIM V.I. DIVERSIFIED INCOME FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,017.10 $3.75 $1,021.08 $3.76 0.75%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,015.50 5.00 1,019.84 5.01 1.00
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. DIVERSIFIED INCOME FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of In addition to their meetings was controlling. Each Trustee may have
AIM Variable Insurance Funds is required throughout the year, the Sub-Committees evaluated the information provided
under the Investment Company Act of 1940 meet at designated contract renewal differently from another Trustee and
to approve annually the renewal of the AIM meetings each year to conduct an in-depth attributed different weight to the various
V.I. Diversified Income Fund (the Fund) review of the performance, fees, expenses, factors. The Trustees recognized that the
investment advisory agreement with Invesco and other matters related to their advisory arrangements and resulting
Aim Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract advisory fees for the Fund and the other
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive AIM Funds are the result of years of
for Mutual Funds (the sub-advisory comparative performance and fee data review and negotiation between the
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an Trustees and Invesco Aim, that the
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Trustees may focus to a greater extent on
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and certain aspects of these arrangements in
Limited, Invesco Australia Limited, supervision of the Senior Officer who also some years than in others, and that the
Invesco Global Asset Management (N.A.), prepares a separate analysis of this Trustees' deliberations and conclusions in
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each a particular year may be based in part on
Institutional (N.A.), Inc., Invesco Senior Sub-Committee then makes recommendations their deliberations and conclusions
Secured Management, Inc. and Invesco to the Investments Committee regarding the regarding these same arrangements
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. throughout the year and in prior years.
Sub-Advisers). During contract renewal The Investments Committee considers each
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes The discussion below serves as a
Board as a whole, and the disinterested or its own recommendations regarding the fees summary of the Senior Officer's
"independent" Trustees voting separately, and expenses of the AIM Funds to the full independent written evaluation with
approved the continuance of the Fund's Board. The Investments Committee also respect to the Fund's investment advisory
investment advisory agreement and the considers each Sub-Committee's agreement as well as a discussion of the
sub-advisory contracts for another year, recommendations in making its annual material factors and related conclusions
effective July 1, 2009. In doing so, the recommendation to the Board whether to that formed the basis for the Board's
Board determined that the Fund's approve the continuance of each AIM Fund's approval of the Fund's investment advisory
investment advisory agreement and the investment advisory agreement and agreement and sub-advisory contracts.
sub-advisory contracts are in the best sub-advisory contracts for another year. Unless otherwise stated, information set
interests of the Fund and its shareholders forth below is as of June 17, 2009, and
and that the compensation to Invesco Aim The independent Trustees met separately does not reflect any changes that may have
and the Affiliated Sub-Advisers under the during their evaluation of the Fund's occurred since that date, including but
Fund's investment advisory agreement and investment advisory agreement and not limited to changes to the Fund's
sub-advisory contracts is fair and sub-advisory contracts with independent performance, advisory fees, expense
reasonable. legal counsel. The independent Trustees limitations and/or fee waivers.
were also assisted in their annual
THE BOARD'S FUND EVALUATION PROCESS evaluation of the Fund's investment FACTORS AND CONCLUSIONS AND SUMMARY OF
advisory agreement by the Senior Officer. INDEPENDENT WRITTEN FEE EVALUATION
The Board's Investments Committee has One responsibility of the Senior Officer
established three Sub-Committees that are is to manage the process by which the AIM A. Nature, Extent and Quality of
responsible for overseeing the management Funds' proposed management fees are Services Provided by Invesco Aim
of a number of the series portfolios of negotiated during the annual contract
the AIM Funds. This Sub-Committee renewal process to ensure that they are The Board reviewed the advisory
structure permits the Trustees to focus on negotiated in a manner that is at arms' services provided to the Fund by Invesco
the performance of the AIM Funds that have length and reasonable. Accordingly, the Aim under the Fund's investment advisory
been assigned to them. The Sub-Committees Senior Officer must either supervise a agreement, the performance of Invesco Aim
meet throughout the year to review the competitive bidding process or prepare an in providing these services, and the
performance of their assigned funds, and independent written evaluation. The Senior credentials and experience of the officers
the Sub-Committees review monthly and Officer recommended that an independent and employees of Invesco Aim who provide
quarterly comparative performance written evaluation be provided and, at the these services. The Board's review of the
information and periodic asset flow data direction of the Board, prepared an qualifications of Invesco Aim to provide
for their assigned funds. These materials independent written evaluation. these services included the Board's
are prepared under the direction and consideration of Invesco Aim's portfolio
supervision of the independent Senior During the annual contract renewal and product review process, various back
Officer, an officer of the AIM Funds who process, the Board considered the factors office support functions provided by
reports directly to the independent discussed below in evaluating the fairness Invesco Aim and its affiliates, and
Trustees. Over the course of each year, and reasonableness of the Fund's Invesco Aim's equity and fixed income
the Sub-Committees meet with portfolio investment advisory agreement and trading operations. The Board concluded
managers for their assigned funds and sub-advisory contracts. The Board that the nature, extent and quality of the
other members of management and review considered all of the information provided advisory services provided to the Fund by
with these individuals the performance, to them, including information provided at Invesco Aim are appropriate and that
investment objective(s), policies, their meetings throughout the year as part Invesco Aim currently is providing
strategies and limitations of these funds. of their ongoing oversight of the Fund, satisfactory advisory services in
and did not identify any particular factor accordance with the terms of the Fund's
that investment advisory agreement. In
addition, based on their
AIM V.I. DIVERSIFIED INCOME FUND continued
ongoing meetings throughout the year C. Fund Performance not reflect the market downturn that
with the Fund's portfolio manager or occurred in the fourth quarter of 2008.
managers, the Board concluded that these The Board considered fund performance
individuals are competent and able to as a relevant factor in considering The Board also compared the Fund's
continue to carry out their whether to approve the investment advisory effective fee rate (the advisory fee after
responsibilities under the Fund's agreement as well as the sub-advisory any advisory fee waivers and before any
investment advisory agreement. contracts for the Fund, as Invesco expense limitations/waivers) to the
Institutional currently manages assets of advisory fee rates of other clients of
In determining whether to continue the the Fund. Invesco Aim and its affiliates with
Fund's investment advisory agreement, the investment strategies comparable to those
Board considered the prior relationship The Board compared the Fund's of the Fund, including one mutual fund
between Invesco Aim and the Fund, as well performance during the past one, three and advised by Invesco Aim and sub-advised by
as the Board's knowledge of Invesco Aim's five calendar years to the performance of Invesco Institutional. The Board noted
operations, and concluded that it is all funds in the Lipper performance that the Fund's rate was above the
beneficial to maintain the current universe that are not managed by Invesco effective fee rate for the other mutual
relationship, in part, because of such Aim or an Affiliated Sub-Adviser, and fund.
knowledge. The Board also considered the against the Lipper VA Underlying Funds -
steps that Invesco Aim and its affiliates Corporate Debt BBB-Rated Index. The Board The Board noted that Invesco Aim has
continue to take to improve the quality noted that the Fund's performance was in contractually agreed to waive fees and/or
and efficiency of the services they the fifth quintile of its performance limit expenses of the Fund through at
provide to the AIM Funds in the areas of universe for the one, three and five year least April 30, 2010 in an amount
investment performance, product line periods (the first quintile being the best necessary to limit total annual operating
diversification, distribution, fund performing funds and the fifth quintile expenses to a specified percentage of
operations, shareholder services and being the worst performing funds). The average daily net assets for each class of
compliance. The Board concluded that the Board noted that the Fund's performance the Fund. The Board also considered the
quality and efficiency of the services was below the performance of the Index for effect this expense limitation would have
Invesco Aim and its affiliates provide to the one, three and five year periods. The on the Fund's estimated total expenses.
the AIM Funds in each of these areas Board also noted that Invesco Aim made
support the Board's approval of the manager and process changes in 2008 and The Board also considered the services
continuance of the Fund's investment early 2009, and Invesco Aim believes it is provided by the Affiliated Sub-Advisers
advisory agreement. too early to assess the impact of such pursuant to the sub-advisory contracts and
changes on the Fund's performance. the services provided by Invesco Aim
B. Nature, Extent and Quality of Although the independent written pursuant to the Fund's advisory agreement,
Services Provided by Affiliated evaluation of the Fund's Senior Officer as well as the allocation of fees between
Sub-Advisers only considered Fund performance through Invesco Aim and the Affiliated
the most recent calendar year, the Board Sub-Advisers pursuant to the sub-advisory
The Board reviewed the services also reviewed more recent Fund performance contracts. The Board noted that the
provided by the Affiliated Sub-Advisers and this review did not change their sub-advisory fees have no direct effect on
under the sub-advisory contracts and the conclusions. The Board noted that, in the Fund or its shareholders, as they are
credentials and experience of the officers response to the Board's focus on fund paid by Invesco Aim to the Affiliated
and employees of the Affiliated performance, Invesco Aim has taken a Sub-Advisers, and that Invesco Aim and the
Sub-Advisers who provide these services. number of actions intended to improve the Affiliated Sub-Advisers are affiliates.
The Board concluded that the nature, investment process for the funds.
extent and quality of the services After taking account of the Fund's
provided by the Affiliated Sub-Advisers D. Advisory and Sub-Advisory Fees and contractual advisory fee rate, the
are appropriate. The Board noted that the Fee Waivers contractual sub-advisory fee rate, the
Affiliated Sub-Advisers, which have comparative advisory fee information
offices and personnel that are The Board compared the Fund's discussed above, the expense limitations
geographically dispersed in financial contractual advisory fee rate to the and other relevant factors, the Board
centers around the world, can provide contractual advisory fee rates of funds in concluded that the Fund's advisory and
research and other information and make the Fund's Lipper expense group that are sub-advisory fees are fair and reasonable.
recommendations on the markets and not managed by Invesco Aim or an
economies of various countries and Affiliated Sub-Adviser, at a common asset E. Economies of Scale and Breakpoints
securities of companies located in such level. The Board noted that the Fund's
countries or on various types of contractual advisory fee rate was at the The Board considered the extent to
investments and investment techniques. The median contractual advisory fee rate of which there are economies of scale in the
Board noted that investment decisions for funds in its expense group. The Board also provision of advisory services to the
the Fund are made by Invesco Institutional reviewed the methodology used by Lipper in Fund. The Board also considered whether
(N.A.), Inc. (Invesco Institutional). The determining contractual fee rates, which the Fund benefits from such economies of
Board concluded that the sub-advisory includes using audited financial data from scale through contractual breakpoints in
contracts benefit the Fund and its the most recent annual report of each fund the Fund's advisory fee schedule. The
shareholders by permitting Invesco Aim to in the expense group that was publicly Board noted that the Fund's contractual
utilize the additional resources and available as of the end of the past advisory fee schedule includes one
talent of the Affiliated Sub-Advisers in calendar year. The Board noted that some breakpoint but that, due to the Fund's
managing the Fund. comparative data was at least one year old asset level at the end of the past
and that other data did calendar year, the Fund has yet to benefit
from the breakpoint. Based on this
information, the Board concluded that the
Fund's advisory fees would reflect
economies of
AIM V.I. DIVERSIFIED INCOME FUND continued
scale at higher asset levels. The Board services to the Fund. The Board
also noted that the Fund shares directly considered the performance of Invesco Aim
in economies of scale through lower fees and its affiliates in providing these
charged by third party service providers services and the organizational structure
based on the combined size of all of the employed by Invesco Aim and its affiliates
AIM Funds and affiliates. to provide these services. The Board also
considered that these services are
F. Profitability and Financial provided to the Fund pursuant to written
Resources contracts that are reviewed and approved
on an annual basis by the Board. The Board
The Board reviewed information from concluded that Invesco Aim and its
Invesco Aim concerning the costs of the affiliates are providing these services in
advisory and other services that Invesco a satisfactory manner and in accordance
Aim and its affiliates provide to the Fund with the terms of their contracts, and are
and the profitability of Invesco Aim and qualified to continue to provide these
its affiliates in providing these services to the Fund.
services. The Board also reviewed
information concerning the financial The Board considered the benefits
condition of Invesco Aim and its realized by Invesco Aim and the Affiliated
affiliates. The Board reviewed with Sub-Advisers as a result of portfolio
Invesco Aim the methodology used to brokerage transactions executed through
prepare the profitability information. The "soft dollar" arrangements. The Board
Board considered the overall profitability noted that soft dollar arrangements shift
of Invesco Ltd., the ultimate parent of the payment obligation for research and
Invesco Aim and the Affiliated execution services from Invesco Aim and
Sub-Advisers, and of Invesco Aim, as well the Affiliated Sub-Advisers to the funds
as the profitability of Invesco Aim in and therefore may reduce Invesco Aim's and
connection with managing the Fund. The the Affiliated Sub-Advisers' expenses. The
Board noted that Invesco Aim continues to Board concluded that Invesco Aim's and the
operate at a net profit, although the Affiliated Sub-Advisers' soft dollar
reduction of assets under management as a arrangements are appropriate. The Board
result of market movements and the also concluded that, based on their review
increase in voluntary fee waivers for and representations made by the Chief
affiliated money market funds have reduced Compliance Officer of Invesco Aim, these
the profitability of Invesco Aim and its arrangements are consistent with
affiliates. The Board concluded that the regulatory requirements.
Fund's fees are fair and reasonable, and
that the level of profits realized by The Board considered the fact that the
Invesco Aim and its affiliates from Fund's uninvested cash and cash collateral
providing services to the Fund is not from any securities lending arrangements
excessive in light of the nature, quality may be invested in money market funds
and extent of the services provided. The advised by Invesco Aim pursuant to
Board considered whether Invesco Aim is procedures approved by the Board. The
financially sound and has the resources Board noted that Invesco Aim will receive
necessary to perform its obligations under advisory fees from these affiliated money
the Fund's investment advisory agreement, market funds attributable to such
and concluded that Invesco Aim has the investments, although Invesco Aim has
financial resources necessary to fulfill contractually agreed to waive through at
these obligations. The Board also least June 30, 2010, the advisory fees
considered whether each Affiliated payable by the Fund in an amount equal to
Sub-Adviser is financially sound and has 100% of the net advisory fees Invesco Aim
the resources necessary to perform its receives from the affiliated money market
obligations under the sub-advisory funds with respect to the Fund's
contracts, and concluded that each investment in the affiliated money market
Affiliated Sub-Adviser has the financial funds of uninvested cash, but not cash
resources necessary to fulfill these collateral. The Board concluded that the
obligations. Fund's investment of uninvested cash and
cash collateral from any securities
G. Collateral Benefits to Invesco Aim lending arrangements in the affiliated
and its Affiliates money market funds is in the best
interests of the Fund and its
The Board considered various other shareholders.
benefits received by Invesco Aim and its
affiliates resulting from Invesco Aim's
relationship with the Fund, including the
fees received by Invesco Aim and its
affiliates for their provision of
administrative, transfer agency and
distribution
AIM V.I. DIVERSIFIED INCOME FUND
[INVESCO AIM LOGO] AIM V.I. DYNAMICS FUND
--SERVICE MARK-- Semiannual Report to Shareholders o June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund
files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the SEC
Web site, sec. gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by
calling 202 942 8090 or 800 732 0330, or by electronic request at the following E-mail address: publicinfo@sec.gov. The SEC file
numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent portfolio holdings, as filed on Form N-Q, have also been
made available to insurance companies issuing variable annuity contracts and variable life insurance policies ("variable products")
that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, from our Client Services department at 800 410 4246 or on the Invesco Aim Web site,
invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site,
sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2009, is
available at our Web site. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting
Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. will be merged into
Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc. Additional information
will be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN
MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
SERIES I SHARES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer Inception (8/22/97) 1.02%
charges. If variable product issuer charges were included, returns would be lower. 10 Year -2.71
5 Years -2.07
Series I Shares 11.01% 1 Year -34.61
Series II Shares 10.93
S&P 500 Index(Triangle) (Broad Market Index) 3.19 SERIES II SHARES
Russell Midcap Growth Index(Triangle) (Style-Specific Index) 16.61 10 Years -2.95%
Lipper VUF Mid-Cap Growth Funds Index(Triangle) (Peer Group Index) 16.11 5 Years -2.30
1 Year -34.68
(Triangle) Lipper Inc. ==========================================
The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index REFLECT SALES CHARGES, EXPENSES AND FEES
covering all major areas of the U.S. economy. It is not the 500 largest companies, but ASSESSED IN CONNECTION WITH A VARIABLE
rather the most widely held 500 companies chosen with respect to market size, liquidity PRODUCT. SALES CHARGES, EXPENSES AND FEES,
and their industry. WHICH ARE DETERMINED BY THE VARIABLE
PRODUCT ISSUERS, WILL VARY AND WILL LOWER
The RUSSELL MIDCAP--REGISTERED TRADEMARK-- GROWTH INDEX measures the performance of THE TOTAL RETURN.
those Russell Midcap companies with higher price-to-book ratios and higher forecasted
growth values. The Russell Midcap Growth Index is a trademark/service mark of the Frank THE MOST RECENT MONTH-END PERFORMANCE
Russell Company. Russell--REGISTERED TRADEMARK-- is a trademark of the Frank Russell DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
Company. PRODUCT CHARGES, IS AVAILABLE ON THE
INVESCO AIM AUTOMATED INFORMATION LINE,
The LIPPER VUF MID-CAP GROWTH FUNDS INDEX is an equally weighted representation of 866 702 4402. AS MENTIONED ABOVE, FOR THE
the largest variable insurance underlying funds in the Lipper Mid-Cap Growth Funds MOST RECENT MONTH-END PERFORMANCE
category. These funds have an above-average price-to-earnings ratio, price-to-book INCLUDING VARIABLE PRODUCT CHARGES, PLEASE
ratio, and three-year sales-per-share growth value, compared to the S&P MidCap 400 CONTACT YOUR VARIABLE PRODUCT ISSUER OR
Index. FINANCIAL ADVISOR.
The Fund is not managed to track the performance of any particular index, including (1) Total annual operating expenses less
the indexes defined here, and consequently, the performance of the Fund may deviate any contractual fee waivers and/or
significantly from the performance of the indexes. expense reimbursements by the advisor
in effect through at least April 30,
A direct investment cannot be made in an index. Unless otherwise indicated, index 2010. See current prospectus for more
results include reinvested dividends, and they do not reflect sales charges. information.
Performance of the peer group reflects fund expenses; performance of a market index
does not.
=======================================================================================
SERIES II SHARES' INCEPTION DATE IS APRIL YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL
30, 2004. RETURNS SINCE THAT DATE ARE SHARES.
HISTORICAL. ALL OTHER RETURNS ARE THE
BLENDED RETURNS OF THE HISTORICAL THE NET ANNUAL FUND OPERATING EXPENSE
PERFORMANCE OF SERIES II SHARES SINCE RATIO SET FORTH IN THE MOST RECENT FUND
THEIR INCEPTION AND THE RESTATED PROSPECTUS AS OF THE DATE OF THIS REPORT
HISTORICAL PERFORMANCE OF SERIES I SHARES FOR SERIES I AND SERIES II SHARES WAS
(FOR PERIODS PRIOR TO INCEPTION OF SERIES 1.22% AND 1.45%, RESPECTIVELY.(1) THE TOTAL
II SHARES) ADJUSTED TO REFLECT THE RULE ANNUAL FUND OPERATING EXPENSE RATIO SET
12B-1 FEES APPLICABLE TO SERIES II SHARES. FORTH IN THE MOST RECENT FUND PROSPECTUS
THE INCEPTION DATE OF SERIES I SHARES IS AS OF THE DATE OF THIS REPORT FOR SERIES I
AUGUST 22, 1997. AND SERIES II SHARES WAS 1.22% AND 1.47%,
RESPECTIVELY. THE EXPENSE RATIOS PRESENTED
THE PERFORMANCE OF THE FUND'S SERIES I ABOVE MAY VARY FROM THE EXPENSE RATIOS
AND SERIES II SHARE CLASSES WILL DIFFER PRESENTED IN OTHER SECTIONS OF THIS REPORT
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES. THAT ARE BASED ON EXPENSES INCURRED DURING
THE PERIOD COVERED BY THIS REPORT.
THE PERFORMANCE DATA QUOTED REPRESENT
PAST PERFORMANCE AND CANNOT GUARANTEE AIM V.I. DYNAMICS FUND, A SERIES
COMPARABLE FUTURE RESULTS; CURRENT PORTFOLIO OF AIM VARIABLE INSURANCE FUNDS,
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE IS CURRENTLY OFFERED THROUGH INSURANCE
CONTACT YOUR VARIABLE PRODUCT ISSUER OR COMPANIES ISSUING VARIABLE PRODUCTS. YOU
FINANCIAL ADVISOR FOR THE MOST RECENT CANNOT PURCHASE SHARES OF THE FUND
MONTH-END VARIABLE PRODUCT PERFORMANCE. DIRECTLY. PERFORMANCE FIGURES GIVEN
PERFORMANCE FIGURES REFLECT FUND EXPENSES, REPRESENT THE FUND AND ARE NOT INTENDED TO
REINVESTED DISTRIBUTIONS AND CHANGES IN REFLECT ACTUAL VARIABLE PRODUCT VALUES.
NET ASSET VALUE. INVESTMENT RETURN AND THEY DO NOT
PRINCIPAL VALUE WILL FLUCTUATE SO THAT
AIM V.I. DYNAMICS FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-97.11%
AEROSPACE & DEFENSE-0.50%
BE Aerospace, Inc.(b) 14,394 $ 206,698
===========================================================================
AIR FREIGHT & LOGISTICS-0.89%
UTI Worldwide, Inc.(b) 32,156 366,578
===========================================================================
APPAREL RETAIL-1.95%
Aeropostale, Inc.(b) 12,087 414,221
- ---------------------------------------------------------------------------
American Eagle Outfitters, Inc. 27,122 384,319
===========================================================================
798,540
===========================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-2.67%
Carter's, Inc.(b) 18,393 452,652
- ---------------------------------------------------------------------------
Coach, Inc. 7,752 208,374
- ---------------------------------------------------------------------------
Hanesbrands, Inc.(b) 28,966 434,779
===========================================================================
1,095,805
===========================================================================
APPLICATION SOFTWARE-3.63%
Adobe Systems Inc.(b) 14,120 399,596
- ---------------------------------------------------------------------------
ANSYS, Inc.(b) 6,680 208,149
- ---------------------------------------------------------------------------
Autodesk, Inc.(b) 15,489 293,981
- ---------------------------------------------------------------------------
Solera Holdings Inc.(b) 23,018 584,657
===========================================================================
1,486,383
===========================================================================
ASSET MANAGEMENT & CUSTODY BANKS-3.83%
Affiliated Managers Group, Inc.(b) 10,762 626,241
- ---------------------------------------------------------------------------
Northern Trust Corp. 7,260 389,717
- ---------------------------------------------------------------------------
State Street Corp. 11,726 553,467
===========================================================================
1,569,425
===========================================================================
AUTOMOTIVE RETAIL-1.01%
O'Reilly Automotive, Inc.(b) 10,901 415,110
===========================================================================
BIOTECHNOLOGY-1.27%
Grifols S.A. (Spain) 11,796 208,266
- ---------------------------------------------------------------------------
United Therapeutics Corp.(b) 3,756 312,987
===========================================================================
521,253
===========================================================================
CASINOS & GAMING-1.04%
Scientific Games Corp.-Class A(b) 26,993 425,680
===========================================================================
COAL & CONSUMABLE FUELS-0.43%
CONSOL Energy Inc. 5,189 176,219
===========================================================================
COMMUNICATIONS EQUIPMENT-0.28%
3Com Corp.(b) 24,050 113,276
===========================================================================
COMPUTER & ELECTRONICS RETAIL-0.93%
Best Buy Co., Inc. 11,344 379,911
===========================================================================
COMPUTER STORAGE & PERIPHERALS-2.38%
NetApp, Inc.(b) 26,300 518,636
- ---------------------------------------------------------------------------
Western Digital Corp.(b) 17,271 457,682
===========================================================================
976,318
===========================================================================
CONSTRUCTION & ENGINEERING-1.90%
Quanta Services, Inc.(b) 16,624 384,513
- ---------------------------------------------------------------------------
Shaw Group Inc. (The)(b) 14,304 392,073
===========================================================================
776,586
===========================================================================
CONSUMER FINANCE-0.77%
Capital One Financial Corp. 14,492 317,085
===========================================================================
DATA PROCESSING & OUTSOURCED SERVICES-1.47%
Alliance Data Systems Corp.(b) 9,578 394,518
- ---------------------------------------------------------------------------
Hewitt Associates, Inc.-Class A(b) 7,022 209,115
===========================================================================
603,633
===========================================================================
DEPARTMENT STORES-1.30%
Kohl's Corp.(b) 3,962 169,375
- ---------------------------------------------------------------------------
Nordstrom, Inc. 18,192 361,839
===========================================================================
531,214
===========================================================================
DISTRIBUTORS-1.03%
LKQ Corp.(b) 25,641 421,795
===========================================================================
DIVERSIFIED METALS & MINING-2.07%
Freeport-McMoRan Copper & Gold Inc.(b) 8,856 443,774
- ---------------------------------------------------------------------------
Southern Copper Corp. (Peru) 19,753 403,752
===========================================================================
847,526
===========================================================================
DIVERSIFIED SUPPORT SERVICES-1.11%
Copart, Inc.(b) 13,136 455,425
===========================================================================
DRUG RETAIL-1.05%
Shoppers Drug Mart Corp. (Canada) 9,993 429,508
===========================================================================
EDUCATION SERVICES-2.72%
Apollo Group, Inc.-Class A(b) 3,340 237,541
- ---------------------------------------------------------------------------
Capella Education Co.(b) 7,807 468,030
- ---------------------------------------------------------------------------
ITT Educational Services, Inc.(b) 4,052 407,874
===========================================================================
1,113,445
===========================================================================
ELECTRONIC COMPONENTS-0.86%
Amphenol Corp.-Class A 11,098 351,141
===========================================================================
ENVIRONMENTAL & FACILITIES SERVICES-1.06%
Republic Services, Inc. 17,832 435,279
===========================================================================
FERTILIZERS & AGRICULTURAL CHEMICALS-0.80%
Intrepid Potash, Inc.(b) 11,677 327,890
===========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. DYNAMICS FUND
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------
GENERAL MERCHANDISE STORES-0.99%
Dollar Tree, Inc.(b) 9,604 $ 404,328
===========================================================================
HEALTH CARE DISTRIBUTORS-0.54%
McKesson Corp. 5,010 220,440
===========================================================================
HEALTH CARE EQUIPMENT-1.56%
Covidien PLC (Ireland) 11,492 430,260
- ---------------------------------------------------------------------------
ResMed Inc.(b) 5,142 209,434
===========================================================================
639,694
===========================================================================
HEALTH CARE FACILITIES-2.19%
Psychiatric Solutions, Inc.(b) 19,877 452,003
- ---------------------------------------------------------------------------
VCA Antech, Inc.(b) 16,739 446,931
===========================================================================
898,934
===========================================================================
HEALTH CARE SERVICES-2.92%
Express Scripts, Inc.(b) 8,499 584,306
- ---------------------------------------------------------------------------
Fresenius Medical Care AG & Co. KGaA (Germany) 9,450 421,590
- ---------------------------------------------------------------------------
Omnicare, Inc. 7,458 192,118
===========================================================================
1,198,014
===========================================================================
HOME ENTERTAINMENT SOFTWARE-1.00%
Activision Blizzard, Inc.(b) 32,443 409,755
===========================================================================
HOTELS, RESORTS & CRUISE LINES-0.54%
Starwood Hotels & Resorts Worldwide, Inc. 9,884 219,425
===========================================================================
HOUSEHOLD APPLIANCES-1.02%
Stanley Works (The) 12,343 417,687
===========================================================================
HOUSEWARES & SPECIALTIES-1.27%
Jarden Corp.(b) 27,672 518,850
===========================================================================
HUMAN RESOURCE & EMPLOYMENT SERVICES-1.06%
Robert Half International, Inc. 18,471 436,285
===========================================================================
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS-0.59%
KGEN Power Corp. (Acquired 01/12/07; Cost
$613,032)(b)(c) 43,788 240,834
===========================================================================
INVESTMENT BANKING & BROKERAGE-4.68%
Charles Schwab Corp. (The) 22,810 400,087
- ---------------------------------------------------------------------------
Lazard Ltd.-Class A 14,533 391,228
- ---------------------------------------------------------------------------
Morgan Stanley 19,264 549,217
- ---------------------------------------------------------------------------
TD Ameritrade Holding Corp.(b) 32,837 575,961
===========================================================================
1,916,493
===========================================================================
INVESTMENT COMPANIES-EXCHANGE TRADED FUNDS-1.14%
iShares Nasdaq Biotechnology Index Fund 6,437 468,356
===========================================================================
IT CONSULTING & OTHER SERVICES-2.31%
Amdocs Ltd.(b) 13,579 291,270
- ---------------------------------------------------------------------------
Cognizant Technology Solutions Corp.-Class A(b) 24,525 654,817
===========================================================================
946,087
===========================================================================
LIFE SCIENCES TOOLS & SERVICES-1.87%
Pharmaceutical Product Development, Inc. 13,552 314,677
- ---------------------------------------------------------------------------
Thermo Fisher Scientific, Inc.(b) 11,074 451,487
===========================================================================
766,164
===========================================================================
MANAGED HEALTH CARE-0.99%
Aveta, Inc. (Acquired 12/21/05-05/22/06; Cost
$1,165,095)(b)(c) 80,000 160,000
- ---------------------------------------------------------------------------
CIGNA Corp. 10,148 244,465
===========================================================================
404,465
===========================================================================
MARINE-0.45%
Diana Shipping Inc. (Greece)(b) 13,875 184,815
===========================================================================
METAL & GLASS CONTAINERS-1.95%
Crown Holdings, Inc.(b) 16,739 404,080
- ---------------------------------------------------------------------------
Pactiv Corp.(b) 18,112 393,030
===========================================================================
797,110
===========================================================================
OIL & GAS DRILLING-2.12%
Noble Corp. 16,618 502,694
- ---------------------------------------------------------------------------
Patterson-UTI Energy, Inc. 28,402 365,250
===========================================================================
867,944
===========================================================================
OIL & GAS EQUIPMENT & SERVICES-2.46%
Key Energy Services, Inc.(b) 70,537 406,293
- ---------------------------------------------------------------------------
Weatherford International Ltd.(b) 30,827 602,976
===========================================================================
1,009,269
===========================================================================
OIL & GAS EXPLORATION & PRODUCTION-4.09%
Continental Resources, Inc.(b) 20,499 568,847
- ---------------------------------------------------------------------------
Denbury Resources Inc.(b) 9,204 135,575
- ---------------------------------------------------------------------------
Petrohawk Energy Corp.(b) 21,056 469,549
- ---------------------------------------------------------------------------
Southwestern Energy Co.(b) 12,877 500,271
===========================================================================
1,674,242
===========================================================================
PERSONAL PRODUCTS-1.64%
Chattem, Inc.(b) 3,537 240,870
- ---------------------------------------------------------------------------
Estee Lauder Cos. Inc. (The)-Class A 13,144 429,414
===========================================================================
670,284
===========================================================================
PHARMACEUTICALS-0.52%
Shire PLC (United Kingdom) 15,524 214,071
===========================================================================
REAL ESTATE SERVICES-0.48%
Jones Lang LaSalle Inc. 6,043 197,787
===========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. DYNAMICS FUND
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------
RESEARCH & CONSULTING SERVICES-2.05%
Equifax Inc. 7,704 $ 201,074
- ---------------------------------------------------------------------------
IHS Inc.-Class A(b) 12,840 640,331
===========================================================================
841,405
===========================================================================
SECURITY & ALARM SERVICES-1.62%
Corrections Corp. of America(b) 39,074 663,867
===========================================================================
SEMICONDUCTOR EQUIPMENT-3.23%
ASML Holding N.V. (Netherlands) 19,766 428,578
- ---------------------------------------------------------------------------
KLA-Tencor Corp. 15,249 385,037
- ---------------------------------------------------------------------------
Lam Research Corp.(b) 19,539 508,014
===========================================================================
1,321,629
===========================================================================
SEMICONDUCTORS-3.52%
Altera Corp. 16,167 263,199
- ---------------------------------------------------------------------------
Broadcom Corp.-Class A(b) 15,609 386,947
- ---------------------------------------------------------------------------
Marvell Technology Group Ltd.(b) 27,919 324,977
- ---------------------------------------------------------------------------
ON Semiconductor Corp.(b) 68,122 467,317
===========================================================================
1,442,440
===========================================================================
SPECIALTY STORES-0.80%
Ulta Salon, Cosmetics & Fragrance, Inc.(b) 29,407 327,006
===========================================================================
STEEL-0.96%
Steel Dynamics, Inc. 26,701 393,306
===========================================================================
SYSTEMS SOFTWARE-2.41%
Check Point Software Technologies Ltd. (Israel)(b) 23,539 552,460
- ---------------------------------------------------------------------------
McAfee Inc.(b) 10,294 434,304
===========================================================================
986,764
===========================================================================
TIRES & RUBBER-0.94%
Goodyear Tire & Rubber Co. (The)(b) 34,282 386,015
===========================================================================
TRADING COMPANIES & DISTRIBUTORS-0.94%
Fastenal Co. 11,640 386,099
===========================================================================
TRUCKING-4.30%
Con-way Inc. 12,778 451,191
- ---------------------------------------------------------------------------
J.B. Hunt Transport Services, Inc. 15,526 474,009
- ---------------------------------------------------------------------------
Knight Transportation, Inc. 23,741 392,914
- ---------------------------------------------------------------------------
Landstar System, Inc. 12,301 441,729
===========================================================================
1,759,843
===========================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.01%
Crown Castle International Corp.(b) 17,228 413,817
===========================================================================
Total Common Stocks & Other Equity Interests
(Cost $43,338,798) 39,785,247
===========================================================================
MONEY MARKET FUNDS-2.19%
Liquid Assets Portfolio-Institutional Class(d) 449,393 449,393
- ---------------------------------------------------------------------------
Premier Portfolio-Institutional Class(d) 449,393 449,393
===========================================================================
Total Money Market Funds (Cost $898,786) 898,786
===========================================================================
TOTAL INVESTMENTS-99.30% (Cost $44,237,584) 40,684,033
===========================================================================
OTHER ASSETS LESS LIABILITIES-0.70% 285,811
===========================================================================
NET ASSETS-100.00% $40,969,844
___________________________________________________________________________
===========================================================================
</Table>
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) Non-income producing security.
(c) Security purchased or received in a transaction exempt from registration
under the Securities Act of 1933, as amended. The security may be resold
pursuant to an exemption from registration under the 1933 Act, typically
to qualified institutional buyers. The aggregate value of these securities
at June 30, 2009 was $400,834, which represented 0.98% of the Fund's Net
Assets.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. DYNAMICS FUND
PORTFOLIO COMPOSITION
By sector, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
Information Technology 21.1%
- -------------------------------------------------------------------------
Consumer Discretionary 18.2
- -------------------------------------------------------------------------
Industrials 15.9
- -------------------------------------------------------------------------
Health Care 13.0
- -------------------------------------------------------------------------
Financials 9.7
- -------------------------------------------------------------------------
Energy 9.1
- -------------------------------------------------------------------------
Materials 5.8
- -------------------------------------------------------------------------
Consumer Staples 2.7
- -------------------------------------------------------------------------
Telecommunication Services 1.0
- -------------------------------------------------------------------------
Utilities 0.6
- -------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities 2.9
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. DYNAMICS FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $43,338,798) $ 39,785,247
- --------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 898,786
================================================================================
Total investments, at value (Cost $44,237,584) 40,684,033
================================================================================
Foreign currencies, at value (Cost $51,826) 50,585
- --------------------------------------------------------------------------------
Receivables for:
Investments sold 290,506
- --------------------------------------------------------------------------------
Fund shares sold 29,013
- --------------------------------------------------------------------------------
Dividends 11,410
- --------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 8,293
================================================================================
Total assets 41,073,840
________________________________________________________________________________
================================================================================
LIABILITIES:
Payables for:
Fund shares reacquired 20,457
- --------------------------------------------------------------------------------
Accrued fees to affiliates 30,594
- --------------------------------------------------------------------------------
Accrued other operating expenses 35,073
- --------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 17,872
================================================================================
Total liabilities 103,996
================================================================================
Net assets applicable to shares outstanding $ 40,969,844
________________________________________________________________________________
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $128,557,332
- --------------------------------------------------------------------------------
Undistributed net investment income (loss) (164,508)
- --------------------------------------------------------------------------------
Undistributed net realized gain (loss) (83,868,216)
- --------------------------------------------------------------------------------
Unrealized appreciation (depreciation) (3,554,764)
================================================================================
$ 40,969,844
________________________________________________________________________________
================================================================================
NET ASSETS:
Series I $ 40,963,907
________________________________________________________________________________
================================================================================
Series II $ 5,937
________________________________________________________________________________
================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 3,693,484
________________________________________________________________________________
================================================================================
Series II 541.7
________________________________________________________________________________
================================================================================
Series I:
Net asset value per share $ 11.09
________________________________________________________________________________
================================================================================
Series II:
Net asset value per share $ 10.96
________________________________________________________________________________
================================================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding
taxes of $3,060) $ 124,569
- ------------------------------------------------------
Dividends from affiliated money market
funds 4,383
======================================================
Total investment income 128,952
======================================================
EXPENSES:
Advisory fees 150,838
- ------------------------------------------------------
Administrative services fees 75,298
- ------------------------------------------------------
Custodian fees 5,843
- ------------------------------------------------------
Distribution fees -- Series II 6
- ------------------------------------------------------
Transfer agent fees 8,495
- ------------------------------------------------------
Trustees' and officers' fees and
benefits 10,859
- ------------------------------------------------------
Professional services fees 17,945
- ------------------------------------------------------
Other 6,090
======================================================
Total expenses 275,374
======================================================
Less: Fees waived (13,071)
======================================================
Net expenses 262,303
======================================================
Net investment income (loss) (133,351)
======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (includes net
gains from securities sold to
affiliates of $29,200) (7,549,608)
- ------------------------------------------------------
Foreign currencies (10,880)
======================================================
(7,560,488)
======================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 11,858,683
- ------------------------------------------------------
Foreign currencies (1,227)
======================================================
11,857,456
======================================================
Net realized and unrealized gain 4,296,968
======================================================
Net increase in net assets resulting
from operations $ 4,163,617
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. DYNAMICS FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- ------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (133,351) $ (495,009)
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) (7,560,488) (20,959,904)
- ------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 11,857,456 (25,826,186)
======================================================================================================
Net increase (decrease) in net assets resulting from operations 4,163,617 (47,281,099)
======================================================================================================
Share transactions-net:
Series I (4,862,974) (33,243,831)
- ------------------------------------------------------------------------------------------------------
Series II 362 --
======================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (4,862,612) (33,243,831)
======================================================================================================
Net increase (decrease) in net assets (698,995) (80,524,930)
======================================================================================================
NET ASSETS:
Beginning of period 41,668,839 122,193,769
======================================================================================================
End of period (includes undistributed net investment income (loss) of
$(164,508) and $(31,157), respectively) $40,969,844 $ 41,668,839
______________________________________________________________________________________________________
======================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. DYNAMICS FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Dynamics Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is long-term capital growth.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
AIM V.I. DYNAMICS FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
Reported net realized foreign currency gains or losses arise from (i)
sales of foreign currencies, (ii) currency gains or losses realized
between the trade and settlement dates on securities transactions, and
(iii) the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency gains and losses arise from changes in the fair values of
assets and liabilities, other than investments in securities at fiscal
period end, resulting from changes in exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
J. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed,
AIM V.I. DYNAMICS FUND
realized gains (losses) are recorded. Realized and unrealized gains
(losses) on the contracts are included in the Statement of Operations. The
maximum risks associated with foreign currency contracts include failure
of the counterparty to meet the terms of the contract and the value of the
foreign currency changing unfavorably. These risks may be in excess of the
amounts reflected in the Statement of Assets and Liabilities.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
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%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 1.30% and Series
II shares to 1.45% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, 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. These credits are used to pay certain expenses incurred by the Fund. To
the extent that the annualized expense ratio does not exceed the expense
limitation, the Advisor will retain its ability to be reimbursed for such fee
waivers or reimbursements prior to the end of each fiscal year.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash in such affiliated money market
funds. The Advisor did not waive fees during the period under this agreement.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$684 and class level expenses of $12,383 and $4 for Series I and Series II
shares, respectively.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $24,795 for accounting and fund
administrative services and reimbursed $50,503 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
AIM V.I. DYNAMICS FUND
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- ----------------------------------------------------------------------------------------------------------------------
Equity Securities $39,218,961 $1,305,072 $160,000 $40,684,033
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
NOTE 4--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS
The Fund is permitted to purchase or sell securities from or to certain other
AIM Funds under specified conditions outlined in procedures adopted by the Board
of Trustees of the Trust. The procedures have been designed to ensure that any
purchase or sale of securities by the Fund from or to another fund or portfolio
that is or could be considered an affiliate by virtue of having a common
investment advisor (or affiliated investment advisors), common Trustees and/or
common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined
under the procedures, each transaction is effected at the current market price.
Pursuant to these procedures, for the six months ended June 30, 2009, the Fund
engaged in securities purchases of $284,437 and securities sales of $217,020,
which resulted in net realized gains of $29,200.
NOTE 5--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $1,474
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 6--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the custodian bank
can be compensated by earning the additional interest; or (ii) compensate by
paying the custodian bank at a rate agreed upon by the custodian bank and
Invesco Aim, not to exceed the contractually agreed upon rate.
AIM V.I. DYNAMICS FUND
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
December 31, 2010 $55,297,523
- -----------------------------------------------------------------------------------------------
December 31, 2016 15,568,832
===============================================================================================
Total capital loss carryforward $70,866,355
_______________________________________________________________________________________________
===============================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $23,980,994 and
$29,630,353, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 2,833,058
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (6,592,616)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $(3,759,558)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $44,443,591.
</Table>
NOTE 9--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- -----------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
------------------------ ---------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
Sold:
Series I 425,534 $ 4,345,910 972,706 $ 15,255,323
- -----------------------------------------------------------------------------------------------------------------------
Series II 33 362 -- --
=======================================================================================================================
Reacquired:
Series I (902,143) (9,208,884) (3,154,261) (48,499,154)
=======================================================================================================================
Net increase (decrease) in share activity (476,576) $(4,862,612) (2,181,555) $(33,243,831)
_______________________________________________________________________________________________________________________
=======================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 68% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
AIM V.I. DYNAMICS FUND
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
RATIO OF
NET GAINS EXPENSES
(LOSSES) ON TO AVERAGE
NET ASSET NET SECURITIES NET ASSETS
VALUE, INVESTMENT (BOTH TOTAL FROM NET ASSET NET ASSETS, WITH FEE WAIVERS
BEGINNING INCOME REALIZED AND INVESTMENT VALUE, END TOTAL END OF PERIOD AND/OR EXPENSES
OF PERIOD (LOSS) UNREALIZED) OPERATIONS OF PERIOD RETURN(a) (000S OMITTED) ABSORBED
- -----------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $ 9.99 $(0.03)(c) $ 1.13 $ 1.10 $11.09 11.01% $ 40,964 1.30%(d)
Year ended 12/31/08 19.24 (0.10)(c) (9.15) (9.25) 9.99 (48.08) 41,664 1.22
Year ended 12/31/07 17.15 (0.11)(c) 2.20 2.09 19.24 12.19 122,184 1.11
Year ended 12/31/06 14.77 (0.09) 2.47 2.38 17.15 16.11 120,792 1.12
Year ended 12/31/05 13.34 (0.04) 1.47 1.43 14.77 10.72 111,655 1.16
Year ended 12/31/04 11.77 (0.09) 1.66 1.57 13.34 13.34 123,609 1.14
- -----------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 9.88 (0.04)(c) 1.12 1.08 10.96 10.93 6 1.45(d)
Year ended 12/31/08 19.06 (0.12)(c) (9.06) (9.18) 9.88 (48.16) 5 1.45
Year ended 12/31/07 17.04 (0.15)(c) 2.17 2.02 19.06 11.85 10 1.36
Year ended 12/31/06 14.71 (0.12) 2.45 2.33 17.04 15.84 14 1.37
Year ended 12/31/05 13.32 (0.07) 1.46 1.39 14.71 10.44 12 1.41
Year ended 12/31/04(e) 11.94 (0.07) 1.45 1.38 13.32 11.56 11 1.40(f)
___________________________________________________________________________________________________________________________________
===================================================================================================================================
<Caption>
RATIO OF
EXPENSES
TO AVERAGE NET RATIO OF NET
ASSETS WITHOUT INVESTMENT
FEE WAIVERS INCOME (LOSS)
AND/OR EXPENSES TO AVERAGE PORTFOLIO
ABSORBED NET ASSETS TURNOVER(b)
- ----------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 1.36%(d) (0.66)%(d) 60%
Year ended 12/31/08 1.22 (0.62) 106
Year ended 12/31/07 1.11 (0.58) 115
Year ended 12/31/06 1.13 (0.51) 142
Year ended 12/31/05 1.17 (0.29) 110
Year ended 12/31/04 1.14 (0.62) 64
- ----------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 1.61(d) (0.81)(d) 60
Year ended 12/31/08 1.47 (0.85) 106
Year ended 12/31/07 1.36 (0.83) 115
Year ended 12/31/06 1.38 (0.76) 142
Year ended 12/31/05 1.42 (0.54) 110
Year ended 12/31/04(e) 1.40(f) (0.88)(f) 64
______________________________________________________________________
======================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net
asset values may differ from the net asset value and returns for
shareholder transactions. Total returns are not annualized for periods
less than one year, if applicable and do not reflect charges assessed in
connection with a variable product, which if included would reduce total
returns.
(b) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(c) Calculated using average shares outstanding.
(d) Ratios are annualized and based on average daily net assets (000's
omitted) of $40,824 and $5 for Series I and Series II shares,
respectively.
(e) Commencement date of April 30, 2004
(f) Annualized.
AIM V.I. DYNAMICS FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009,
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,110.10 $6.80 $1,018.35 $6.51 1.30%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,109.30 7.58 1,017.60 7.25 1.45
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. DYNAMICS FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM In addition to their meetings was controlling. Each Trustee may have
Variable Insurance Funds is required under throughout the year, the Sub-Committees evaluated the information provided
the Investment Company Act of 1940 to meet at designated contract renewal differently from another Trustee and
approve annually the renewal of the AIM meetings each year to conduct an in-depth attributed different weight to the various
V.I. Dynamics Fund (the Fund) investment review of the performance, fees, expenses factors. The Trustees recognized that the
advisory agreement with Invesco Aim and other matters related to their advisory arrangements and resulting
Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract advisory fees for the Fund and the other
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive AIM Funds are the result of years of
for Mutual Funds (the sub-advisory comparative performance and fee data review and negotiation between the
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an Trustees and Invesco Aim, that the
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Trustees may focus to a greater extent on
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and certain aspects of these arrangements in
Limited, Invesco Australia Limited, supervision of the Senior Officer who also some years than in others, and that the
Invesco Global Asset Management (N.A.), prepares a separate analysis of this Trustees' deliberations and conclusions in
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each Sub- a particular year may be based in part on
Institutional (N.A.), Inc., Invesco Senior Committee then makes recommendations to their deliberations and conclusions
Secured Management, Inc. and Invesco the Investments Committee regarding the regarding these same arrangements
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. throughout the year and in prior years.
Sub-Advisers). During contract renewal The Investments Committee considers each
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes The discussion below serves as a
Board as a whole, and the disinterested or its own recommendations regarding the fees summary of the Senior Officer's
"independent" Trustees voting separately, and expenses of the AIM Funds to the full independent written evaluation with
approved the continuance of the Fund's Board. The Investments Committee also respect to the Fund's investment advisory
investment advisory agreement and the considers each Sub-Committee's agreement as well as a discussion of the
sub-advisory contracts for another year, recommendations in making its annual material factors and related conclusions
effective July 1, 2009. In doing so, the recommendation to the Board whether to that formed the basis for the Board's
Board determined that the Fund's approve the continuance of each AIM Fund's approval of the Fund's investment advisory
investment advisory agreement and the investment advisory agreement and agreement and sub-advisory contracts.
sub-advisory contracts are in the best sub-advisory contracts for another year. Unless otherwise stated, information set
interests of the Fund and its shareholders forth below is as of June 17, 2009, and
and that the compensation to Invesco Aim The independent Trustees met separately does not reflect any changes that may have
and the Affiliated Sub-Advisers under the during their evaluation of the Fund's occurred since that date, including but
Fund's investment advisory agreement and investment advisory agreement and not limited to changes to the Fund's
sub-advisory contracts is fair and sub-advisory contracts with independent performance, advisory fees, expense
reasonable. legal counsel. The independent Trustees limitations and/or fee waivers.
were also assisted in their annual
THE BOARD'S FUND EVALUATION PROCESS evaluation of the Fund's investment FACTORS AND CONCLUSIONS AND SUMMARY OF
advisory agreement by the Senior Officer. INDEPENDENT WRITTEN FEE EVALUATION
The Board's Investments Committee has One responsibility of the Senior Officer
established three Sub-Committees that are is to manage the process by which the AIM A. Nature, Extent and Quality of
responsible for overseeing the management Funds' proposed management fees are Services Provided by Invesco Aim
of a number of the series portfolios of negotiated during the annual contract
the AIM Funds. This Sub-Committee renewal process to ensure that they are The Board reviewed the advisory services
structure permits the Trustees to focus on negotiated in a manner that is at arms' provided to the Fund by Invesco Aim under
the performance of the AIM Funds that have length and reasonable. Accordingly, the the Fund's investment advisory agreement,
been assigned to them. The Sub-Committees Senior Officer must either supervise a the performance of Invesco Aim in
meet throughout the year to review the competitive bidding process or prepare an providing these services, and the
performance of their assigned funds, and independent written evaluation. The Senior credentials and experience of the officers
the Sub-Committees review monthly and Officer recommended that an independent and employees of Invesco Aim who provide
quarterly comparative performance written evaluation be provided and, at the these services. The Board's review of the
information and periodic asset flow data direction of the Board, prepared an qualifications of Invesco Aim to provide
for their assigned funds. These materials independent written evaluation. these services included the Board's
are prepared under the direction and consideration of Invesco Aim's portfolio
supervision of the independent Senior During the annual contract renewal and product review process, various back
Officer, an officer of the AIM Funds who process, the Board considered the factors office support functions provided by
reports directly to the independent discussed below in evaluating the fairness Invesco Aim and its affiliates, and
Trustees. Over the course of each year, and reasonableness of the Fund's Invesco Aim's equity and fixed income
the Sub-Committees meet with portfolio investment advisory agreement and trading operations. The Board concluded
managers for their assigned funds and sub-advisory contracts. The Board that the nature, extent and quality of the
other members of management and review considered all of the information provided advisory services provided to the Fund by
with these individuals the performance, to them, including information provided at Invesco Aim are appropriate and that
investment objective(s), policies, their meetings throughout the year as part Invesco Aim currently is providing
strategies and limitations of these funds. of their ongoing oversight of the Fund, satisfactory advisory services in
and did not identify any particular factor accordance with the terms of the Fund's
that investment advisory agreement. In
addition, based on their
AIM V.I. DYNAMICS FUND continued
ongoing meetings throughout the year with advisory agreement. The Board did not view fourth quarter of 2008.
the Fund's portfolio manager or managers, fund performance as a relevant factor in
the Board concluded that these individuals considering whether to approve the The Board also compared the Fund's
are competent and able to continue to sub-advisory contracts for the Fund, as no effective fee rate (the advisory fee after
carry out their responsibilities under the Affiliated Sub-Adviser currently manages any advisory fee waivers and before any
Fund's investment advisory agreement. assets of the Fund. expense limitations/waivers) to the
advisory fee rates of other domestic
In determining whether to continue the The Board compared the Fund's clients of Invesco Aim and its affiliates
Fund's investment advisory agreement, the performance during the past one, three and with investment strategies comparable to
Board considered the prior relationship five calendar years to the performance of those of the Fund, including one mutual
between Invesco Aim and the Fund, as well all funds in the Lipper performance fund advised by Invesco Aim and one mutual
as the Board's knowledge of Invesco Aim's universe that are not managed by Invesco fund subadvised by an Invesco Aim
operations, and concluded that it is Aim or an Affiliated Sub-Adviser and affiliate. The Board noted that the Fund's
beneficial to maintain the current against the Lipper VA Underlying Funds - rate was: (i) above the effective fee rate
relationship, in part, because of such Mid-Cap Growth Index. The Board noted that for the mutual fund advised by Invesco
knowledge. The Board also considered the the Fund's performance was in the fourth Aim; and (ii) above the sub-adviser
steps that Invesco Aim and its affiliates quintile of its performance universe for effective fee rate for the domestic mutual
continue to take to improve the quality the one and three year periods and the fund sub-advised by an Invesco Aim
and efficiency of the services they third quintile for the five year period affiliate.
provide to the AIM Funds in the areas of (the first quintile being the best
investment performance, product line performing funds and the fifth quintile The Board noted that Invesco Aim has
diversification, distribution, fund being the worst performing funds). The contractually agreed to waive fees and/or
operations, shareholder services and Board noted that the Fund's performance limit expenses of the Fund through at
compliance. The Board concluded that the was below the performance of the Index for least April 30, 2010 in an amount
quality and efficiency of the services the one, three and five year periods. The necessary to limit total annual operating
Invesco Aim and its affiliates provide to Board noted that Invesco Aim indicated expenses to a specified percentage of
the AIM Funds in each of these areas that much of the underperformance was average daily net assets for each class of
support the Board's approval of the concentrated in the second half of 2007 as the Fund. The Board also considered the
continuance of the Fund's investment a result of financial sector stock effect this expense limitation would have
advisory agreement. selection. Although the independent on the Fund's estimated total expenses.
written evaluation of the Fund's Senior
B. Nature, Extent and Quality of Officer only considered Fund performance The Board also considered the services
Services Provided by Affiliated through the most recent calendar year, the provided by the Affiliated Sub-Advisers
Sub-Advisers Board also reviewed more recent Fund pursuant to the sub-advisory contracts and
performance and this review did not change the services provided by Invesco Aim
The Board reviewed the services provided their conclusions. The Board noted that, pursuant to the Fund's advisory agreement,
by the Affiliated Sub-Advisers under the in response to the Board's focus on fund as well as the allocation of fees between
sub-advisory contracts and the credentials performance, Invesco Aim has taken a Invesco Aim and the Affiliated
and experience of the officers and number of actions intended to improve the Sub-Advisers pursuant to the sub-advisory
employees of the Affiliated Sub-Advisers investment process for the funds. contracts. The Board noted that the
who provide these services. The Board sub-advisory fees have no direct effect on
concluded that the nature, extent and D. Advisory and Sub-Advisory Fees and the Fund or its shareholders, as they are
quality of the services provided by the Fee Waivers paid by Invesco Aim to the Affiliated
Affiliated Sub-Advisers are appropriate. Sub-Advisers, and that Invesco Aim and the
The Board noted that the Affiliated The Board compared the Fund's contractual Affiliated Sub-Advisers are affiliates.
Sub-Advisers, which have offices and advisory fee rate to the contractual
personnel that are geographically advisory fee rates of funds in the Fund's After taking account of the Fund's
dispersed in financial centers around the Lipper expense group that are not managed contractual advisory fee rate, the
world, can provide research and other by Invesco Aim or an Affiliated contractual sub-advisory fee rate, the
information and make recommendations on Sub-Adviser, at a common asset level. The comparative advisory fee information and
the markets and economies of various Board noted that the Fund's contractual the expense limitation discussed above and
countries and securities of companies advisory fee rate was below the median other relevant factors, the Board
located in such countries or on various contractual advisory fee rate of funds in concluded that the Fund's advisory and
types of investments and investment its expense group. The Board also reviewed sub-advisory fees are fair and reasonable.
techniques. The Board concluded that the the methodology used by Lipper in
sub-advisory contracts benefit the Fund determining contractual fee rates, which E. Economies of Scale and Breakpoints
and its shareholders by permitting Invesco includes using audited financial data from
Aim to utilize the additional resources the most recent annual report of each fund The Board considered the extent to which
and talent of the Affiliated Sub-Advisers in the expense group that was publicly there are economies of scale in the
in managing the Fund. available as of the end of the past provision of advisory services to the
calendar year. The Board noted that some Fund. The Board also considered whether
C. Fund Performance comparative data was at least one year old the Fund benefits from such economies of
and did not reflect the market downturn scale through contractual breakpoints in
The Board considered fund performance as a that occurred in the the Fund's advisory fee schedule. The
relevant factor in considering whether to Board noted that the Fund's contractual
approve the investment advisory fee schedule includes seven
breakpoints, but that due to the Fund's
asset level at the end of the past
calendar
AIM V.I. DYNAMICS FUND continued
year, the Fund is not currently benefiting relationship with the Fund, including the
from the breakpoints. The Board concluded fees received by Invesco Aim and its
that the Fund's advisory fees would affiliates for their provision of
reflect economies of scale at higher asset administrative, transfer agency and
levels. The Board also noted that the Fund distribution services to the Fund. The
shares directly in economies of scale Board considered the performance of
through lower fees charged by third party Invesco Aim and its affiliates in
service providers based on the combined providing these services and the
size of all of the AIM Funds and organizational structure employed by
affiliates. Invesco Aim and its affiliates to provide
these services. The Board also considered
F. Profitability and Financial that these services are provided to the
Resources Fund pursuant to written contracts that
are reviewed and approved on an annual
The Board reviewed information from basis by the Board. The Board concluded
Invesco Aim concerning the costs of the that Invesco Aim and its affiliates are
advisory and other services that Invesco providing these services in a satisfactory
Aim and its affiliates provide to the Fund manner and in accordance with the terms of
and the profitability of Invesco Aim and their contracts, and are qualified to
its affiliates in providing these continue to provide these services to the
services. The Board also reviewed Fund.
information concerning the financial
condition of Invesco Aim and its The Board considered the benefits
affiliates. The Board reviewed with realized by Invesco Aim and the Affiliated
Invesco Aim the methodology used to Sub-Advisers as a result of portfolio
prepare the profitability information. The brokerage transactions executed through
Board considered the overall profitability "soft dollar" arrangements. The Board
of Invesco Ltd., the ultimate parent of noted that soft dollar arrangements shift
Invesco Aim and the Affiliated the payment obligation for research and
Sub-Advisers, and of Invesco Aim, as well execution services from Invesco Aim and
as the profitability of Invesco Aim in the Affiliated Sub-Advisers to the funds
connection with managing the Fund. The and therefore may reduce Invesco Aim's and
Board noted that Invesco Aim continues to the Affiliated Sub-Advisers' expenses. The
operate at a net profit, although the Board concluded that Invesco Aim's and the
reduction of assets under management as a Affiliated Sub-Advisers' soft dollar
result of market movements and the arrangements are appropriate. The Board
increase in voluntary fee waivers for also concluded that, based on their review
affiliated money market funds have reduced and representations made by the Chief
the profitability of Invesco Aim and its Compliance Officer of Invesco Aim, these
affiliates. The Board concluded that the arrangements are consistent with
Fund's fees are fair and reasonable, and regulatory requirements.
that the level of profits realized by
Invesco Aim and its affiliates from The Board considered the fact that the
providing services to the Fund is not Fund's uninvested cash and cash collateral
excessive in light of the nature, quality from any securities lending arrangements
and extent of the services provided. The may be invested in money market funds
Board considered whether Invesco Aim is advised by Invesco Aim pursuant to
financially sound and has the resources procedures approved by the Board. The
necessary to perform its obligations under Board noted that Invesco Aim will receive
the Fund's investment advisory agreement, advisory fees from these affiliated money
and concluded that Invesco Aim has the market funds attributable to such
financial resources necessary to fulfill investments, although Invesco Aim has
these obligations. The Board also contractually agreed to waive through at
considered whether each Affiliated least June 30, 2010, the advisory fees
Sub-Adviser is financially sound and has payable by the Fund in an amount equal to
the resources necessary to perform its 100% of the net advisory fee Invesco Aim
obligations under the sub-advisory receives from the affiliated money market
contracts, and concluded that each funds with respect to the Fund's
Affiliated Sub-Adviser has the financial investment in the affiliated money market
resources necessary to fulfill these funds of uninvested cash, but not cash
obligations. collateral. The Board concluded that the
Fund's investment of uninvested cash and
G. Collateral Benefits to Invesco Aim cash collateral from any securities
and its Affiliates lending arrangements in the affiliated
money market funds is in the best
The Board considered various other interests of the Fund and its
benefits received by Invesco Aim and its shareholders.
affiliates resulting from Invesco Aim's
AIM V.I. DYNAMICS FUND
[INVESCO AIM LOGO] AIM V.I. FINANCIAL SERVICES FUND
--SERVICE MARK-- Semiannual Report to Shareholders o June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund
files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the SEC
Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by
calling 202 942 8090 or 800 732 0330, or by electronic request at the following E-mail address: publicinfo@sec.gov. The SEC file
numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent portfolio holdings, as filed on Form N-Q, have also been
made available to insurance companies issuing variable annuity contracts and variable life insurance policies ("variable products")
that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, from our Client Services department at 800 410 4246 or on the Invesco Aim Web site,
invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site,
sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2009, is
available at our Web site. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting
Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. will be merged into
Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc. Additional information
will be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN
MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
SERIES I SHARES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer Inception (9/20/99) -5.22%
charges. If variable product issuer charges were included, returns would be lower. 5 Years -15.79
1 Year -39.65
Series I Shares 1.70%
Series II Shares 1.72 SERIES II SHARES
S&P 500 Index(Triangle) (Broad Market Index) 3.19 Inception -5.44%
S&P 500 Financials Index(Triangle) (Style-Specific Index) -3.41 5 Years -15.98
Lipper VUF Financial Services Funds Category Average(Triangle) (Peer Group) 2.93 1 Year -39.76
==========================================
(Triangle) Lipper Inc.
FEES ASSESSED IN CONNECTION WITH A
The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index VARIABLE PRODUCT. SALES CHARGES, EXPENSES
covering all major areas of the U.S. economy. It is not the 500 largest companies, but AND FEES, WHICH ARE DETERMINED BY THE
rather the most widely held 500 companies chosen with respect to market size, liquidity VARIABLE PRODUCT ISSUERS, WILL VARY AND
and their industry. WILL LOWER THE TOTAL RETURN.
The S&P 500 FINANCIALS INDEX is a market capitalization-weighted index of companies THE MOST RECENT MONTH-END PERFORMANCE
involved in activities such as banking, consumer finance, investment banking and DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
brokerage, asset management, insurance and investment, and real estate, including PRODUCT CHARGES, IS AVAILABLE ON THE
REITs. INVESCO AIM AUTOMATED INFORMATION LINE,
866 702 4402. AS MENTIONED ABOVE, FOR THE
The LIPPER VUF FINANCIAL SERVICES FUNDS CATEGORY AVERAGE represents an average of MOST RECENT MONTH-END PERFORMANCE
all of the variable insurance underlying funds in the Lipper Financial Services Funds INCLUDING VARIABLE PRODUCT CHARGES, PLEASE
category. These funds invest at least 65% of their assets in equity securities of CONTACT YOUR VARIABLE PRODUCT ISSUER OR
companies engaged in providing financial services. FINANCIAL ADVISOR.
The Fund is not managed to track the performance of any particular index, including (1) Total annual operating expenses less
the indexes defined here, and consequently, the performance of the Fund may deviate any contractual fee waivers and/or
significantly from the performance of the indexes. expense reimbursements by the advisor
in effect through at least April 30,
A direct investment cannot be made in an index. Unless otherwise indicated, index 2010. See current prospectus for more
results include reinvested dividends, and they do not reflect sales charges. information.
Performance of the peer group reflects fund expenses; performance of a market index
does not. (2) Total annual operating expenses less
======================================================================================= contractual advisory fee waivers by
the advisor in effect through at least
SERIES II SHARES' INCEPTION DATE IS APRIL YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL June 30, 2010. See current prospectus
30, 2004. RETURNS SINCE THAT DATE ARE SHARES. for more information.
HISTORICAL. ALL OTHER RETURNS ARE THE
BLENDED RETURNS OF THE HISTORICAL THE NET ANNUAL FUND OPERATING EXPENSE
PERFORMANCE OF SERIES II SHARES SINCE RATIO SET FORTH IN THE MOST RECENT FUND
THEIR INCEPTION AND THE RESTATED PROSPECTUS AS OF THE DATE OF THIS REPORT
HISTORICAL PERFORMANCE OF SERIES I SHARES FOR SERIES I AND SERIES II SHARES WAS
(FOR PERIODS PRIOR TO INCEPTION OF SERIES 1.23% AND 1.45%, RESPECTIVELY.(1, 2) THE
II SHARES) ADJUSTED TO REFLECT THE RULE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO
12B-1 FEES APPLICABLE TO SERIES II SHARES. SET FORTH IN THE MOST RECENT FUND
THE INCEPTION DATE OF SERIES I SHARES IS PROSPECTUS AS OF THE DATE OF THIS REPORT
SEPTEMBER 20, 1999. FOR SERIES I AND SERIES II SHARES WAS
1.24% AND 1.49%, RESPECTIVELY. THE EXPENSE
THE PERFORMANCE OF THE FUND'S SERIES I RATIOS PRESENTED ABOVE MAY VARY FROM THE
AND SERIES II SHARE CLASSES WILL DIFFER EXPENSE RATIOS PRESENTED IN OTHER SECTIONS
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES. OF THIS REPORT THAT ARE BASED ON EXPENSES
INCURRED DURING THE PERIOD COVERED BY THIS
THE PERFORMANCE DATA QUOTED REPRESENT REPORT.
PAST PERFORMANCE AND CANNOT GUARANTEE
COMPARABLE FUTURE RESULTS; CURRENT AIM V.I. FINANCIAL SERVICES FUND, A
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE SERIES PORTFOLIO OF AIM VARIABLE INSURANCE
CONTACT YOUR VARIABLE PRODUCT ISSUER OR FUNDS, IS CURRENTLY OFFERED THROUGH
FINANCIAL ADVISOR FOR THE MOST RECENT INSURANCE COMPANIES ISSUING VARIABLE
MONTH-END VARIABLE PRODUCT PERFORMANCE. PRODUCTS. YOU CANNOT PURCHASE SHARES OF
PERFORMANCE FIGURES REFLECT FUND EXPENSES, THE FUND DIRECTLY. PERFORMANCE FIGURES
REINVESTED DISTRIBUTIONS AND CHANGES IN GIVEN REPRESENT THE FUND AND ARE NOT
NET ASSET VALUE. INVESTMENT RETURN AND INTENDED TO REFLECT ACTUAL VARIABLE
PRINCIPAL VALUE WILL FLUCTUATE SO THAT PRODUCT VALUES. THEY DO NOT REFLECT SALES
CHARGES, EXPENSES AND
AIM V.I. FINANCIAL SERVICES FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-95.98%
ASSET MANAGEMENT & CUSTODY BANKS-12.77%
Blackstone Group L.P. (The) 48,965 $ 516,091
- -----------------------------------------------------------------------------
Federated Investors, Inc.-Class B 79,635 1,918,407
- -----------------------------------------------------------------------------
Legg Mason, Inc. 83,226 2,029,050
- -----------------------------------------------------------------------------
State Street Corp. 49,536 2,338,099
=============================================================================
6,801,647
=============================================================================
CONSUMER FINANCE-16.24%
American Express Co. 103,679 2,409,500
- -----------------------------------------------------------------------------
AmeriCredit Corp.(b) 71,854 973,622
- -----------------------------------------------------------------------------
Capital One Financial Corp. 118,541 2,593,677
- -----------------------------------------------------------------------------
SLM Corp.(b) 260,613 2,676,495
=============================================================================
8,653,294
=============================================================================
DATA PROCESSING & OUTSOURCED SERVICES-6.78%
Alliance Data Systems Corp.(b) 26,517 1,092,235
- -----------------------------------------------------------------------------
Automatic Data Processing, Inc. 52,807 1,871,480
- -----------------------------------------------------------------------------
Heartland Payment Systems, Inc. 322 3,082
- -----------------------------------------------------------------------------
VeriFone Holdings, Inc.(b) 53,455 401,447
- -----------------------------------------------------------------------------
Western Union Co. 14,933 244,901
=============================================================================
3,613,145
=============================================================================
DIVERSIFIED BANKS-0.20%
U.S. Bancorp 6,016 107,807
=============================================================================
DIVERSIFIED CAPITAL MARKETS-2.49%
UBS AG (Switzerland)(b) 108,799 1,328,436
=============================================================================
INSURANCE BROKERS-4.44%
Marsh & McLennan Cos., Inc. 95,256 1,917,503
- -----------------------------------------------------------------------------
National Financial Partners Corp.(b) 61,455 449,851
=============================================================================
2,367,354
=============================================================================
INVESTMENT BANKING & BROKERAGE-8.56%
FBR Capital Markets Corp.(b) 280,608 1,318,858
- -----------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 7,626 1,124,377
- -----------------------------------------------------------------------------
Morgan Stanley 74,323 2,118,949
=============================================================================
4,562,184
=============================================================================
LIFE & HEALTH INSURANCE-3.04%
Prudential Financial, Inc. 8,774 326,568
- -----------------------------------------------------------------------------
StanCorp Financial Group, Inc. 45,033 1,291,547
=============================================================================
1,618,115
=============================================================================
MANAGED HEALTH CARE-4.22%
Coventry Health Care, Inc.(b) 33,223 621,602
- -----------------------------------------------------------------------------
UnitedHealth Group Inc. 65,129 1,626,923
=============================================================================
2,248,525
=============================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-13.56%
Bank of America Corp. 213,246 2,814,847
- -----------------------------------------------------------------------------
Citigroup Inc.(b) 332,063 986,227
- -----------------------------------------------------------------------------
JPMorgan Chase & Co. 100,407 3,424,883
=============================================================================
7,225,957
=============================================================================
PROPERTY & CASUALTY INSURANCE-5.29%
Allstate Corp. (The) 7,538 183,927
- -----------------------------------------------------------------------------
XL Capital Ltd.-Class A 229,979 2,635,559
=============================================================================
2,819,486
=============================================================================
REAL ESTATE SERVICES-0.23%
Jones Lang LaSalle Inc. 3,708 121,363
=============================================================================
REGIONAL BANKS-8.94%
Fifth Third Bancorp 296,892 2,107,933
- -----------------------------------------------------------------------------
First Horizon National Corp.(b) 10,108 121,295
- -----------------------------------------------------------------------------
SunTrust Banks, Inc. 88,035 1,448,176
- -----------------------------------------------------------------------------
Zions Bancorp. 93,886 1,085,322
=============================================================================
4,762,726
=============================================================================
REINSURANCE-1.94%
Transatlantic Holdings, Inc. 23,913 1,036,150
=============================================================================
SPECIALIZED CONSUMER SERVICES-1.81%
H&R Block, Inc. 55,835 962,037
=============================================================================
SPECIALIZED FINANCE-5.47%
CIT Group, Inc.(b) 319,441 686,798
- -----------------------------------------------------------------------------
Moody's Corp. 84,442 2,225,047
=============================================================================
2,911,845
=============================================================================
Total Common Stocks & Other Equity Interests
(Cost $84,243,144) 51,140,071
=============================================================================
MONEY MARKET FUNDS-4.46%
Liquid Assets Portfolio-Institutional Class(c) 1,187,722 1,187,722
- -----------------------------------------------------------------------------
Premier Portfolio-Institutional Class(c) 1,187,722 1,187,722
=============================================================================
Total Money Market Funds (Cost $2,375,444) 2,375,444
=============================================================================
TOTAL INVESTMENTS-100.44% (Cost $86,618,588) 53,515,515
=============================================================================
OTHER ASSETS LESS LIABILITIES-(0.44)% (235,169)
=============================================================================
NET ASSETS-100.00% $53,280,346
_____________________________________________________________________________
=============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. FINANCIAL SERVICES FUND
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) Non-income producing security.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
PORTFOLIO COMPOSITION
By sector, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
Financials 83.2%
- -------------------------------------------------------------------------
Information Technology 6.8
- -------------------------------------------------------------------------
Health Care 4.2
- -------------------------------------------------------------------------
Consumer Discretionary 1.8
- -------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities 4.0
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. FINANCIAL SERVICES FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $84,243,144) $ 51,140,071
- --------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 2,375,444
================================================================================
Total investments, at value (Cost $86,618,588) 53,515,515
================================================================================
Receivables for:
Investments sold 110
- --------------------------------------------------------------------------------
Fund shares sold 11,446
- --------------------------------------------------------------------------------
Dividends 52,299
- --------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 8,605
================================================================================
Total assets 53,587,975
________________________________________________________________________________
================================================================================
LIABILITIES:
Payables for:
Investments purchased 2,835
- --------------------------------------------------------------------------------
Fund shares reacquired 220,173
- --------------------------------------------------------------------------------
Accrued fees to affiliates 30,501
- --------------------------------------------------------------------------------
Accrued other operating expenses 33,822
- --------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 20,298
================================================================================
Total liabilities 307,629
================================================================================
Net assets applicable to shares outstanding $ 53,280,346
________________________________________________________________________________
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $114,666,772
- --------------------------------------------------------------------------------
Undistributed net investment income 1,984,608
- --------------------------------------------------------------------------------
Undistributed net realized gain (loss) (30,267,961)
- --------------------------------------------------------------------------------
Unrealized appreciation (depreciation) (33,103,073)
================================================================================
$ 53,280,346
________________________________________________________________________________
================================================================================
NET ASSETS:
Series I $ 47,459,968
________________________________________________________________________________
================================================================================
Series II $ 5,820,378
________________________________________________________________________________
================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 11,313,460
________________________________________________________________________________
================================================================================
Series II 1,401,682
________________________________________________________________________________
================================================================================
Series I:
Net asset value per share $ 4.20
________________________________________________________________________________
================================================================================
Series II:
Net asset value per share $ 4.15
________________________________________________________________________________
================================================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends $ 401,376
- ------------------------------------------------------
Dividends from affiliated money market
funds 11,734
======================================================
Total investment income 413,110
======================================================
EXPENSES:
Advisory fees 151,658
- ------------------------------------------------------
Administrative services fees 74,963
- ------------------------------------------------------
Custodian fees 3,605
- ------------------------------------------------------
Distribution fees -- Series II 5,094
- ------------------------------------------------------
Transfer agent fees 8,544
- ------------------------------------------------------
Trustees' and officers' fees and
benefits 10,850
- ------------------------------------------------------
Professional services fees 16,366
- ------------------------------------------------------
Other 5,705
======================================================
Total expenses 276,785
======================================================
Less: Fees waived and expenses
reimbursed (12,932)
======================================================
Net expenses 263,853
======================================================
Net investment income 149,257
======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from investment
securities (3,989,134)
- ------------------------------------------------------
Change in net unrealized appreciation of
investment securities 5,942,169
- ------------------------------------------------------
Net realized and unrealized gain 1,953,035
======================================================
Net increase in net assets resulting
from operations $ 2,102,292
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. FINANCIAL SERVICES FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- ------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 149,257 $ 1,865,196
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) (3,989,134) (25,097,989)
- ------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 5,942,169 (35,661,911)
======================================================================================================
Net increase (decrease) in net assets resulting from operations 2,102,292 (58,894,704)
======================================================================================================
Distributions to shareholders from net investment income:
Series I -- (1,840,747)
- ------------------------------------------------------------------------------------------------------
Series II -- (162,993)
======================================================================================================
Total distributions from net investment income -- (2,003,740)
======================================================================================================
Distributions to shareholders from net realized gains:
Series I -- (5,303,718)
- ------------------------------------------------------------------------------------------------------
Series II -- (492,299)
======================================================================================================
Total distributions from net realized gains -- (5,796,017)
======================================================================================================
Share transactions-net:
Series I 6,315,534 16,386,023
- ------------------------------------------------------------------------------------------------------
Series II 1,572,767 4,765,984
======================================================================================================
Net increase in net assets resulting from share transactions 7,888,301 21,152,007
======================================================================================================
Net increase (decrease) in net assets 9,990,593 (45,542,454)
======================================================================================================
NET ASSETS:
Beginning of period 43,289,753 88,832,207
======================================================================================================
End of period (includes undistributed net investment income of
$1,984,608 and $1,835,351, respectively) $53,280,346 $ 43,289,753
______________________________________________________________________________________________________
======================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. FINANCIAL SERVICES FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Financial Services Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is capital growth.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
AIM V.I. FINANCIAL SERVICES FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. OTHER RISKS -- The Fund's investments are concentrated in a comparatively
narrow segment of the economy. Consequently, the Fund may tend to be more
volatile than other mutual funds, and the value of the Fund's investments
may tend to rise and fall more rapidly.
The financial services sector is subject to extensive government
regulation, which may change frequently. The profitability of businesses
in this sector depends heavily on the availability and cost of money and
may fluctuate significantly in response to changes to interest rates and
general economic conditions.
AIM V.I. FINANCIAL SERVICES FUND
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS 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%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 1.30% and Series
II shares to 1.45% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, 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. These credits are used to pay certain expenses incurred by the Fund. To
the extent that the annualized expense ratio does not exceed the expense
limitation, the Advisor will retain its ability to be reimbursed for such fee
waivers or reimbursements prior to the end of each fiscal year.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash (excluding investments of cash
collateral from securities lending) in such affiliated money market funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$10,894 and reimbursed class level expenses of $2,038 of Series II shares.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $24,795 for accounting and fund
administrative services and reimbursed $50,168 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the
AIM V.I. FINANCIAL SERVICES FUND
highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- -------------------------------------------------------------------------------------------------------------------
Equity Securities $53,515,515 $-- $-- $53,515,515
___________________________________________________________________________________________________________________
===================================================================================================================
</Table>
NOTE 4--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $1,471
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 5--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the custodian bank
can be compensated by earning the additional interest; or (ii) compensate by
paying the custodian bank at a rate agreed upon by the custodian bank and
Invesco Aim, not to exceed the contractually agreed upon rate.
NOTE 6--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
December 31, 2016 $22,454,636
_______________________________________________________________________________________________
===============================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
AIM V.I. FINANCIAL SERVICES FUND
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $10,537,035 and
$3,397,400, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 2,008,245
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (36,163,241)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $(34,154,996)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $87,670,511.
</Table>
NOTE 8--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- ------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 4,094,612 $14,573,039 4,741,184 $ 41,508,337
- ------------------------------------------------------------------------------------------------------------------------
Series II 556,699 1,908,121 635,748 5,276,073
========================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 1,609,114 7,144,465
- ------------------------------------------------------------------------------------------------------------------------
Series II -- -- 148,930 655,292
========================================================================================================================
Reacquired:
Series I (2,348,994) (8,257,505) (3,725,544) (32,266,779)
- ------------------------------------------------------------------------------------------------------------------------
Series II (103,052) (335,354) (139,755) (1,165,381)
========================================================================================================================
Net increase in share activity 2,199,265 $ 7,888,301 3,269,677 $ 21,152,007
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 74% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
AIM V.I. FINANCIAL SERVICES FUND
NOTE 9--FINANCIAL HIGHLIGHTS
<Table>
<Caption>
NET GAINS
(LOSSES)
NET ASSET ON SECURITIES DIVIDENDS DISTRIBUTIONS
VALUE, NET (BOTH TOTAL FROM FROM NET FROM NET NET ASSET
BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END
OF PERIOD INCOME UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD
- ---------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $ 4.12 $0.01(c) $ 0.07 $ 0.08 $ -- $ -- $ -- $ 4.20
Year ended 12/31/08 12.26 0.24(c) (7.46) (7.22) (0.24) (0.68) (0.92) 4.12
Year ended 12/31/07 17.41 0.27(c) (4.04) (3.77) (0.29) (1.09) (1.38) 12.26
Year ended 12/31/06 15.26 0.23(c) 2.28 2.51 (0.26) (0.10) (0.36) 17.41
Year ended 12/31/05 14.61 0.19(c) 0.66 0.85 (0.20) -- (0.20) 15.26
Year ended 12/31/04 13.54 0.15 1.02 1.17 (0.10) -- (0.10) 14.61
- ---------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 4.08 0.01(c) 0.06 0.07 -- -- -- 4.15
Year ended 12/31/08 12.17 0.21(c) (7.39) (7.18) (0.23) (0.68) (0.91) 4.08
Year ended 12/31/07 17.33 0.22(c) (4.00) (3.78) (0.29) (1.09) (1.38) 12.17
Year ended 12/31/06 15.23 0.20(c) 2.26 2.46 (0.26) (0.10) (0.36) 17.33
Year ended 12/31/05 14.59 0.15(c) 0.67 0.82 (0.18) -- (0.18) 15.23
Year ended 12/31/04(e) 13.50 0.12 1.07 1.19 (0.10) -- (0.10) 14.59
_________________________________________________________________________________________________________________________________
=================================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME
TOTAL END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
RETURN(a) (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(b)
- ------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 1.94% $ 47,460 1.29%(d) 1.34%(d) 0.75%(d) 9%
Year ended 12/31/08 (59.44) 39,421 1.22 1.23 2.71 47
Year ended 12/31/07 (22.22) 85,144 1.11 1.11 1.61 9
Year ended 12/31/06 16.52 146,092 1.12 1.12 1.44 14
Year ended 12/31/05 5.84 141,241 1.12 1.12 1.30 22
Year ended 12/31/04 8.68 203,879 1.12 1.12 0.89 67
- ------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 1.72 5,820 1.44(d) 1.59(d) 0.60(d) 9
Year ended 12/31/08 (59.56) 3,869 1.44 1.48 2.49 47
Year ended 12/31/07 (22.39) 3,688 1.36 1.36 1.36 9
Year ended 12/31/06 16.22 1,664 1.37 1.37 1.19 14
Year ended 12/31/05 5.61 11 1.37 1.37 1.05 22
Year ended 12/31/04(e) 8.85 11 1.38(f) 1.38(f) 0.63(f) 67
__________________________________________________________________________________________________________________
==================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Total returns are not annualized for periods less than on
year and do not reflect charges assessed in connection with a variable
product, which if included would reduce total returns, if applicable.
(b) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(c) Calculated using average shares outstanding.
(d) Ratios are annualized and based on average daily net assets (000's omitted)
of $36,668 and $4,109 for Series I and Series II shares, respectively.
(e) Commencement date of April 30, 2004.
(f) Annualized.
AIM V.I. FINANCIAL SERVICES FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,017.00 $6.45 $1,018.40 $6.46 1.29%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,017.20 7.20 1,017.65 7.20 1.44
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. FINANCIAL SERVICES FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM In addition to their meetings particular factor that was controlling.
Variable Insurance Funds is required under throughout the year, the Sub-Committees Each Trustee may have evaluated the
the Investment Company Act of 1940 to meet at designated contract renewal information provided differently from
approve annually the renewal of the AIM meetings each year to conduct an in-depth another Trustee and attributed different
V.I. Financial Services Fund (the Fund) review of the performance, fees, expenses weight to the various factors. The
investment advisory agreement with Invesco and other matters related to their Trustees recognized that the advisory
Aim Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract arrangements and resulting advisory fees
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive for the Fund and the other AIM Funds are
for Mutual Funds (the sub-advisory comparative performance and fee data the result of years of review and
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an negotiation between the Trustees and
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Invesco Aim, that the Trustees may focus
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and to a greater extent on certain aspects of
Limited, Invesco Australia Limited, supervision of the Senior Officer who also these arrangements in some years than in
Invesco Global Asset Management (N.A.), prepares a separate analysis of this others, and that the Trustees'
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each deliberations and conclusions in a
Institutional (N.A.), Inc., Invesco Senior Sub-Committee then makes recommendations particular year may be based in part on
Secured Management, Inc. and Invesco to the Investments Committee regarding the their deliberations and conclusions
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. regarding these same arrangements
Sub-Advisers). During contract renewal The Investments Committee considers each throughout the year and in prior years.
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes
Board as a whole, and the disinterested or its own recommendations regarding the fees The discussion below serves as a
"independent" Trustees voting separately, and expenses of the AIM Funds to the full summary of the Senior Officer's
approved the continuance of the Fund's Board. The Investments Committee also independent written evaluation with
investment advisory agreement and the considers each Sub-Committee's respect to the Fund's investment advisory
sub-advisory contracts for another year, recommendations in making its annual agreement as well as a discussion of the
effective July 1, 2009. In doing so, the recommendation to the Board whether to material factors and related conclusions
Board determined that the Fund's approve the continuance of each AIM Fund's that formed the basis for the Board's
investment advisory agreement and the investment advisory agreement and approval of the Fund's investment advisory
sub-advisory contracts are in the best sub-advisory contracts for another year. agreement and sub-advisory contracts.
interests of the Fund and its shareholders Unless otherwise stated, information set
and that the compensation to Invesco Aim The independent Trustees met separately forth below is as of June 17, 2009, and
and the Affiliated Sub-Advisers under the during their evaluation of the Fund's does not reflect any changes that may have
Fund's investment advisory agreement and investment advisory agreement and occurred since that date, including but
sub-advisory contracts is fair and sub-advisory contracts with independent not limited to changes to the Fund's
reasonable. legal counsel. The independent Trustees performance, advisory fees, expense
were also assisted in their annual limitations and/or fee waivers.
THE BOARD'S FUND EVALUATION PROCESS evaluation of the Fund's investment
The Board's Investments Committee has advisory agreement by the Senior Officer. FACTORS AND CONCLUSIONS AND SUMMARY OF
established three Sub-Committees that are One responsibility of the Senior Officer INDEPENDENT WRITTEN FEE EVALUATION
responsible for overseeing the management is to manage the process by which the AIM
of a number of the series portfolios of Funds' proposed management fees are A. Nature, Extent and Quality of
the AIM Funds. This Sub-Committee negotiated during the annual contract Services Provided by Invesco Aim
structure permits the Trustees to focus on renewal process to ensure that they are
the performance of the AIM Funds that have negotiated in a manner that is at arms' The Board reviewed the advisory services
been assigned to them. The Sub-Committees length and reasonable. Accordingly, the provided to the Fund by Invesco Aim under
meet throughout the year to review the Senior Officer must either supervise a the Fund's investment advisory agreement,
performance of their assigned funds, and competitive bidding process or prepare an the performance of Invesco Aim in
the Sub-Committees review monthly and independent written evaluation. The Senior providing these services, and the
quarterly comparative performance Officer recommended that an independent credentials and experience of the officers
information and periodic asset flow data written evaluation be provided and, at the and employees of Invesco Aim who provide
for their assigned funds. These materials direction of the Board, prepared an these services. The Board's review of the
are prepared under the direction and independent written evaluation. qualifications of Invesco Aim to provide
supervision of the independent Senior these services included the Board's
Officer, an officer of the AIM Funds who During the annual contract renewal consideration of Invesco Aim's portfolio
reports directly to the independent process, the Board considered the factors and product review process, various back
Trustees. Over the course of each year, discussed below in evaluating the fairness office support functions provided by
the Sub-Committees meet with portfolio and reasonableness of the Fund's Invesco Aim and its affiliates, and
managers for their assigned funds and investment advisory agreement and Invesco Aim's equity and fixed income
other members of management and review sub-advisory contracts. The Board trading operations. The Board concluded
with these individuals the performance, considered all of the information provided that the nature, extent and quality of the
investment objective(s), policies, to them, including information provided at advisory services provided to the Fund by
strategies and limitations of these funds. their meetings throughout the year as part Invesco Aim are appropriate and that
of their ongoing oversight of the Fund, Invesco Aim currently is providing
and did not identify any satisfactory advisory services in
accordance with the terms of the Fund's
investment advisory
AIM V.I. FINANCIAL SERVICES FUND continued
agreement. In addition, based on their whether to approve the investment advisory median contractual advisory fee rate of
ongoing meetings throughout the year with agreement. The Board did not view fund funds in its expense group. The Board also
the Fund's portfolio manager or managers, performance as a relevant factor in reviewed the methodology used by Lipper in
the Board concluded that these individuals considering whether to approve the determining contractual fee rates, which
are competent and able to continue to sub-advisory contracts for the Fund, as no includes using audited financial data from
carry out their responsibilities under the Affiliated Sub-Adviser currently manages the most recent annual report of each fund
Fund's investment advisory agreement. assets of the Fund. in the expense group that was publicly
available as of the end of the past
In determining whether to continue the The Board compared the Fund's calendar year. The Board noted that some
Fund's investment advisory agreement, the performance during the past one, three and comparative data was at least one year old
Board considered the prior relationship five calendar years to the performance of and did not reflect the market downturn
between Invesco Aim and the Fund, as well all funds in the Lipper performance that occurred in the fourth quarter of
as the Board's knowledge of Invesco Aim's universe that are not managed by Invesco 2008.
operations, and concluded that it is Aim or an Affiliated Sub-Adviser. The
beneficial to maintain the current Board noted that the Fund's performance The Board also compared the Fund's
relationship, in part, because of such was in the fifth quintile of its effective fee rate (the advisory fee after
knowledge. The Board also considered the performance universe for the one, three any advisory fee waivers and before any
steps that Invesco Aim and its affiliates and five year periods (the first quintile expense limitations/waivers) to the
continue to take to improve the quality being the best performing funds and the advisory fee rates of other domestic
and efficiency of the services they fifth quintile being the worst performing clients of Invesco Aim and its affiliates
provide to the AIM Funds in the areas of funds). The Board also noted that Invesco with investment strategies comparable to
investment performance, product line Aim acknowledges the Fund's those of the Fund, including one mutual
diversification, distribution, fund underperformance, and has confirmed that fund advised by Invesco Aim. The Board
operations, shareholder services and the portfolio manager consistently follows noted that the Fund's rate was the same as
compliance. The Board concluded that the the stated investment process. Invesco Aim the effective fee rate of the other mutual
quality and efficiency of the services continues to monitor the Fund and to fund.
Invesco Aim and its affiliates provide to provide the Board with periodic reporting
the AIM Funds in each of these areas on business issues that affect the Fund's The Board noted that Invesco Aim
support the Board's approval of the performance. The Board also considered a contractually agreed to waive fees and/or
continuance of the Fund's investment report of the Senior Officer describing limit expenses of the Fund through at
advisory agreement. (i) the Board's oversight of performance least April 30, 2010 in an amount
issues for the intrinsic value funds, necessary to limit total annual operating
B. Nature, Extent and Quality of including the Fund, and Invesco Aim's expenses to a specified percentage of
Services Provided by Affiliated response, including numerous meetings with average daily net assets for each class of
Sub-Advisers portfolio managers, members of management the Fund. The Board considered the effect
and members of the Global Performance this fee waiver would have on the Fund's
The Board reviewed the services provided Measurement & Risk Group; (ii) actions total estimated expenses.
by the Affiliated Sub-Advisers under the consistent with the exercise by the
sub-advisory contracts and the credentials Trustees of their fiduciary duties; and The Board also considered the services
and experience of the officers and (iii) conclusions and recommendations for provided by the Affiliated Sub-Advisers
employees of the Affiliated Sub-Advisers consideration by the Board. Although the pursuant to the sub-advisory contracts and
who provide these services. The Board independent written evaluation of the the services provided by Invesco Aim
concluded that the nature, extent and Fund's Senior Officer only considered Fund pursuant to the Fund's advisory agreement,
quality of the services provided by the performance through the most recent as well as the allocation of fees between
Affiliated Sub-Advisers are appropriate. calendar year, the Board also reviewed Invesco Aim and the Affiliated
The Board noted that the Affiliated more recent Fund performance and this Sub-Advisers pursuant to the sub-advisory
Sub-Advisers, which have offices and review did not change their conclusions. contracts. The Board noted that the
personnel that are geographically The Board noted that, in response to the sub-advisory fees have no direct effect on
dispersed in financial centers around the Board's focus on fund performance, Invesco the Fund or its shareholders, as they are
world, can provide research and other Aim has taken a number of actions intended paid by Invesco Aim to the Affiliated
information and make recommendations on to improve the investment process for the Sub-Advisers, and that Invesco Aim and the
the markets and economies of various funds. Affiliated Sub-Advisers are affiliates.
countries and securities of companies
located in such countries or on various D. Advisory and Sub-Advisory Fees and After taking account of the Fund's
types of investments and investment Fee Waivers contractual advisory fee rate, the
techniques. The Board concluded that the contractual sub-advisory fee rate, the
sub-advisory contracts benefit the Fund The Board compared the Fund's contractual comparative advisory fee information
and its shareholders by permitting Invesco advisory fee rate to the contractual discussed above, the waivers and expense
Aim to utilize the additional resources advisory fee rates of funds in the Fund's limitations and other relevant factors,
and talent of the Affiliated Sub-Advisers Lipper expense group that are not managed the Board concluded that the Fund's
in managing the Fund. by Invesco Aim or an Affiliated advisory and sub-advisory fees are fair
Sub-Adviser, at a common asset level. The and reasonable.
C. Fund Performance Board noted that the Fund's contractual
advisory fee rate was below the E. Economies of Scale and Breakpoints
The Board considered fund performance as a
relevant factor in considering The Board considered the extent to which
there are economies of scale in the
provision of advisory services to the
AIM V.I. FINANCIAL SERVICES FUND continued
Fund. The Board also considered whether each Affiliated Sub-Adviser has the market funds with respect to the Fund's
the Fund benefits from such economies of financial resources necessary to fulfill investment in the affiliated money market
scale through contractual breakpoints in these obligations. funds of uninvested cash, but not cash
the Fund's advisory fee schedule. The collateral. The Board concluded that the
Board noted that the Fund's contractual G. Collateral Benefits to Invesco Aim Fund's investment of uninvested cash and
advisory fee schedule includes seven and its Affiliates cash collateral from any securities
breakpoints, but that due to the Fund's lending arrangements in the affiliated
asset level at the end of the past The Board considered various other money market funds is in the best
calendar year, the Fund is not currently benefits received by Invesco Aim and its interests of the Fund and its
benefiting from the breakpoints. The Board affiliates resulting from Invesco Aim's shareholders.
concluded that the Fund's advisory fees relationship with the Fund, including the
appropriately reflect economies of scale fees received by Invesco Aim and its
at current asset levels. The Board also affiliates for their provision of
noted that the Fund shares directly in administrative, transfer agency and
economies of scale through lower fees distribution services to the Fund. The
charged by third party service providers Board considered the performance of
based on the combined size of all of the Invesco Aim and its affiliates in
AIM Funds and affiliates. providing these services and the
organizational structure employed by
F. Profitability and Financial Invesco Aim and its affiliates to provide
Resources these services. The Board also considered
that these services are provided to the
The Board reviewed information from Fund pursuant to written contracts that
Invesco Aim concerning the costs of the are reviewed and approved on an annual
advisory and other services that Invesco basis by the Board. The Board concluded
Aim and its affiliates provide to the Fund that Invesco Aim and its affiliates are
and the profitability of Invesco Aim and providing these services in a satisfactory
its affiliates in providing these manner and in accordance with the terms of
services. The Board also reviewed their contracts, and are qualified to
information concerning the financial continue to provide these services to the
condition of Invesco Aim and its Fund.
affiliates. The Board reviewed with
Invesco Aim the methodology used to The Board considered the benefits
prepare the profitability information. The realized by Invesco Aim and the Affiliated
Board considered the overall profitability Sub-Advisers as a result of portfolio
of Invesco Ltd., the ultimate parent of brokerage transactions executed through
Invesco Aim and the Affiliated "soft dollar" arrangements. The Board
Sub-Advisers, and of Invesco Aim, as well noted that soft dollar arrangements shift
as the profitability of Invesco Aim in the payment obligation for research and
connection with managing the Fund. The execution services from Invesco Aim and
Board noted that Invesco Aim continues to the Affiliated Sub-Advisers to the funds
operate at a net profit, although the and therefore may reduce Invesco Aim's and
reduction of assets under management as a the Affiliated Sub-Advisers' expenses. The
result of market movements and the Board concluded that Invesco Aim's and the
increase in voluntary fee waivers for Affiliated Sub-Advisers' soft dollar
affiliated money market funds have reduced arrangements are appropriate. The Board
the profitability of Invesco Aim and its also concluded that, based on their review
affiliates. The Board concluded that the and representations made by the Chief
Fund's fees are fair and reasonable, and Compliance Officer of Invesco Aim, these
that the level of profits realized by arrangements are consistent with
Invesco Aim and its affiliates from regulatory requirements.
providing services to the Fund is not
excessive in light of the nature, quality The Board considered the fact that the
and extent of the services provided. The Fund's uninvested cash and cash collateral
Board considered whether Invesco Aim is from any securities lending arrangements
financially sound and has the resources may be invested in money market funds
necessary to perform its obligations under advised by Invesco Aim pursuant to
the Fund's investment advisory agreement, procedures approved by the Board. The
and concluded that Invesco Aim has the Board noted that Invesco Aim will receive
financial resources necessary to fulfill advisory fees from these affiliated money
these obligations. The Board also market funds attributable to such
considered whether each Affiliated investments, although Invesco Aim has
Sub-Adviser is financially sound and has contractually agreed to waive through at
the resources necessary to perform its least June 30, 2010, the advisory fees
obligations under the sub-advisory payable by the Fund in an amount equal to
contracts, and concluded that 100% of the net advisory fee Invesco Aim
receives from the affiliated money
AIM V.I. FINANCIAL SERVICES FUND
[INVESCO AIM LOGO] AIM V.I. GLOBAL HEALTH CARE FUND
--SERVICE MARK-- Semiannual Report to Shareholders o June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund
files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the SEC
Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by
calling 202 942 8090 or 800 732 0330, or by electronic request at the following E-mail address: publicinfo@sec.gov. The SEC file
numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent portfolio holdings, as filed on Form N-Q, have also been
made available to insurance companies issuing variable annuity contracts and variable life insurance policies ("variable products")
that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, from our Client Services department at 800 410 4246 or on the Invesco Aim Web site,
invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site,
sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2009, is
available at our Web site. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting
Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. will be merged into
Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc. Additional information
will be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN
MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
SERIES I SHARES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer Inception (5/21/97) 5.60%
charges. If variable product issuer charges were included, returns would be lower. 10 Year 2.50
5 Years 0.40
Series I Shares 8.58% 1 Year -14.46
Series II Shares 8.48
MSCI World Index(Triangle) (Broad Market Index) 6.35 SERIES II SHARES
MSCI World Health Care Index(Triangle) (Style-Specific Index) -1.49 10 Years 2.24%
Lipper VUF Health/Biotechnology Funds Category Average(Triangle) (Peer Group) 5.09 5 Years 0.15
1 Year -14.60
(Triangle) Lipper Inc. ==========================================
The MSCI WORLD INDEX --SERVICE MARK-- is a free float-adjusted market capitalization THE MOST RECENT MONTH-END PERFORMANCE
index that is designed to measure global developed market equity performance. DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
PRODUCT CHARGES, IS AVAILABLE ON THE
The MSCI WORLD HEALTH CARE INDEX is a free float-adjusted market capitalization INVESCO AIM AUTOMATED INFORMATION LINE,
index that represents the health care segment in global developed market equity 866 702 4402. AS MENTIONED ABOVE, FOR THE
performance. MOST RECENT MONTH-END PERFORMANCE
INCLUDING VARIABLE PRODUCT CHARGES, PLEASE
The LIPPER VUF HEALTH/BIOTECHNOLOGY FUNDS CATEGORY AVERAGE represents an average of CONTACT YOUR VARIABLE PRODUCT ISSUER OR
all of the variable insurance underlying funds in the Lipper Health/Biotechnology Funds FINANCIAL ADVISOR.
category. These funds invest at least 65% of their portfolios in equity securities of
companies engaged in healthcare, medicine and biotechnology. (1) Total annual operating expenses less
any contractual fee waivers and/or
The Fund is not managed to track the performance of any particular index, including expense reimbursements by the advisor
the indexes defined here, and consequently, the performance of the Fund may deviate in effect through at least April 30,
significantly from the performance of the indexes. 2010. See current prospectus for more
information.
A direct investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends, and they do not reflect sales charges. (2) Total annual operating expenses less
Performance of the peer group reflects fund expenses; performance of a market index contractual advisory fee waivers by
does not. the advisor in effect through at least
======================================================================================= June 30, 2010. See current prospectus
for more information.
SERIES II SHARES' INCEPTION DATE IS APRIL EXPENSE RATIO SET FORTH IN THE MOST RECENT
30, 2004. RETURNS SINCE THAT DATE ARE FUND PROSPECTUS AS OF THE DATE OF THIS
HISTORICAL. ALL OTHER RETURNS ARE THE REPORT FOR SERIES I AND SERIES II SHARES
BLENDED RETURNS OF THE HISTORICAL WAS 1.13% AND 1.38%, RESPECTIVELY.(1, 2)
PERFORMANCE OF SERIES II SHARES SINCE THE TOTAL ANNUAL FUND OPERATING EXPENSE
THEIR INCEPTION AND THE RESTATED RATIO SET FORTH IN THE MOST RECENT FUND
HISTORICAL PERFORMANCE OF SERIES I SHARES PROSPECTUS AS OF THE DATE OF THIS REPORT
(FOR PERIODS PRIOR TO INCEPTION OF SERIES FOR SERIES I AND SERIES II SHARES WAS
II SHARES) ADJUSTED TO REFLECT THE RULE 1.14% AND 1.39%, RESPECTIVELY. THE EXPENSE
12B-1 FEES APPLICABLE TO SERIES II SHARES. RATIOS PRESENTED ABOVE MAY VARY FROM THE
THE INCEPTION DATE OF SERIES I SHARES IS EXPENSE RATIOS PRESENTED IN OTHER SECTIONS
MAY 21, 1997. OF THIS REPORT THAT ARE BASED ON EXPENSES
INCURRED DURING THE PERIOD COVERED BY THIS
THE PERFORMANCE OF THE FUND'S SERIES I REPORT.
AND SERIES II SHARE CLASSES WILL DIFFER
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES. AIM V.I. GLOBAL HEALTH CARE FUND, A
SERIES PORTFOLIO OF AIM VARIABLE INSURANCE
THE PERFORMANCE DATA QUOTED REPRESENT FUNDS, IS CURRENTLY OFFERED THROUGH
PAST PERFORMANCE AND CANNOT GUARANTEE INSURANCE COMPANIES ISSUING VARIABLE
COMPARABLE FUTURE RESULTS; CURRENT PRODUCTS. YOU CANNOT PURCHASE SHARES OF
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE THE FUND DIRECTLY. PERFORMANCE FIGURES
CONTACT YOUR VARIABLE PRODUCT ISSUER OR GIVEN REPRESENT THE FUND AND ARE NOT
FINANCIAL ADVISOR FOR THE MOST RECENT INTENDED TO REFLECT ACTUAL VARIABLE
MONTH-END VARIABLE PRODUCT PERFORMANCE. PRODUCT VALUES. THEY DO NOT REFLECT SALES
PERFORMANCE FIGURES REFLECT FUND EXPENSES, CHARGES, EXPENSES AND FEES ASSESSED IN
REINVESTED DISTRIBUTIONS AND CHANGES IN CONNECTION WITH A VARIABLE PRODUCT. SALES
NET ASSET VALUE. INVESTMENT RETURN AND CHARGES, EXPENSES AND FEES, WHICH ARE
PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU DETERMINED BY THE VARIABLE PRODUCT
MAY HAVE A GAIN OR LOSS WHEN YOU SELL ISSUERS, WILL VARY AND WILL LOWER THE
SHARES. TOTAL RETURN.
THE NET ANNUAL FUND OPERATING
AIM V.I. GLOBAL HEALTH CARE FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-100.15%
BIOTECHNOLOGY-20.25%
Amgen Inc.(b) 110,398 $ 5,844,470
- ------------------------------------------------------------------------------
Array BioPharma Inc.(b) 86,657 272,103
- ------------------------------------------------------------------------------
Biogen Idec Inc.(b) 30,129 1,360,324
- ------------------------------------------------------------------------------
BioMarin Pharmaceutical Inc.(b) 124,174 1,938,356
- ------------------------------------------------------------------------------
Celgene Corp.(b) 71,847 3,437,161
- ------------------------------------------------------------------------------
CSL Ltd. (Australia) 68,902 1,780,558
- ------------------------------------------------------------------------------
Dendreon Corp.(b) 12,845 319,198
- ------------------------------------------------------------------------------
Genzyme Corp.(b) 65,059 3,621,835
- ------------------------------------------------------------------------------
Gilead Sciences, Inc.(b) 159,971 7,493,042
- ------------------------------------------------------------------------------
Incyte Corp.(b) 78,315 257,656
- ------------------------------------------------------------------------------
OSI Pharmaceuticals, Inc.(b) 28,993 818,472
- ------------------------------------------------------------------------------
Pharmasset, Inc.(b) 20,400 229,500
- ------------------------------------------------------------------------------
Rigel Pharmaceuticals, Inc.(b) 41,422 502,035
- ------------------------------------------------------------------------------
United Therapeutics Corp.(b) 16,941 1,411,694
==============================================================================
29,286,404
==============================================================================
DRUG RETAIL-2.38%
CVS Caremark Corp. 64,197 2,045,959
- ------------------------------------------------------------------------------
Drogasil S.A. (Brazil) 146,520 1,401,268
==============================================================================
3,447,227
==============================================================================
HEALTH CARE DISTRIBUTORS-1.67%
Animal Health International, Inc.(b) 45,215 70,083
- ------------------------------------------------------------------------------
McKesson Corp. 53,309 2,345,596
==============================================================================
2,415,679
==============================================================================
HEALTH CARE EQUIPMENT-17.87%
Baxter International Inc. 69,269 3,668,486
- ------------------------------------------------------------------------------
Becton, Dickinson and Co. 49,873 3,556,444
- ------------------------------------------------------------------------------
Covidien PLC (Ireland) 83,280 3,118,003
- ------------------------------------------------------------------------------
Dexcom Inc.(b) 62,938 389,586
- ------------------------------------------------------------------------------
Hologic, Inc.(b) 72,855 1,036,727
- ------------------------------------------------------------------------------
Hospira, Inc.(b) 41,251 1,588,989
- ------------------------------------------------------------------------------
Insulet Corp.(b) 49,520 381,304
- ------------------------------------------------------------------------------
Medtronic, Inc. 138,435 4,829,997
- ------------------------------------------------------------------------------
Nobel Biocare Holding AG (Switzerland) 24,515 537,344
- ------------------------------------------------------------------------------
ResMed Inc.(b) 26,421 1,076,127
- ------------------------------------------------------------------------------
Varian Medical Systems, Inc.(b) 70,967 2,493,780
- ------------------------------------------------------------------------------
Wright Medical Group, Inc.(b) 67,893 1,103,940
- ------------------------------------------------------------------------------
Zimmer Holdings, Inc.(b) 48,434 2,063,289
==============================================================================
25,844,016
==============================================================================
HEALTH CARE FACILITIES-2.35%
Assisted Living Concepts Inc.-Class A(b) 31,460 457,743
- ------------------------------------------------------------------------------
Rhoen-Klinikum AG (Germany) 133,140 2,942,960
==============================================================================
3,400,703
==============================================================================
HEALTH CARE SERVICES-8.33%
DaVita, Inc.(b) 56,959 2,817,192
- ------------------------------------------------------------------------------
Express Scripts, Inc.(b) 44,408 3,053,050
- ------------------------------------------------------------------------------
Medco Health Solutions, Inc.(b) 66,580 3,036,714
- ------------------------------------------------------------------------------
Omnicare, Inc. 57,542 1,482,282
- ------------------------------------------------------------------------------
Quest Diagnostics Inc. 29,326 1,654,866
==============================================================================
12,044,104
==============================================================================
HEALTH CARE SUPPLIES-3.70%
Alcon, Inc. 24,943 2,896,381
- ------------------------------------------------------------------------------
DENTSPLY International Inc. 49,965 1,524,932
- ------------------------------------------------------------------------------
Immucor, Inc.(b) 67,457 928,208
==============================================================================
5,349,521
==============================================================================
HEALTH CARE TECHNOLOGY-0.83%
Allscripts-Misys Healthcare Solutions, Inc. 63,962 1,014,437
- ------------------------------------------------------------------------------
Medidata Solutions, Inc.(b) 11,550 189,189
==============================================================================
1,203,626
==============================================================================
LIFE & HEALTH INSURANCE-0.77%
Amil Participacoes S.A. (Brazil)(c) 230,700 1,111,410
==============================================================================
LIFE SCIENCES TOOLS & SERVICES-8.68%
AMAG Pharmaceuticals, Inc.(b) 19,999 1,093,345
- ------------------------------------------------------------------------------
Life Technologies Corp.(b) 97,315 4,059,982
- ------------------------------------------------------------------------------
Pharmaceutical Product Development, Inc. 81,031 1,881,540
- ------------------------------------------------------------------------------
Thermo Fisher Scientific, Inc.(b) 135,224 5,513,083
==============================================================================
12,547,950
==============================================================================
MANAGED HEALTH CARE-7.57%
Aetna Inc. 54,251 1,358,987
- ------------------------------------------------------------------------------
AMERIGROUP Corp.(b) 36,021 967,164
- ------------------------------------------------------------------------------
Aveta, Inc. (Acquired 12/21/05; Cost
$1,655,802)(b)(c) 122,652 245,304
- ------------------------------------------------------------------------------
CIGNA Corp. 82,418 1,985,450
- ------------------------------------------------------------------------------
Health Net Inc.(b) 48,226 749,914
- ------------------------------------------------------------------------------
UnitedHealth Group Inc. 80,755 2,017,260
- ------------------------------------------------------------------------------
WellPoint Inc.(b) 71,100 3,618,279
==============================================================================
10,942,358
==============================================================================
PHARMACEUTICALS-25.75%
Abbott Laboratories 121,833 5,731,024
- ------------------------------------------------------------------------------
Allergan, Inc. 54,662 2,600,818
- ------------------------------------------------------------------------------
ARYx Therapeutics, Inc.(b) 82,292 339,866
- ------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. GLOBAL HEALTH CARE FUND
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
PHARMACEUTICALS-(CONTINUED)
Auxilium Pharmaceuticals Inc.(b) 23,211 $ 728,361
- ------------------------------------------------------------------------------
Bayer AG (Germany) 23,675 1,268,930
- ------------------------------------------------------------------------------
Cadence Pharmaceuticals, Inc.(b) 75,089 750,139
- ------------------------------------------------------------------------------
EastPharma Ltd.-GDR (Turkey)(b)(c) 114,132 370,929
- ------------------------------------------------------------------------------
Eli Lilly and Co. 33,698 1,167,299
- ------------------------------------------------------------------------------
Hikma Pharmaceuticals PLC (United Kingdom) 119,052 919,415
- ------------------------------------------------------------------------------
Ipsen S.A. (France) 33,959 1,482,488
- ------------------------------------------------------------------------------
Johnson & Johnson 96,438 5,477,678
- ------------------------------------------------------------------------------
Merck KGaA (Germany) 13,065 1,331,507
- ------------------------------------------------------------------------------
Novartis AG-ADR (Switzerland) 53,971 2,201,477
- ------------------------------------------------------------------------------
Pharmstandard-GDR (Russia)(b)(c) 23,450 354,095
- ------------------------------------------------------------------------------
Roche Holding AG (Switzerland) 41,654 5,661,464
- ------------------------------------------------------------------------------
Shire PLC-ADR (United Kingdom) 57,466 2,383,690
- ------------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR (Israel) 33,100 1,633,154
- ------------------------------------------------------------------------------
Wyeth 62,685 2,845,272
==============================================================================
37,247,606
==============================================================================
Total Common Stocks & Other Equity Interests
(Cost $164,724,761) 144,840,604
==============================================================================
MONEY MARKET FUNDS-4.00%
Liquid Assets Portfolio-Institutional Class(d) 2,888,365 2,888,365
- ------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(d) 2,888,364 2,888,364
==============================================================================
Total Money Market Funds (Cost $5,776,729) 5,776,729
==============================================================================
TOTAL INVESTMENTS-104.15% (Cost $170,501,490) 150,617,333
==============================================================================
OTHER ASSETS LESS LIABILITIES-(4.15)% (5,999,699)
==============================================================================
NET ASSETS-100.00% $144,617,634
______________________________________________________________________________
==============================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
</Table>
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) Non-income producing security.
(c) Security purchased or received in a transaction exempt from registration
under the Securities Act of 1933, as amended. The security may be resold
pursuant to an exemption from registration under the 1933 Act, typically
to qualified institutional buyers. The aggregate value of these securities
at June 30, 2009 was $2,081,738, which represented 1.44% of the Fund's Net
Assets.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
PORTFOLIO COMPOSITION
By country, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
United States 80.5%
- -------------------------------------------------------------------------
Switzerland 5.8
- -------------------------------------------------------------------------
Germany 3.8
- -------------------------------------------------------------------------
United Kingdom 2.3
- -------------------------------------------------------------------------
Ireland 2.2
- -------------------------------------------------------------------------
Countries Each Less Than 2.0% of portfolio 5.6
- -------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities (0.2)
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. GLOBAL HEALTH CARE FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $164,724,761) $144,840,604
- --------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 5,776,729
================================================================================
Total investments, at value (Cost $170,501,490) 150,617,333
================================================================================
Foreign currencies, at value (Cost $48,092) 47,673
- --------------------------------------------------------------------------------
Receivables for:
Investments sold 9,964
- --------------------------------------------------------------------------------
Fund shares sold 85,856
- --------------------------------------------------------------------------------
Dividends 80,818
- --------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 11,399
================================================================================
Total assets 150,853,043
________________________________________________________________________________
================================================================================
LIABILITIES:
Payables for:
Investments purchased 5,730,611
- --------------------------------------------------------------------------------
Fund shares reacquired 72,870
- --------------------------------------------------------------------------------
Foreign currency contracts outstanding 256,880
- --------------------------------------------------------------------------------
Accrued fees to affiliates 100,296
- --------------------------------------------------------------------------------
Accrued other operating expenses 39,369
- --------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 35,383
================================================================================
Total liabilities 6,235,409
================================================================================
Net assets applicable to shares outstanding $144,617,634
________________________________________________________________________________
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $186,155,015
- --------------------------------------------------------------------------------
Undistributed net investment income 747,820
- --------------------------------------------------------------------------------
Undistributed net realized gain (loss) (22,156,908)
- --------------------------------------------------------------------------------
Unrealized appreciation (depreciation) (20,128,293)
================================================================================
$144,617,634
________________________________________________________________________________
================================================================================
NET ASSETS:
Series I $121,514,083
________________________________________________________________________________
================================================================================
Series II $ 23,103,551
________________________________________________________________________________
================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 8,972,747
- --------------------------------------------------------------------------------
Series II 1,737,213
________________________________________________________________________________
================================================================================
Series I:
Net asset value per share $ 13.54
________________________________________________________________________________
================================================================================
Series II:
Net asset value per share $ 13.30
________________________________________________________________________________
================================================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding
taxes of $112,181) $ 992,959
- ------------------------------------------------------
Dividends from affiliated money market
funds (includes securities lending
income of $118,730) 142,927
======================================================
Total investment income 1,135,886
======================================================
EXPENSES:
Advisory fees 517,074
- ------------------------------------------------------
Administrative services fees 194,214
- ------------------------------------------------------
Custodian fees 11,380
- ------------------------------------------------------
Distribution fees -- Series II 25,828
- ------------------------------------------------------
Transfer agent fees 17,910
- ------------------------------------------------------
Trustees' and officers' fees and
benefits 12,328
- ------------------------------------------------------
Other 28,675
======================================================
Total expenses 807,409
======================================================
Less: Fees waived (4,139)
======================================================
Net expenses 803,270
======================================================
Net investment income 332,616
======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (includes net
gains (losses) from securities sold
to affiliates of $(4,370)) (8,092,794)
- ------------------------------------------------------
Foreign currencies 96,313
- ------------------------------------------------------
Foreign currency contracts (110,564)
======================================================
(8,107,045)
======================================================
Change in net unrealized appreciation
of:
Investment securities 18,705,775
- ------------------------------------------------------
Foreign currencies 10,440
- ------------------------------------------------------
Foreign currency contracts 65,317
======================================================
18,781,532
======================================================
Net realized and unrealized gain 10,674,487
======================================================
Net increase in net assets resulting
from operations $11,007,103
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. GLOBAL HEALTH CARE FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- --------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 332,616 $ 624,017
- --------------------------------------------------------------------------------------------------------
Net realized gain (loss) (8,107,045) (13,908,110)
- --------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 18,781,532 (53,954,663)
========================================================================================================
Net increase (decrease) in net assets resulting from operations 11,007,103 (67,238,756)
========================================================================================================
Distributions to shareholders from net realized gains:
Series I -- (33,925,325)
- --------------------------------------------------------------------------------------------------------
Series II -- (5,201,268)
========================================================================================================
Total distributions from net realized gains -- (39,126,593)
========================================================================================================
Share transactions-net:
Series I (16,179,866) (970,476)
- --------------------------------------------------------------------------------------------------------
Series II 1,340,714 11,520,859
========================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (14,839,152) 10,550,383
========================================================================================================
Net increase (decrease) in net assets (3,832,049) (95,814,966)
========================================================================================================
NET ASSETS:
Beginning of period 148,449,683 244,264,649
========================================================================================================
End of period (includes undistributed net investment income of
$747,820 and $415,204, respectively) $144,617,634 $148,449,683
________________________________________________________________________________________________________
========================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. GLOBAL HEALTH CARE FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Global Health Care Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is capital growth.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
AIM V.I. GLOBAL HEALTH CARE FUND
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. OTHER RISKS -- The Fund may invest a large percentage of assets in
securities of a limited number of companies, such that each investment may
have 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.
The Fund has invested in non-publicly traded companies, some of which
are in the startup or development stages. These investments are inherently
risky, as the market for the technologies or products these companies are
developing are typically in the early stages and may never materialize.
The Fund could lose its entire investment in these companies. These
investments are valued at fair value as determined in good faith in
accordance with procedures approved by the Board of Trustees. Investments
in privately held venture capital securities are illiquid.
J. SECURITIES LENDING -- The Fund may lend portfolio securities having a
market value up to one-third of the Fund's total assets. Such loans are
secured by collateral equal to no less than the market value of the loaned
securities determined daily by the securities lending provider. Such
collateral will be cash or debt securities issued or guaranteed by the
U.S. Government or any of its sponsored agencies. Cash collateral received
in connection with these loans is invested in short-term money market
instruments or affiliated money market funds and is shown as such on the
Schedule of Investments. It is the Fund's policy to obtain additional
collateral from or return excess collateral to the borrower by the end of
the next business day, following the valuation date of the securities
loaned. Therefore, the value of the collateral held may be temporarily
less than the value of the securities on loan. Lending securities entails
a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase
the collateral accordingly, and the borrower fails to return the
securities. Upon the failure of the borrower to return the securities,
collateral may be liquidated and the securities may be purchased on the
open market to replace the loaned securities. The Fund could experience
delays and costs in gaining access to
AIM V.I. GLOBAL HEALTH CARE FUND
the collateral. The Fund bears the risk of any deficiency in the amount of
the collateral available for return to the borrower due to any loss on the
collateral invested. Dividends received on cash collateral investments for
securities lending transactions, which are net of compensation to
counterparties, is included in Dividends from affiliates on the Statement
of Operations. The aggregate value of securities out on loan is shown as a
footnote on the Statement of Assets and Liabilities, if any.
K. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
Reported net realized foreign currency gains or losses arise from (i)
sales of foreign currencies, (ii) currency gains or losses realized
between the trade and settlement dates on securities transactions, and
(iii) the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency gains and losses arise from changes in the fair values of
assets and liabilities, other than investments in securities at fiscal
period end, resulting from changes in exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
L. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed, realized gains (losses) are
recorded. Realized and unrealized gains (losses) on the contracts are
included in the Statement of Operations. The maximum risks associated with
foreign currency contracts include failure of the counterparty to meet the
terms of the contract and the value of the foreign currency changing
unfavorably. These risks may be in excess of the amounts reflected in the
Statement of Assets and Liabilities.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS 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%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 1.30% and Series
II shares to 1.45% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, 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. These credits are used to pay certain expenses incurred by the Fund. The
Advisor did not waive fees and/or reimburse expenses during the period under
this expense limitation.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash (excluding investments of cash
collateral from securities lending) in such affiliated money market funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$4,139.
AIM V.I. GLOBAL HEALTH CARE FUND
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $24,795 for accounting and fund
administrative services and reimbursed $169,419 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- ----------------------------------------------------------------------------------------------------------------------------
Equity Securities $143,779,660 $6,592,369 $245,304 $150,617,333
- ----------------------------------------------------------------------------------------------------------------------------
Other Investments* (244,462) (244,462)
============================================================================================================================
$143,779,660 $6,347,907 $245,304 $150,372,871
____________________________________________________________________________________________________________________________
============================================================================================================================
</Table>
* Other Investments includes foreign currency contracts, which are included at
unrealized appreciation/(depreciation).
NOTE 4--DERIVATIVE INSTRUMENTS
Effective with the beginning of the Fund's fiscal year, the Fund has adopted the
provisions of FASB Statement No. 161, Disclosures about Derivative Instruments
and Hedging Activities. The standard is intended to improve financial reporting
about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an
entity's financial position and financial performance. The adoption of this
provision has no impact on the results of operations reported in the financial
statements.
VALUE OF DERIVATIVE INSTRUMENTS AT PERIOD-END
The Table below summarizes the value of the Fund's derivative instruments,
detailed by primary risk exposure, held as of June 30, 2009:
<Table>
<Caption>
VALUE
----------------------
RISK EXPOSURE/ DERIVATIVE TYPE ASSETS LIABILITIES
- ----------------------------------------------------------------------------------------------------
Currency risk
Foreign Currency Contracts(a) $128 $(244,590)
____________________________________________________________________________________________________
====================================================================================================
</Table>
(a) Values are disclosed on the Statement of Assets and Liabilities under the
Foreign currency contracts outstanding line item.
AIM V.I. GLOBAL HEALTH CARE FUND
EFFECT OF DERIVATIVE INSTRUMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009
The table below summarizes the gains (losses) on derivative instruments,
detailed by primary risk exposure, recognized in earnings during the period:
<Table>
<Caption>
LOCATION OF GAIN (LOSS)
ON STATEMENT OF OPERATIONS
---------------------------
FOREIGN CURRENCY CONTRACTS*
- -----------------------------------------------------------------------------------------------------
Realized Gain (Loss)
Currency risk $(110,564)
- -----------------------------------------------------------------------------------------------------
Change in Unrealized Appreciation (Depreciation)
Currency risk 65,317
- -----------------------------------------------------------------------------------------------------
Total $ (45,247)
=====================================================================================================
</Table>
* The average value outstanding of foreign currency contracts during the period
was $5,278,104.
FOREIGN CURRENCY CONTRACTS AT PERIOD-END
<Table>
<Caption>
OPEN FOREIGN CURRENCY CONTRACTS
- -----------------------------------------------------------------------------------------------------------------
CONTRACT TO UNREALIZED
SETTLEMENT ---------------------------------------- APPRECIATION
DATE DELIVER RECEIVE VALUE (DEPRECIATION)
- -----------------------------------------------------------------------------------------------------------------
08/11/09 CHF 2,220,000 USD 1,970,303 $2,044,028 $ (73,725)
- -----------------------------------------------------------------------------------------------------------------
08/11/09 CHF 485,000 USD 446,684 446,556 128
- -----------------------------------------------------------------------------------------------------------------
08/11/09 EUR 1,425,000 USD 1,910,711 1,998,303 (87,592)
- -----------------------------------------------------------------------------------------------------------------
08/11/09 GBP 592,000 USD 890,457 973,730 (83,273)
=================================================================================================================
Total open foreign
currency contracts $(244,462)
=================================================================================================================
<Caption>
CLOSED FOREIGN CURRENCY CONTRACTS
- -----------------------------------------------------------------------------------------------------------------
CONTRACT TO REALIZED
CLOSED ---------------------------------------- GAIN
DATE DELIVER RECEIVE VALUE (LOSS)
- -----------------------------------------------------------------------------------------------------------------
06/15/09 USD 401,264 EUR 290,000 $ 388,846 $ (12,418)
=================================================================================================================
Total foreign currency
contracts $(256,880)
_________________________________________________________________________________________________________________
=================================================================================================================
</Table>
<Table>
Currency Abbreviations:
CHF - Swiss Franc
EUR - Euro
GBP - British Pound Sterling
USD - U.S. Dollar
</Table>
NOTE 5--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS
The Fund is permitted to purchase or sell securities from or to certain other
AIM Funds under specified conditions outlined in procedures adopted by the Board
of Trustees of the Trust. The procedures have been designed to ensure that any
purchase or sale of securities by the Fund from or to another fund or portfolio
that is or could be considered an affiliate by virtue of having a common
investment advisor (or affiliated investment advisors), common Trustees and/or
common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined
under the procedures, each transaction is effected at the current market price.
Pursuant to these procedures, for the six months ended June 30, 2009, the Fund
engaged in securities sales of $4,306, which resulted in net realized gains
(losses) of $(4,370).
NOTE 6--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $1,609
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 7--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the
AIM V.I. GLOBAL HEALTH CARE FUND
custodian bank can be compensated by earning the additional interest; or (ii)
compensate by paying the custodian bank at a rate agreed upon by the custodian
bank and Invesco Aim, not to exceed the contractually agreed upon rate.
NOTE 8--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
December 31, 2016 $12,235,818
_______________________________________________________________________________________________
===============================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
NOTE 9--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $44,693,431 and
$49,654,593, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 7,956,896
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (28,687,192)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $(20,730,296)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $171,347,629.
</Table>
NOTE 10--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- ------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 592,434 $ 7,318,908 2,216,216 $ 47,385,882
- ------------------------------------------------------------------------------------------------------------------------
Series II 220,317 2,628,594 477,003 9,789,685
========================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 2,846,084 33,925,325
- ------------------------------------------------------------------------------------------------------------------------
Series II -- -- 443,795 5,201,268
========================================================================================================================
Reacquired:
Series I (1,931,209) (23,498,774) (4,039,623) (82,281,683)
- ------------------------------------------------------------------------------------------------------------------------
Series II (105,229) (1,287,880) (172,689) (3,470,094)
========================================================================================================================
Net increase (decrease) in share activity (1,223,687) $(14,839,152) 1,770,786 $ 10,550,383
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 72% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and/or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
AIM V.I. GLOBAL HEALTH CARE FUND
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
(LOSSES)
NET ASSET NET ON SECURITIES DISTRIBUTIONS
VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET NET ASSET
BEGINNING INCOME REALIZED AND INVESTMENT REALIZED VALUE, END TOTAL
OF PERIOD (LOSS) UNREALIZED) OPERATIONS GAINS OF PERIOD RETURN(a)
- ---------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $12.47 $ 0.03(c) $ 1.04 $ 1.07 $ -- $13.54 8.58%
Year ended 12/31/08 24.06 0.07(c)(e) (7.16) (7.09) (4.50) 12.47 (28.62)
Year ended 12/31/07 21.51 (0.01)(c) 2.56 2.55 -- 24.06 11.85
Year ended 12/31/06 20.44 (0.04)(c) 1.11 1.07 -- 21.51 5.24
Year ended 12/31/05 18.90 (0.06) 1.60 1.54 -- 20.44 8.15
Year ended 12/31/04 17.57 (0.03) 1.36 1.33 -- 18.90 7.57
- ---------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 12.26 0.02(c) 1.02 1.04 -- 13.30 8.48
Year ended 12/31/08 23.82 0.02(c)(e) (7.08) (7.06) (4.50) 12.26 (28.78)
Year ended 12/31/07 21.36 (0.07)(c) 2.53 2.46 -- 23.82 11.52
Year ended 12/31/06 20.34 (0.09)(c) 1.11 1.02 -- 21.36 5.01
Year ended 12/31/05 18.86 (0.09) 1.57 1.48 -- 20.34 7.85
Year ended 12/31/04(f) 18.19 (0.05) 0.72 0.67 -- 18.86 3.68
_____________________________________________________________________________________________________________________
=====================================================================================================================
<Caption>
RATIO OF
RATIO OF EXPENSES
EXPENSES TO AVERAGE NET
TO AVERAGE ASSETS WITHOUT RATIO OF NET
NET ASSETS FEE WAIVERS INVESTMENT
NET ASSETS, WITH FEE WAIVERS AND/OR INCOME (LOSS)
END OF PERIOD AND/OR EXPENSES EXPENSES TO AVERAGE PORTFOLIO
(000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(b)
- -------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $121,514 1.12%(d) 1.13%(d) 0.52%(d) 33%
Year ended 12/31/08 128,563 1.12 1.13 0.34(e) 67
Year ended 12/31/07 223,448 1.06 1.07 (0.06) 66
Year ended 12/31/06 235,509 1.10 1.10 (0.19) 79
Year ended 12/31/05 257,736 1.08 1.09 (0.24) 82
Year ended 12/31/04 354,889 1.11 1.11 (0.17) 175
- -------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 23,104 1.37(d) 1.38(d) 0.27(d) 33
Year ended 12/31/08 19,886 1.37 1.38 0.09(e) 67
Year ended 12/31/07 20,817 1.31 1.32 (0.31) 66
Year ended 12/31/06 97,646 1.35 1.35 (0.44) 79
Year ended 12/31/05 11 1.33 1.34 (0.49) 82
Year ended 12/31/04(f) 10 1.36(g) 1.36(g) (0.42)(g) 175
_______________________________________________________________________________________________________
=======================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Total returns are not annualized for periods less than one
year, if applicable and do not reflect charges assessed in connection with
a variable product, which if included would reduce total returns.
(b) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(c) Calculated using average shares outstanding.
(d) Ratios are annualized and based on average daily net assets (000's omitted)
of $118,196 and $20,833 for Series I and Series II shares, respectively.
(e) Net investment income (loss) per share and the ratio of net investment
income (loss) to average net assets include a special cash dividend
received of $5.23 per share owned of Allscripts-Misys Healthcare Solutions,
Inc. on October 13, 2008. Net investment income (loss) per share and the
ratio of net investment income (loss) to average net assets excluding the
special dividend are $0.02 and 0.08% and $(0.03) and (0.17)% for Series I
and Series II shares, respectively.
(f) Commencement date of April 30, 2004.
(g) Annualized
AIM V.I. GLOBAL HEALTH CARE FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,085.80 $5.79 $1,019.24 $5.61 1.12%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,084.80 7.08 1,018.00 6.85 1.37
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. GLOBAL HEALTH CARE FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM In addition to their meetings was controlling. Each Trustee may have
Variable Insurance Funds is required under throughout the year, the Sub-Committees evaluated the information provided
the Investment Company Act of 1940 to meet at designated contract renewal differently from another Trustee and
approve annually the renewal of the AIM meetings each year to conduct an in-depth attributed different weight to the various
V.I. Global Health Care Fund (the Fund) review of the performance, fees, expenses factors. The Trustees recognized that the
investment advisory agreement with Invesco and other matters related to their advisory arrangements and resulting
Aim Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract advisory fees for the Fund and the other
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive AIM Funds are the result of years of
for Mutual Funds (the sub-advisory comparative performance and fee data review and negotiation between the
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an Trustees and Invesco Aim, that the
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Trustees may focus to a greater extent on
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and certain aspects of these arrangements in
Limited, Invesco Australia Limited, supervision of the Senior Officer who also some years than in others, and that the
Invesco Global Asset Management (N.A.), prepares a separate analysis of this Trustees' deliberations and conclusions in
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each a particular year may be based in part on
Institutional (N.A.), Inc., Invesco Senior Sub-Committee then makes recommendations their deliberations and conclusions
Secured Management, Inc. and Invesco to the Investments Committee regarding the regarding these same arrangements
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. throughout the year and in prior years.
Sub-Advisers). During contract renewal The Investments Committee considers each
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes The discussion below serves as a
Board as a whole, and the disinterested or its own recommendations regarding the fees summary of the Senior Officer's
"independent" Trustees voting separately, and expenses of the AIM Funds to the full independent written evaluation with
approved the continuance of the Fund's Board. The Investments Committee also respect to the Fund's investment advisory
investment advisory agreement and the considers each Sub-Committee's agreement as well as a discussion of the
sub-advisory contracts for another year, recommendations in making its annual material factors and related conclusions
effective July 1, 2009. In doing so, the recommendation to the Board whether to that formed the basis for the Board's
Board determined that the Fund's approve the continuance of each Invesco approval of the Fund's investment advisory
investment advisory agreement and the Aim Fund's investment advisory agreement agreement and sub-advisory contracts.
sub-advisory contracts are in the best and sub-advisory contracts for another Unless otherwise stated, information set
interests of the Fund and its shareholders year. forth below is as of June 17, 2009, and
and that the compensation to Invesco Aim does not reflect any changes that may have
and the Affiliated Sub-Advisers under the The independent Trustees met separately occurred since that date, including but
Fund's investment advisory agreement and during their evaluation of the Fund's not limited to changes to the Fund's
sub-advisory contracts is fair and investment advisory agreement and performance, advisory fees, expense
reasonable. sub-advisory contracts with independent limitations and/or fee waivers.
legal counsel. The independent Trustees
THE BOARD'S FUND EVALUATION PROCESS were also assisted in their annual FACTORS AND CONCLUSIONS AND SUMMARY OF
evaluation of the Fund's investment INDEPENDENT WRITTEN FEE EVALUATION
The Board's Investments Committee has advisory agreement by the Senior Officer.
established three Sub-Committees that are One responsibility of the Senior Officer A. Nature, Extent and Quality of
responsible for overseeing the management is to manage the process by which the AIM Services Provided by Invesco Aim
of a number of the series portfolios of Funds' proposed management fees are
the AIM Funds. This Sub-Committee negotiated during the annual contract The Board reviewed the advisory services
structure permits the Trustees to focus on renewal process to ensure that they are provided to the Fund by Invesco Aim under
the performance of the AIM Funds that have negotiated in a manner that is at arms' the Fund's investment advisory agreement,
been assigned to them. The Sub-Committees length and reasonable. Accordingly, the the performance of Invesco Aim in
meet throughout the year to review the Senior Officer must either supervise a providing these services, and the
performance of their assigned funds, and competitive bidding process or prepare an credentials and experience of the officers
the Sub-Committees review monthly and independent written evaluation. The Senior and employees of Invesco Aim who provide
quarterly comparative performance Officer recommended that an independent these services. The Board's review of the
information and periodic asset flow data written evaluation be provided and, at the qualifications of Invesco Aim to provide
for their assigned funds. These materials direction of the Board, prepared an these services included the Board's
are prepared under the direction and independent written evaluation. consideration of Invesco Aim's portfolio
supervision of the independent Senior and product review process, various back
Officer, an officer of the AIM Funds who During the annual contract renewal office support functions provided by
reports directly to the independent process, the Board considered the factors Invesco Aim and its affiliates, and
Trustees. Over the course of each year, discussed below in evaluating the fairness Invesco Aim's equity and fixed income
the Sub-Committees meet with portfolio and reasonableness of the Fund's trading operations. The Board concluded
managers for their assigned funds and investment advisory agreement and that the nature, extent and quality of the
other members of management and review sub-advisory contracts. The Board advisory services provided to the Fund by
with these individuals the performance, considered all of the information provided Invesco Aim are appropriate and that
investment objective(s), policies, to them, including information provided at Invesco Aim currently is providing
strategies and limitations of these funds. their meetings throughout the year as part satisfactory advisory services in
of their ongoing oversight of the Fund, accordance with the terms of the Fund's
and did not identify any particular factor investment advisory agreement. In
that addition, based on their
AIM V.I. GLOBAL HEALTH CARE FUND continued
ongoing meetings throughout the year with advisory agreement. The Board did not view expense limitations/waivers) to the
the Fund's portfolio manager or managers, fund performance as a relevant factor in advisory fee rates of other domestic
the Board concluded that these individuals considering whether to approve the clients of Invesco Aim and its affiliates
are competent and able to continue to sub-advisory contracts for the Fund, as no with investment strategies comparable to
carry out their responsibilities under the Affiliated Sub-Adviser currently manages those of the Fund, including one mutual
Fund's investment advisory agreement. assets of the Fund. fund advised by Invesco Aim and one mutual
fund sub-advised by an Invesco Aim
In determining whether to continue the The Board compared the Fund's affiliate. The Board noted that the Fund's
Fund's investment advisory agreement, the performance during the past one, three and rate was: (i) above the effective fee rate
Board considered the prior relationship five calendar years to the performance of for the mutual fund advised by Invesco
between Invesco Aim and the Fund, as well all funds in the Lipper performance Aim; and (ii) above the sub-adviser
as the Board's knowledge of Invesco Aim's universe that are not managed by Invesco effective fee rate for the domestic mutual
operations, and concluded that it is Aim or an Affiliated Sub-Adviser and fund sub-advised by an Invesco Aim
beneficial to maintain the current against the Lipper VA Underlying Funds - affiliate.
relationship, in part, because of such Health/Biotechnology Index. The Board
knowledge. The Board also considered the noted that the Fund's performance was in The Board noted that Invesco Aim
steps that Invesco Aim and its affiliates the third quintile of its performance contractually agreed to waive fees and/or
continue to take to improve the quality universe for the one year period and the limit expenses of the Fund through at
and efficiency of the services they fifth quintile for the three and five year least April 30, 2010 in an amount
provide to the AIM Funds in the areas of periods (the first quintile being the best necessary to limit total annual operating
investment performance, product line performing funds and the fifth quintile expenses to a specified percentage of
diversification, distribution, fund being the worst performing funds). The average daily net assets for each class of
operations, shareholder services and Board noted that the Fund's performance the Fund. The Board noted that at the
compliance. The Board concluded that the was below the performance of the Index for current expense ratio for the Fund, the
quality and efficiency of the services the one, three and five year periods. expense waiver does not have any impact.
Invesco Aim and its affiliates provide to Although the independent written
the AIM Funds in each of these areas evaluation of the Fund's Senior Officer The Board also considered the services
support the Board's approval of the only considered Fund performance through provided by the Affiliated Sub-Advisers
continuance of the Fund's investment the most recent calendar year, the Board pursuant to the sub-advisory contracts and
advisory agreement. also reviewed more recent Fund performance the services provided by Invesco Aim
and this review did not change their pursuant to the Fund's advisory agreement,
B. Nature, Extent and Quality of conclusions. The Board noted that, in as well as the allocation of fees between
Services Provided by Affiliated response to the Board's focus on fund Invesco Aim and the Affiliated
Sub-Advisers performance, Invesco Aim has taken a Sub-Advisers pursuant to the sub-advisory
number of actions intended to improve the contracts. The Board noted that the
The Board reviewed the services provided investment process for the funds. sub-advisory fees have no direct effect on
by the Affiliated Sub-Advisers under the the Fund or its shareholders, as they are
sub-advisory contracts and the credentials D. Advisory and Sub-Advisory Fees and paid by Invesco Aim to the Affiliated
and experience of the officers and Fee Waivers Sub-Advisers, and that Invesco Aim and the
employees of the Affiliated Sub-Advisers Affiliated Sub-Advisers are affiliates.
who provide these services. The Board The Board compared the Fund's contractual
concluded that the nature, extent and advisory fee rate to the contractual After taking account of the Fund's
quality of the services provided by the advisory fee rates of funds in the Fund's contractual advisory fee rate, the
Affiliated Sub-Advisers are appropriate. Lipper expense group that are not managed contractual sub-advisory fee rate, the
The Board noted that the Affiliated by Invesco Aim or an Affiliated comparative advisory fee information, the
Sub-Advisers, which have offices and Sub-Adviser, at a common asset level. The expense limitations and other relevant
personnel that are geographically Board noted that the Fund's contractual factors, the Board concluded that the
dispersed in financial centers around the advisory fee rate was below the median Fund's advisory and sub-advisory fees are
world, can provide research and other contractual advisory fee rate of funds in fair and reasonable.
information and make recommendations on its expense group. The Board also reviewed
the markets and economies of various the methodology used by Lipper in E. Economies of Scale and Breakpoints
countries and securities of companies determining contractual fee rates, which
located in such countries or on various included using audited financial data from The Board considered the extent to which
types of investments and investment the most recent annual report of each fund there are economies of scale in the
techniques. The Board concluded that the in the expense group that was publicly provision of advisory services to the
sub-advisory contracts benefit the Fund available as of the end of the past Fund. The Board also considered whether
and its shareholders by permitting Invesco calendar year. The Board noted that some the Fund benefits from such economies of
Aim to utilize the additional resources comparative data was at least one year old scale through contractual breakpoints in
and talent of the Affiliated Sub-Advisers and did not reflect the market downturn the Fund's advisory fee schedule. The
in managing the Fund. that occurred in the fourth quarter of Board noted that the Fund's contractual
2008. advisory fee schedule currently includes
C. Fund Performance seven breakpoints, but that due to the
The Board also compared the Fund's Fund's asset level at the end of the past
The Board considered fund performance as a effective fee rate (the advisory fee after calendar year, the Fund is not currently
relevant factor in considering whether to any advisory fee waivers and before any benefiting from the breakpoints. The Board
approve the investment also noted that the Fund shares
AIM V.I. GLOBAL HEALTH CARE FUND continued
directly in economies of scale through its affiliates in providing these services
lower fees charged by third party service and the organizational structure employed
providers based on the combined size of by Invesco Aim and its affiliates to
all of the AIM Funds and affiliates. provide these services. The Board also
considered that these services are
F. Profitability and Financial provided to the Fund pursuant to written
Resources contracts that are reviewed and approved
on an annual basis by the Board. The Board
The Board reviewed information from concluded that Invesco Aim and its
Invesco Aim concerning the costs of the affiliates are providing these services in
advisory and other services that Invesco a satisfactory manner and in accordance
Aim and its affiliates provide to the Fund with the terms of their contracts, and are
and the profitability of Invesco Aim and qualified to continue to provide these
its affiliates in providing these services to the Fund.
services. The Board also reviewed
information concerning the financial The Board considered the benefits
condition of Invesco Aim and its realized by Invesco Aim and the Affiliated
affiliates. The Board reviewed with Sub-Advisers as a result of portfolio
Invesco Aim the methodology used to brokerage transactions executed through
prepare the profitability information. The "soft dollar" arrangements. The Board
Board considered the overall profitability noted that soft dollar arrangements shift
of Invesco Ltd., the ultimate parent of the payment obligation for research and
Invesco Aim and the Affiliated execution services from Invesco Aim and
Sub-Advisers, and of Invesco Aim, as well the Affiliated Sub-Advisers to the funds
as the profitability of Invesco Aim in and therefore may reduce Invesco Aim's and
connection with managing the Fund. The the Affiliated Sub-Advisers' expenses. The
Board noted that Invesco Aim continues to Board concluded that Invesco Aim's and the
operate at a net profit, although the Affiliated Sub-Advisers' soft dollar
reduction of assets under management as a arrangements are appropriate. The Board
result of market movements and the also concluded that, based on their review
increase in voluntary fee waivers for and representations made by the Chief
affiliated money market funds have reduced Compliance Officer of Invesco Aim, these
the profitability of Invesco Aim and its arrangements are consistent with
affiliates. The Board concluded that the regulatory requirements.
Fund's fees are fair and reasonable, and
that the level of profits realized by The Board considered the fact that the
Invesco Aim and its affiliates from Fund's uninvested cash and cash collateral
providing services to the Fund is not from any securities lending arrangements
excessive in light of the nature, quality may be invested in money market funds
and extent of the services provided. The advised by Invesco Aim pursuant to
Board considered whether Invesco Aim is procedures approved by the Board. The
financially sound and has the resources Board noted that Invesco Aim will receive
necessary to perform its obligations under advisory fees from these affiliated money
the Fund's investment advisory agreement, market funds attributable to such
and concluded that Invesco Aim has the investments, although Invesco Aim has
financial resources necessary to fulfill contractually agreed to waive through at
these obligations. The Board also least June 30, 2010, the advisory fees
considered whether each Affiliated payable by the Fund in an amount equal to
Sub-Adviser is financially sound and has 100% of the net advisory fee Invesco Aim
the resources necessary to perform its receives from the affiliated money market
obligations under the sub-advisory funds with respect to the Fund's
contracts, and concluded that each investment in the affiliated money market
Affiliated Sub-Adviser has the financial funds of uninvested cash, but not cash
resources necessary to fulfill these collateral. The Board concluded that the
obligations. Fund's investment of uninvested cash and
cash collateral from any securities
G. Collateral Benefits to Invesco Aim lending arrangements in the affiliated
and its Affiliates money market funds is in the best
interests of the Fund and its
The Board considered various other shareholders.
benefits received by Invesco Aim and its
affiliates resulting from Invesco Aim's
relationship with the Fund, including the
fees received by Invesco Aim and its
affiliates for their provision of
administrative, transfer agency and
distribution services to the Fund. The
Board considered the performance of
Invesco Aim and
AIM V.I. GLOBAL HEALTH CARE FUND
[INVESCO AIM LOGO] AIM V.I. GLOBAL REAL ESTATE FUND
--SERVICE MARK-- Semiannual Report to Shareholders o June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund
files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the SEC
Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by
calling 202 942 8090 or 800 732 0330, or by electronic request at the following E-mail address: publicinfo@sec.gov. The SEC file
numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent portfolio holdings, as filed on Form N-Q, have also been
made available to insurance companies issuing variable annuity contracts and variable life insurance policies ("variable products")
that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, from our Client Services department at 800 410 4246 or on the Invesco Aim Web site,
invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site,
sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2009, is
available at our Web site. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting
Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. will be merged into
Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc. Additional information
will be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN
MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
SERIES I SHARES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer Inception (3/31/98) 5.94%
charges. If variable product issuer charges were included, returns would be lower. 10 Years 7.86
5 Years 2.27
Series I Shares 3.36% 1 Year -33.24
Series II Shares 3.08
MSCI World Index(Triangle) (Broad Market Index) 6.35 SERIES II SHARES
FTSE EPRA/NAREIT Developed Real Estate Index(Square) (Style-Specific Index) 5.88 10 Years 7.60
Lipper VUF Real Estate Funds Category Average(Triangle) (Peer Group) -5.19 5 Years 2.02
1 Year -33.43
(Triangle) Lipper Inc.; (Square) Invesco Aim, Bloomberg L.P. ==========================================
The MSCI WORLD INDEX--SERVICE MARK-- is a free float-adjusted market capitalization INFORMATION LINE, 866 702 4402. AS
index that is designed to measure global developed market equity performance. MENTIONED ABOVE, FOR THE MOST RECENT
MONTH-END PERFORMANCE INCLUDING VARIABLE
The FTSE EPRA/NAREIT DEVELOPED REAL ESTATE INDEX is designed to track the PRODUCT CHARGES, PLEASE CONTACT YOUR
performance of listed real estate companies and REITs worldwide. It is compiled by the VARIABLE PRODUCT ISSUER OR FINANCIAL
FTSE Group, National Association of Real Estate Investment Trusts, and European Public ADVISOR.
Real Estate Association.
HAD THE ADVISOR NOT WAIVED FEES AND/OR
The LIPPER VUF REAL ESTATE FUNDS CATEGORY AVERAGE represents an average of all of REIMBURSED EXPENSES IN THE PAST,
the variable insurance underlying funds in the Lipper Real Estate Funds category. These PERFORMANCE WOULD HAVE BEEN LOWER.
funds invest at least 65% of their portfolios in equity securities of domestic and
foreign companies engaged in the real estate industry.
The Fund is not managed to track the performance of any particular index, including
the indexes defined here, and consequently, the performance of the Fund may deviate
significantly from the performance of the indexes.
A direct investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends, and they do not reflect sales charges.
Performance of the peer group reflects fund expenses; performance of a market index
does not.
=======================================================================================
SERIES II SHARES' INCEPTION DATE IS APRIL THE TOTAL ANNUAL FUND OPERATING EXPENSE
30, 2004. RETURNS SINCE THAT DATE ARE RATIO SET FORTH IN THE MOST RECENT FUND
HISTORICAL. ALL OTHER RETURNS ARE THE PROSPECTUS AS OF THE DATE OF THIS REPORT
BLENDED RETURNS OF THE HISTORICAL FOR SERIES I AND SERIES II SHARES WAS
PERFORMANCE OF SERIES II SHARES SINCE 1.17% AND 1.42%, RESPECTIVELY. THE EXPENSE
THEIR INCEPTION AND THE RESTATED RATIOS PRESENTED ABOVE MAY VARY FROM THE
HISTORICAL PERFORMANCE OF SERIES I SHARES EXPENSE RATIOS PRESENTED IN OTHER SECTIONS
(FOR PERIODS PRIOR TO INCEPTION OF SERIES OF THIS REPORT THAT ARE BASED ON EXPENSES
II SHARES) ADJUSTED TO REFLECT THE RULE INCURRED DURING THE PERIOD COVERED BY THIS
12B-1 FEES APPLICABLE TO SERIES II SHARES. REPORT.
THE INCEPTION DATE OF SERIES I SHARES IS
MARCH 31, 1998. AIM V.I. GLOBAL REAL ESTATE FUND, A
SERIES PORTFOLIO OF AIM VARIABLE INSURANCE
THE PERFORMANCE OF THE FUND'S SERIES I FUNDS, IS CURRENTLY OFFERED THROUGH
AND SERIES II SHARE CLASSES WILL DIFFER INSURANCE COMPANIES ISSUING VARIABLE
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES. PRODUCTS. YOU CANNOT PURCHASE SHARES OF
THE FUND DIRECTLY. PERFORMANCE FIGURES
THE PERFORMANCE DATA QUOTED REPRESENT GIVEN REPRESENT THE FUND AND ARE NOT
PAST PERFORMANCE AND CANNOT GUARANTEE INTENDED TO REFLECT ACTUAL VARIABLE
COMPARABLE FUTURE RESULTS; CURRENT PRODUCT VALUES. THEY DO NOT REFLECT SALES
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE CHARGES, EXPENSES AND FEES ASSESSED IN
CONTACT YOUR VARIABLE PRODUCT ISSUER OR CONNECTION WITH A VARIABLE PRODUCT. SALES
FINANCIAL ADVISOR FOR THE MOST RECENT CHARGES, EXPENSES AND FEES, WHICH ARE
MONTH-END VARIABLE PRODUCT PERFORMANCE. DETERMINED BY THE VARIABLE PRODUCT
PERFORMANCE FIGURES REFLECT FUND EXPENSES, ISSUERS, WILL VARY AND WILL LOWER THE
REINVESTED DISTRIBUTIONS AND CHANGES IN TOTAL RETURN.
NET ASSET VALUE. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU THE MOST RECENT MONTH-END PERFORMANCE
MAY HAVE A GAIN OR LOSS WHEN YOU SELL DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
SHARES. PRODUCT CHARGES, IS AVAILABLE ON THE
INVESCO AIM AUTOMATED
AIM V.I. GLOBAL REAL ESTATE FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
FOREIGN REAL ESTATE INVESTMENT TRUSTS, COMMON STOCKS & OTHER
EQUITY INTERESTS-95.95%
AUSTRALIA-9.48%
CFS Retail Property Trust 871,174 $ 1,151,593
- ------------------------------------------------------------------------------
Dexus Property Group 1,781,123 1,067,611
- ------------------------------------------------------------------------------
GPT Group 2,881,209 1,124,404
- ------------------------------------------------------------------------------
Mirvac Group 655,642 564,979
- ------------------------------------------------------------------------------
Stockland 619,218 1,587,511
- ------------------------------------------------------------------------------
Westfield Group 486,259 4,428,376
==============================================================================
9,924,474
==============================================================================
AUSTRIA-0.23%
Conwert Immobilien Invest S.E.(b) 30,305 244,790
==============================================================================
CANADA-2.66%
Canadian REIT 30,400 641,156
- ------------------------------------------------------------------------------
Morguard REIT 23,500 194,979
- ------------------------------------------------------------------------------
Primaris Retail REIT 36,400 369,610
- ------------------------------------------------------------------------------
RioCan REIT 120,100 1,579,891
==============================================================================
2,785,636
==============================================================================
CHINA-1.44%
Agile Property Holdings Ltd. 160,000 227,641
- ------------------------------------------------------------------------------
Shimao Property Holdings Ltd. 428,000 827,298
- ------------------------------------------------------------------------------
Sino-Ocean Land Holdings Ltd. 393,000 448,403
==============================================================================
1,503,342
==============================================================================
FINLAND-0.27%
Citycon Oyj 109,376 285,294
==============================================================================
FRANCE-4.79%
ICADE 6,876 565,285
- ------------------------------------------------------------------------------
Klepierre 29,187 752,506
- ------------------------------------------------------------------------------
Unibail-Rodamco 24,745 3,693,881
==============================================================================
5,011,672
==============================================================================
GERMANY-0.25%
Deutsche Euroshop AG 8,434 259,612
==============================================================================
HONG KONG-18.11%
China Overseas Land & Investment Ltd. 1,044,301 2,417,883
- ------------------------------------------------------------------------------
China Resources Land Ltd. 743,800 1,637,604
- ------------------------------------------------------------------------------
Hang Lung Properties Ltd. 638,000 2,111,561
- ------------------------------------------------------------------------------
Henderson Land Development Co. Ltd. 308,000 1,766,518
- ------------------------------------------------------------------------------
Hongkong Land Holdings Ltd. 400,000 1,412,165
- ------------------------------------------------------------------------------
Hysan Development Co. Ltd. 90,000 231,095
- ------------------------------------------------------------------------------
Kerry Properties Ltd. 266,900 1,186,374
- ------------------------------------------------------------------------------
Link REIT (The) 438,500 935,838
- ------------------------------------------------------------------------------
New World Development Co., Ltd. 106,000 191,756
- ------------------------------------------------------------------------------
Sino Land Co. Ltd. 358,000 588,283
- ------------------------------------------------------------------------------
Sun Hung Kai Properties Ltd. 520,000 6,472,479
==============================================================================
18,951,556
==============================================================================
JAPAN-14.24%
AEON Mall Co., Ltd. 22,200 420,027
- ------------------------------------------------------------------------------
Japan Real Estate Investment Corp. 159 1,321,906
- ------------------------------------------------------------------------------
Mitsubishi Estate Co. Ltd. 297,000 4,919,576
- ------------------------------------------------------------------------------
Mitsui Fudosan Co., Ltd. 244,000 4,226,819
- ------------------------------------------------------------------------------
Nippon Building Fund Inc. 178 1,526,057
- ------------------------------------------------------------------------------
NTT Urban Development Corp. 609 587,173
- ------------------------------------------------------------------------------
Sumitomo Realty & Development Co., Ltd. 88,000 1,600,569
- ------------------------------------------------------------------------------
TOKYU REIT, Inc. 56 303,410
==============================================================================
14,905,537
==============================================================================
NETHERLANDS-2.91%
Corio N.V. 29,656 1,445,023
- ------------------------------------------------------------------------------
Eurocommercial Properties N.V.(b) 7,518 231,416
- ------------------------------------------------------------------------------
VastNed Retail N.V. 8,181 407,245
- ------------------------------------------------------------------------------
Wereldhave N.V. 12,829 955,755
==============================================================================
3,039,439
==============================================================================
SINGAPORE-3.53%
Ascendas Real Estate Investment Trust 563,779 617,133
- ------------------------------------------------------------------------------
Capitaland Ltd. 1,011,000 2,567,634
- ------------------------------------------------------------------------------
CapitaMall Trust 522,550 503,091
==============================================================================
3,687,858
==============================================================================
SWEDEN-0.46%
Hufvudstaden A.B. 77,609 482,674
==============================================================================
UNITED KINGDOM-5.70%
Big Yellow Group PLC(b) 39,311 221,146
- ------------------------------------------------------------------------------
British Land Co. PLC 222,980 1,401,099
- ------------------------------------------------------------------------------
Derwent London PLC 59,353 912,838
- ------------------------------------------------------------------------------
Great Portland Estates PLC 144,656 523,478
- ------------------------------------------------------------------------------
Hammerson PLC 122,356 619,992
- ------------------------------------------------------------------------------
Land Securities Group PLC 168,960 1,314,260
- ------------------------------------------------------------------------------
Segro PLC 1,841,328 737,247
- ------------------------------------------------------------------------------
Shaftesbury PLC 47,335 234,947
==============================================================================
5,965,007
==============================================================================
UNITED STATES-31.88%
Acadia Realty Trust 26,641 347,665
- ------------------------------------------------------------------------------
Alexandria Real Estate Equities, Inc. 18,400 658,536
- ------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. GLOBAL REAL ESTATE FUND
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
UNITED STATES-(CONTINUED)
AMB Property Corp. 23,000 $ 432,630
- ------------------------------------------------------------------------------
AvalonBay Communities, Inc. 16,142 902,983
- ------------------------------------------------------------------------------
Boston Properties, Inc. 34,600 1,650,420
- ------------------------------------------------------------------------------
Camden Property Trust 39,482 1,089,703
- ------------------------------------------------------------------------------
DCT Industrial Trust Inc. 138,000 563,040
- ------------------------------------------------------------------------------
Digital Realty Trust, Inc. 35,900 1,287,015
- ------------------------------------------------------------------------------
EastGroup Properties, Inc. 10,900 359,918
- ------------------------------------------------------------------------------
Equity Residential 85,277 1,895,708
- ------------------------------------------------------------------------------
Essex Property Trust, Inc. 15,900 989,457
- ------------------------------------------------------------------------------
Federal Realty Investment Trust 23,000 1,184,960
- ------------------------------------------------------------------------------
HCP, Inc. 54,948 1,164,348
- ------------------------------------------------------------------------------
Health Care REIT, Inc. 39,167 1,335,595
- ------------------------------------------------------------------------------
Highwoods Properties, Inc. 35,900 803,083
- ------------------------------------------------------------------------------
Host Hotels & Resorts Inc.(b) 119,060 998,913
- ------------------------------------------------------------------------------
Kilroy Realty Corp. 17,800 365,612
- ------------------------------------------------------------------------------
Kimco Realty Corp. 31,100 312,555
- ------------------------------------------------------------------------------
Liberty Property Trust 38,300 882,432
- ------------------------------------------------------------------------------
Macerich Co. (The) 28,857 508,172
- ------------------------------------------------------------------------------
Mack-Cali Realty Corp. 23,000 524,400
- ------------------------------------------------------------------------------
Mid-America Apartment Communities, Inc. 12,700 466,217
- ------------------------------------------------------------------------------
Nationwide Health Properties, Inc. 47,371 1,219,330
- ------------------------------------------------------------------------------
OMEGA Healthcare Investors, Inc. 32,472 503,965
- ------------------------------------------------------------------------------
ProLogis 102,414 825,457
- ------------------------------------------------------------------------------
Public Storage 30,800 2,016,784
- ------------------------------------------------------------------------------
Regency Centers Corp. 28,100 980,971
- ------------------------------------------------------------------------------
Senior Housing Properties Trust 54,788 894,140
- ------------------------------------------------------------------------------
Simon Property Group, Inc. 68,922 3,544,658
- ------------------------------------------------------------------------------
SL Green Realty Corp. 23,708 543,862
- ------------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc. 8,173 181,441
- ------------------------------------------------------------------------------
Tanger Factory Outlet Centers, Inc. 17,800 577,254
- ------------------------------------------------------------------------------
Ventas, Inc. 49,800 1,487,028
- ------------------------------------------------------------------------------
Vornado Realty Trust 32,617 1,468,744
- ------------------------------------------------------------------------------
Washington REIT 17,684 395,591
==============================================================================
33,362,587
==============================================================================
Total Foreign Real Estate Investment Trusts,
Common Stocks & Other Equity Interests
(Cost $106,989,265) 100,409,478
==============================================================================
MONEY MARKET FUNDS-4.04%
Liquid Assets Portfolio-Institutional Class(c) 2,111,187 2,111,187
- ------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(c) 2,111,187 2,111,187
==============================================================================
Total Money Market Funds (Cost $4,222,374) 4,222,374
==============================================================================
TOTAL INVESTMENTS-99.99% (Cost $111,211,639) 104,631,852
==============================================================================
OTHER ASSETS LESS LIABILITIES-0.01% 14,207
==============================================================================
NET ASSETS-100.00% $104,646,059
______________________________________________________________________________
==============================================================================
</Table>
Investment Abbreviations:
<Table>
REIT - Real Estate Investment Trust
</Table>
Notes to Schedule of Investments:
(a) Property type classifications used in this report are generally according
to FTSE ERPA/NAREIT Global Real Estate Index, which is exclusively owned
by the FTSE Group, the European Public Real Estate Association (ERPA), the
National Association of Real Estate Investment Trusts (NAREIT) and
Euronext Indices BV.
(b) Non-income producing security.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
PORTFOLIO COMPOSITION
By property type, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
Diversified 40.9%
- -------------------------------------------------------------------------
Retail 20.1
- -------------------------------------------------------------------------
Office 10.5
- -------------------------------------------------------------------------
Residential 10.4
- -------------------------------------------------------------------------
Healthcare 6.3
- -------------------------------------------------------------------------
Industrial 3.4
- -------------------------------------------------------------------------
Self Storage 2.1
- -------------------------------------------------------------------------
Specialty 1.2
- -------------------------------------------------------------------------
Lodging-Resorts 1.1
- -------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities 4.0
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. GLOBAL REAL ESTATE FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $106,989,265) $100,409,478
- --------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 4,222,374
================================================================================
Total investments, at value (Cost $111,211,639) 104,631,852
================================================================================
Foreign currencies, at value (Cost $597,292) 597,205
- --------------------------------------------------------------------------------
Receivables for:
Investments sold 91,839
- --------------------------------------------------------------------------------
Fund shares sold 268,945
- --------------------------------------------------------------------------------
Dividends 440,426
- --------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 6,468
- --------------------------------------------------------------------------------
Other assets 1,149
================================================================================
Total assets 106,037,884
________________________________________________________________________________
================================================================================
LIABILITIES:
Payables for:
Investments purchased 1,031,605
- --------------------------------------------------------------------------------
Fund shares reacquired 194,406
- --------------------------------------------------------------------------------
Amount due custodian 38,857
- --------------------------------------------------------------------------------
Accrued fees to affiliates 59,254
- --------------------------------------------------------------------------------
Accrued other operating expenses 52,553
- --------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 15,150
================================================================================
Total liabilities 1,391,825
================================================================================
Net assets applicable to shares outstanding $104,646,059
________________________________________________________________________________
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $157,974,838
- --------------------------------------------------------------------------------
Undistributed net investment income 1,348,282
- --------------------------------------------------------------------------------
Undistributed net realized gain (loss) (48,098,663)
- --------------------------------------------------------------------------------
Unrealized appreciation (depreciation) (6,578,398)
================================================================================
$104,646,059
________________________________________________________________________________
================================================================================
NET ASSETS:
Series I $ 98,211,191
________________________________________________________________________________
================================================================================
Series II $ 6,434,868
________________________________________________________________________________
================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 10,298,751
________________________________________________________________________________
================================================================================
Series II 685,676
________________________________________________________________________________
================================================================================
Series I:
Net asset value per share $ 9.54
________________________________________________________________________________
================================================================================
Series II:
Net asset value per share $ 9.38
________________________________________________________________________________
================================================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding
taxes of $126,493) $ 2,103,053
- ------------------------------------------------------
Dividends from affiliated money market
funds (includes securities lending
income of $83,398) 89,379
======================================================
Total investment income 2,192,432
======================================================
EXPENSES:
Advisory fees 302,183
- ------------------------------------------------------
Administrative services fees 118,459
- ------------------------------------------------------
Custodian fees 42,387
- ------------------------------------------------------
Distribution fees -- Series II 5,848
- ------------------------------------------------------
Transfer agent fees 13,761
- ------------------------------------------------------
Trustees' and officers' fees and
benefits 11,221
- ------------------------------------------------------
Other 32,153
======================================================
Total expenses 526,012
======================================================
Less: Fees waived and reimbursed
expenses (2,999)
======================================================
Net expenses 523,013
======================================================
Net investment income 1,669,419
======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (19,346,905)
- ------------------------------------------------------
Foreign currencies (33,397)
======================================================
(19,380,302)
======================================================
Change in net unrealized appreciation
of:
Investment securities 20,849,518
- ------------------------------------------------------
Foreign currencies 1,744
======================================================
20,851,262
======================================================
Net realized and unrealized gain 1,470,960
======================================================
Net increase in net assets resulting
from operations $ 3,140,379
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. GLOBAL REAL ESTATE FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- -------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 1,669,419 $ 3,064,226
- -------------------------------------------------------------------------------------------------------
Net realized gain (loss) (19,380,302) (27,452,774)
- -------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 20,851,262 (45,616,452)
=======================================================================================================
Net increase (decrease) in net assets resulting from operations 3,140,379 (70,005,000)
=======================================================================================================
Distributions to shareholders from net investment income:
Series I -- (7,313,873)
- -------------------------------------------------------------------------------------------------------
Series II -- (346,827)
=======================================================================================================
Total distributions from net investment income -- (7,660,700)
=======================================================================================================
Distributions to shareholders from net realized gains:
Series I -- (11,303,629)
- -------------------------------------------------------------------------------------------------------
Series II -- (540,744)
=======================================================================================================
Total distributions from net realized gains -- (11,844,373)
=======================================================================================================
Share transactions-net:
Series I 12,916,370 25,400,434
- -------------------------------------------------------------------------------------------------------
Series II 1,803,379 4,476,456
=======================================================================================================
Net increase in net assets resulting from share transactions 14,719,749 29,876,890
=======================================================================================================
Net increase (decrease) in net assets 17,860,128 (59,633,183)
=======================================================================================================
NET ASSETS:
Beginning of period 86,785,931 146,419,114
=======================================================================================================
End of period (includes undistributed net investment income of
$1,348,282 and $(321,137), respectively) $104,646,059 $ 86,785,931
_______________________________________________________________________________________________________
=======================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. GLOBAL REAL ESTATE FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Global Real Estate Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is high total return through growth of capital
and current income.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
AIM V.I. GLOBAL REAL ESTATE FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
The Fund recharacterizes distributions received from REIT investments
based on information provided by the REIT into the following categories:
ordinary income, long-term and short-term capital gains, and return of
capital. If information is not available on a timely basis from the REIT,
the recharacterization will be based on available information which may
include the previous year's allocation. If new or additional information
becomes available from the REIT at a later date, a recharacterization will
be made in the following year. The Fund records as dividend income the
amount recharacterized as ordinary income and as realized gain the amount
recharacterized as capital gain in the Statement of Operations, and the
amount recharacterized as return of capital as a reduction to the cost of
investments in the Statement of Assets and Liabilities. These
recharacterizations are reflected in the accompanying financial
statements.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. OTHER RISKS -- The Fund's investments are concentrated in a comparatively
narrow segment of the economy. Consequently, the Fund may tend to be more
volatile than other mutual funds, and the value of the Fund's investments
may tend to rise and fall more rapidly.
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.
J. SECURITIES LENDING -- The Fund may lend portfolio securities having a
market value up to one-third of the Fund's total assets. Such loans are
secured by collateral equal to no less than the market value of the loaned
securities determined daily by the securities lending provider. Such
collateral will be cash or debt securities issued or guaranteed by the
U.S. Government or any of its sponsored agencies. Cash collateral received
in connection with these loans is invested in short-term money market
instruments or affiliated money market funds and is shown as such on the
Schedule of Investments. It is the Fund's policy to obtain additional
collateral from or return excess collateral to the borrower by the end of
the next business day, following the valuation date of the securities
loaned. Therefore, the value of the collateral held may be temporarily
less than the value of the securities on loan. Lending securities entails
a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase
the collateral accordingly, and the borrower fails to return the
securities. Upon the failure of the borrower to return the securities,
collateral may be liquidated
AIM V.I. GLOBAL REAL ESTATE FUND
and the securities may be purchased on the open market to replace the
loaned securities. The Fund could experience delays and costs in gaining
access to the collateral. The Fund bears the risk of any deficiency in the
amount of the collateral available for return to the borrower due to any
loss on the collateral invested. Dividends received on cash collateral
investments for securities lending transactions, which are net of
compensation to counterparties, is included in Dividends from affiliates
on the Statement of Operations. The aggregate value of securities out on
loan is shown as a footnote on the Statement of Assets and Liabilities, if
any.
K. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
Reported net realized foreign currency gains or losses arise from (i)
sales of foreign currencies, (ii) currency gains or losses realized
between the trade and settlement dates on securities transactions, and
(iii) the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency gains and losses arise from changes in the fair values of
assets and liabilities, other than investments in securities at fiscal
period end, resulting from changes in exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
L. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed, realized gains (losses) are
recorded. Realized and unrealized gains (losses) on the contracts are
included in the Statement of Operations. The maximum risks associated with
foreign currency contracts include failure of the counterparty to meet the
terms of the contract and the value of the foreign currency changing
unfavorably. These risks may be in excess of the amounts reflected in the
Statement of Assets and Liabilities.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS 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%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has also contractually agreed to waive advisory fees and/or
reimburse expenses to the extent necessary to limit total annual operating
expenses (excluding certain items discussed below) of Series I shares to 1.30%
and Series II shares to 1.45% of average daily net assets, through at least
April 30, 2010. 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 net annual operating expenses to exceed the numbers
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, in addition to the expense reimbursement arrangement
with Invesco Ltd. ("Invesco") described more fully below, the only 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. These credits are used to
pay certain expenses incurred by the Fund. To the extent that the annualized
expense ratio does not exceed the expense limitation, the Advisor will retain
its ability to be reimbursed for such fee waivers or reimbursements prior to the
end of each fiscal year.
AIM V.I. GLOBAL REAL ESTATE FUND
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash (excluding investments of cash
collateral from securities lending) in such affiliated money market funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$900 and reimbursed class level expenses of $2,099 for Series II shares.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $24,795 for accounting and fund
administrative services and reimbursed $93,664 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- ---------------------------------------------------------------------------------------------------------------------
Equity Securities $53,825,863 $50,805,989 $-- 104,631,852
_____________________________________________________________________________________________________________________
=====================================================================================================================
</Table>
NOTE 4--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $1,523
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
AIM V.I. GLOBAL REAL ESTATE FUND
NOTE 5--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the custodian bank
can be compensated by earning the additional interest; or (ii) compensate by
paying the custodian bank at a rate agreed upon by the custodian bank and
Invesco Aim, not to exceed the contractually agreed upon rate.
NOTE 6--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
December 31, 2016 $18,732,825
_______________________________________________________________________________________________
===============================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $44,261,072 and
$30,627,295, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 7,392,034
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (17,235,772)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $ (9,843,738)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $114,475,590.
</Table>
NOTE 8--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- ------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 2,855,906 $ 24,993,617 2,881,953 $ 52,755,460
- ------------------------------------------------------------------------------------------------------------------------
Series II 269,001 2,183,465 287,801 4,439,666
========================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 2,120,444 18,617,502
- ------------------------------------------------------------------------------------------------------------------------
Series II -- -- 102,609 887,571
========================================================================================================================
Reacquired:
Series I (1,500,995) (12,077,247) (2,630,426) (45,972,528)
- ------------------------------------------------------------------------------------------------------------------------
Series II (45,383) (380,086) (50,546) (850,781)
========================================================================================================================
Net increase in share activity 1,578,529 $ 14,719,749 2,711,835 $ 29,876,890
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 58% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
AIM V.I. GLOBAL REAL ESTATE FUND
NOTE 9--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
(LOSSES) ON
NET ASSET SECURITIES DIVIDENDS DISTRIBUTIONS
VALUE, NET (BOTH TOTAL FROM FROM NET FROM NET NET ASSET
BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END
OF PERIOD INCOME(a) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD
- --------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $ 9.23 $0.17 $ 0.14 $ 0.31 $ -- $ -- $ -- $ 9.54
Year ended 12/31/08 21.88 0.44 (10.35) (9.91) (1.08) (1.66) (2.74) 9.23
Year ended 12/31/07 28.74 0.38 (1.52) (1.14) (1.69) (4.03) (5.72) 21.88
Year ended 12/31/06 21.06 0.33 8.61 8.94 (0.28) (0.98) (1.26) 28.74
Year ended 12/31/05 19.13 0.38 2.34 2.72 (0.22) (0.57) (0.79) 21.06
Year ended 12/31/04 14.34 0.32 4.92 5.24 (0.14) (0.31) (0.45) 19.13
- --------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 9.10 0.16 0.12 0.28 -- -- -- 9.38
Year ended 12/31/08 21.66 0.36 (10.19) (9.83) (1.07) (1.66) (2.73) 9.10
Year ended 12/31/07 28.57 0.29 (1.49) (1.20) (1.68) (4.03) (5.71) 21.66
Year ended 12/31/06 20.98 0.27 8.58 8.85 (0.28) (0.98) (1.26) 28.57
Year ended 12/31/05 19.12 0.34 2.31 2.65 (0.22) (0.57) (0.79) 20.98
Year ended 12/31/04(e) 13.96 0.20 5.41 5.61 (0.14) (0.31) (0.45) 19.12
________________________________________________________________________________________________________________________________
================================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME
TOTAL END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
RETURN(b) (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(c)
- ------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 3.36% $ 98,211 1.29%(d) 1.29%(d) 4.15%(d) 38%
Year ended 12/31/08 (44.65) 82,582 1.17 1.17 2.51 62
Year ended 12/31/07 (5.54) 143,773 1.13 1.22 1.31 57
Year ended 12/31/06 42.60 192,617 1.15 1.30 1.32 84
Year ended 12/31/05 14.24 99,977 1.21 1.36 1.91 51
Year ended 12/31/04 36.58 79,391 1.31 1.42 1.96 34
- ------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 3.08 6,435 1.45(d) 1.54(d) 3.99(d) 38
Year ended 12/31/08 (44.72) 4,203 1.42 1.42 2.26 62
Year ended 12/31/07 (5.76) 2,646 1.38 1.47 1.06 57
Year ended 12/31/06 42.30 311 1.40 1.55 1.07 84
Year ended 12/31/05 13.85 62 1.45 1.61 1.67 51
Year ended 12/31/04(e) 40.23 14 1.45(f) 1.66(f) 1.82(f) 34
__________________________________________________________________________________________________________________
==================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net
asset values may differ from the net asset value and returns for
shareholder transactions. Total returns are not annualized for periods
less than one year, if applicable and do not reflect charges assessed in
connection with a variable product, which if included would reduce total
returns.
(c) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(d) Ratios are annualized and based on average daily net assets (000's
omitted) of $76,532 and $4,718 for Series I and Series II shares,
respectively.
(e) Commencement date of April 30, 2004.
(f) Annualized.
AIM V.I. GLOBAL REAL ESTATE FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,033.60 $6.50 $1,018.40 $6.46 1.29%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,030.80 7.30 1,017.60 7.25 1.45
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. GLOBAL REAL ESTATE FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM In addition to their meetings particular factor that was controlling.
Variable Insurance Funds is required under throughout the year, the Sub-Committees Each Trustee may have evaluated the
the Investment Company Act of 1940 to meet at designated contract renewal information provided differently from
approve annually the renewal of the AIM meetings each year to conduct an in-depth another Trustee and attributed different
V.I. Global Real Estate Fund (the Fund) review of the performance, fees, expenses weight to the various factors. The
investment advisory agreement with Invesco and other matters related to their Trustees recognized that the advisory
Aim Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract arrangements and resulting advisory fees
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive for the Fund and the other AIM Funds are
for Mutual Funds (the sub-advisory comparative performance and fee data the result of years of review and
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an negotiation between the Trustees and
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Invesco Aim, that the Trustees may focus
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and to a greater extent on certain aspects of
Limited, Invesco Australia Limited, supervision of the Senior Officer who also these arrangements in some years than in
Invesco Global Asset Management (N.A.), prepares a separate analysis of this others, and that the Trustees'
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each deliberations and conclusions in a
Institutional (N.A.), Inc., Invesco Senior Sub-Committee then makes recommendations particular year may be based in part on
Secured Management, Inc. and Invesco to the Investments Committee regarding the their deliberations and conclusions
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. regarding these same arrangements
Sub-Advisers). During contract renewal The Investments Committee considers each throughout the year and in prior years.
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes
Board as a whole, and the disinterested or its own recommendations regarding the fees The discussion below serves as a
"independent" Trustees voting separately, and expenses of the AIM Funds to the full summary of the Senior Officer's
approved the continuance of the Fund's Board. The Investments Committee also independent written evaluation with
investment advisory agreement and the considers each Sub-Committee's respect to the Fund's investment advisory
sub-advisory contracts for another year, recommendations in making its annual agreement as well as a discussion of the
effective July 1, 2009. In doing so, the recommendation to the Board whether to material factors and related conclusions
Board determined that the Fund's approve the continuance of each AIM Fund's that formed the basis for the Board's
investment advisory agreement and the investment advisory agreement and approval of the Fund's investment advisory
sub-advisory contracts are in the best sub-advisory contracts for another year. agreement and sub-advisory contracts.
interests of the Fund and its shareholders Unless otherwise stated, information set
and that the compensation to Invesco Aim The independent Trustees met separately forth below is as of June 17, 2009, and
and the Affiliated Sub-Advisers under the during their evaluation of the Fund's does not reflect any changes that may have
Fund's investment advisory agreement and investment advisory agreement and occurred since that date, including but
sub-advisory contracts is fair and sub-advisory contracts with independent not limited to changes to the Fund's
reasonable. legal counsel. The independent Trustees performance, advisory fees, expense
were also assisted in their annual limitations and/or fee waivers.
THE BOARD'S FUND EVALUATION PROCESS evaluation of the Fund's investment
advisory agreement by the Senior Officer. FACTORS AND CONCLUSIONS AND SUMMARY OF
The Board's Investments Committee has One responsibility of the Senior Officer INDEPENDENT WRITTEN FEE EVALUATION
established three Sub-Committees that are is to manage the process by which the AIM
responsible for overseeing the management Funds' proposed management fees are A. Nature, Extent and Quality of
of a number of the series portfolios of negotiated during the annual contract Services Provided by Invesco Aim
the AIM Funds. This Sub-Committee renewal process to ensure that they are
structure permits the Trustees to focus on negotiated in a manner that is at arms' The Board reviewed the advisory services
the performance of the AIM Funds that have length and reasonable. Accordingly, the provided to the Fund by Invesco Aim under
been assigned to them. The Sub-Committees Senior Officer must either supervise a the Fund's investment advisory agreement,
meet throughout the year to review the competitive bidding process or prepare an the performance of Invesco Aim in
performance of their assigned funds, and independent written evaluation. The Senior providing these services, and the
the Sub-Committees review monthly and Officer recommended that an independent credentials and experience of the officers
quarterly comparative performance written evaluation be provided and, at the and employees of Invesco Aim who provide
information and periodic asset flow data direction of the Board, prepared an these services. The Board's review of the
for their assigned funds. These materials independent written evaluation. qualifications of Invesco Aim to provide
are prepared under the direction and these services included the Board's
supervision of the independent Senior During the annual contract renewal consideration of Invesco Aim's portfolio
Officer, an officer of the AIM Funds who process, the Board considered the factors and product review process, various back
reports directly to the independent discussed below in evaluating the fairness office support functions provided by
Trustees. Over the course of each year, and reasonableness of the Fund's Invesco Aim and its affiliates, and
the Sub-Committees meet with portfolio investment advisory agreement and Invesco Aim's equity and fixed income
managers for their assigned funds and sub-advisory contracts. The Board trading operations. The Board concluded
other members of management and review considered all of the information provided that the nature, extent and quality of the
with these individuals the performance, to them, including information provided at advisory services provided to the Fund by
investment objective(s), policies, their meetings throughout the year as part Invesco Aim are appropriate and that
strategies and limitations of these funds. of their ongoing oversight of the Fund, Invesco Aim currently is providing
and did not identify any satisfactory advisory services in
accordance with the terms of the Fund's
investment advisory
AIM V.I. GLOBAL REAL ESTATE FUND continued
agreement. In addition, based on their resources and talent of the Affiliated any advisory fee waivers and before any
ongoing meetings throughout the year with Sub-Advisers in managing the Fund. expense limitations/waivers) to the
the Fund's portfolio manager or managers, advisory fee rates of other domestic
the Board concluded that these individuals C. Fund Performance clients of Invesco Aim and Invesco
are competent and able to continue to Institutional with investment strategies
carry out their responsibilities under the The Board considered fund performance as a comparable to those of the Fund, including
Fund's investment advisory agreement. relevant factor in considering whether to one mutual fund advised by Invesco Aim and
approve the investment advisory agreement sub-advised by Invesco Institutional. The
In determining whether to continue the as well as the sub-advisory contracts for Board noted that the Fund's rate was the
Fund's investment advisory agreement, the the Fund, as Invesco Institutional and same as the effective fee rate for the
Board considered the prior relationship Invesco Asset Management currently manage other mutual fund. The Board also compared
between Invesco Aim and the Fund, as well assets of the Fund. the sub-advisory fee rate of the Fund to
as the Board's knowledge of Invesco Aim's the sub-advisory fee rate of three foreign
operations, and concluded that it is The Board compared the Fund's funds sub-advised by Invesco
beneficial to maintain the current performance during the past one, three and Institutional. The sub-advisory fee rate
relationship, in part, because of such five calendar years to the performance of of the Fund was above the sub-advisory fee
knowledge. The Board also considered the all funds in the Lipper performance rate of one of the foreign funds and below
steps that Invesco Aim and its affiliates universe that are not managed by Invesco the sub-advisory fee rate of the other two
continue to take to improve the quality Aim or an Affiliated Sub-Adviser. The foreign funds.
and efficiency of the services they Board noted that the Fund's performance
provide to the AIM Funds in the areas of was in the fifth quintile of its Additionally, the Board compared the
investment performance, product line performance universe for the one year Fund's effective fee rate to the effective
diversification, distribution, fund period and in the first quintile for the fee rate paid by numerous separately
operations, shareholder services and three and five year periods (the first managed accounts/wrap accounts advised by
compliance. The Board concluded that the quintile being the best performing funds Invesco Institutional. The Board noted
quality and efficiency of the services and the fifth quintile being the worst that the Fund's rate was above the rates
Invesco Aim and its affiliates provide to performing funds). Although the for all but four of the separately managed
the AIM Funds in each of these areas independent written evaluation of the accounts/wrap accounts. The Board
support the Board's approval of the Fund's Senior Officer only considered Fund considered that management of the
continuance of the Fund's investment performance through the most recent separately managed accounts/wrap accounts
advisory agreement. calendar year, the Board also reviewed by the Invesco Institutional involves
more recent Fund performance and this different levels of services and different
B. Nature, Extent and Quality of review did not change their conclusions. operational and regulatory requirements
Services Provided by Affiliated The Board noted that, in response to the than Invesco Aim's and Invesco
Sub-Advisers Board's focus on fund performance, Invesco Institutional's management of the Fund.
Aim has taken a number of actions intended The Board concluded that these differences
The Board reviewed the services provided to improve the investment process for the are appropriately reflected in the fee
by the Affiliated Sub-Advisers under the funds. structure for the Fund.
sub-advisory contracts and the credentials
and experience of the officers and D. Advisory and Sub-Advisory Fees and The Board noted that Invesco Aim
employees of the Affiliated Sub-Advisers Fee Waivers contractually agreed to waive fees and/or
who provide these services. The Board limit expenses of the Fund through at
concluded that the nature, extent and The Board compared the Fund's contractual least April 30, 2010 in an amount
quality of the services provided by the advisory fee rate to the contractual necessary to limit total annual operating
Affiliated Sub-Advisers are appropriate. advisory fee rates of funds in the Fund's expenses to a specified percentage of
The Board noted that the Affiliated Lipper expense group that are not managed average daily net assets for each class of
Sub-Advisers, which have offices and by Invesco Aim or an Affiliated the Fund. The Board noted that at the
personnel that are geographically Sub-Adviser, at a common asset level. The current expense ratio for the Fund, this
dispersed in financial centers around the Board noted that the Fund's contractual expense waiver does not have any impact.
world, can provide research and other advisory fee rate was below the median
information and make recommendations on contractual advisory fee rate of funds in The Board also considered the services
the markets and economies of various its expense group. The Board also reviewed provided by the Affiliated Sub-Advisers
countries and securities of companies the methodology used by Lipper in pursuant to the sub-advisory contracts and
located in such countries or on various determining contractual fee rates, which the services provided by Invesco Aim
types of investments and investment includes using audited financial data from pursuant to the Fund's advisory agreement,
techniques. The Board noted that the most recent annual report of each fund as well as the allocation of fees between
investment decisions for the Fund are made in the expense group that was publicly Invesco Aim and the Affiliated
by Invesco Institutional (N.A.), Inc. available as of the end of the past Sub-Advisers pursuant to the sub-advisory
(Invesco Institutional) and Invesco Asset calendar year. The Board noted that some contracts. The Board noted that the
Management Limited ("Invesco Asset comparative data was at least one year old sub-advisory fees have no direct effect on
Management"). The Board concluded that the did not reflect the market downturn that the Fund or its shareholders, as they are
sub-advisory contracts benefit the Fund occurred in the fourth quarter of 2008. paid by Invesco Aim to the Affiliated
and its shareholders by permitting Invesco Sub-Advisers, and that Invesco Aim and
Aim to utilize the additional The Board also compared the Fund's
effective fee rate (the advisory fee after
AIM V.I. GLOBAL REAL ESTATE FUND continued
the Affiliated Sub-Advisers are Fund is not excessive in light of the The Board considered the fact that the
affiliates. nature, quality and extent of the services Fund's uninvested cash and cash collateral
provided. The Board considered whether from any securities lending arrangements
After taking account of the Fund's Invesco Aim is financially sound and has may be invested in money market funds
contractual advisory fee rate, the the resources necessary to perform its advised by Invesco Aim pursuant to
contractual sub-advisory fee rate, the obligations under the Fund's investment procedures approved by the Board. The
comparative advisory fee information advisory agreement, and concluded that Board noted that Invesco Aim will receive
discussed above and other relevant Invesco Aim has the financial resources advisory fees from these affiliated money
factors, the Board concluded that the necessary to fulfill these obligations. market funds attributable to such
Fund's advisory and sub-advisory fees are The Board also considered whether each investments, although Invesco Aim has
fair and reasonable. Affiliated Sub-Adviser is financially contractually agreed to waive through at
sound and has the resources necessary to least June 30, 2010, the advisory fees
E. Economies of Scale and Breakpoints perform its obligations under the payable by the Fund in an amount equal to
sub-advisory contracts, and concluded that 100% of the net advisory fee Invesco Aim
The Board considered the extent to which each Affiliated Sub-Adviser has the receives from the affiliated money market
there are economies of scale in the financial resources necessary to fulfill funds with respect to the Fund's
provision of advisory services to the these obligations. investment in the affiliated money market
Fund. The Board also considered whether funds of uninvested cash, but not cash
the Fund benefits from such economies of G. Collateral Benefits to Invesco Aim collateral. The Board concluded that the
scale through contractual breakpoints in and its Affiliates Fund's investment of uninvested cash and
the Fund's advisory fee schedule. The cash collateral from any securities
Board noted that the Fund's contractual The Board considered various other lending arrangements in the affiliated
advisory fee schedule includes seven benefits received by Invesco Aim and its money market funds is in the best
breakpoints, but that due to the Fund's affiliates resulting from Invesco Aim's interests of the Fund and its
asset level at the end of the past relationship with the Fund, including the shareholders.
calendar year, the Fund is not currently fees received by Invesco Aim and its
benefiting from the breakpoints. The Board affiliates for their provision of
concluded that the Fund's advisory fees administrative, transfer agency and
appropriately reflect economies of scale distribution services to the Fund. The
at current asset levels. The Board also Board considered the performance of
noted that the Fund shares directly in Invesco Aim and its affiliates in
economies of scale through lower fees providing these services and the
charged by third party service providers organizational structure employed by
based on the combined size of all of the Invesco Aim and its affiliates to provide
AIM Funds and affiliates. these services. The Board also considered
that these services are provided to the
F. Profitability and Financial Fund pursuant to written contracts that
Resources are reviewed and approved on an annual
basis by the Board. The Board concluded
The Board reviewed information from that Invesco Aim and its affiliates are
Invesco Aim concerning the costs of the providing these services in a satisfactory
advisory and other services that Invesco manner and in accordance with the terms of
Aim and its affiliates provide to the Fund their contracts, and are qualified to
and the profitability of Invesco Aim and continue to provide these services to the
its affiliates in providing these Fund.
services. The Board also reviewed
information concerning the financial The Board considered the benefits
condition of Invesco Aim and its realized by Invesco Aim and the Affiliated
affiliates. The Board reviewed with Sub-Advisers as a result of portfolio
Invesco Aim the methodology used to brokerage transactions executed through
prepare the profitability information. The "soft dollar" arrangements. The Board
Board considered the overall profitability noted that soft dollar arrangements shift
of Invesco Ltd., the ultimate parent of the payment obligation for research and
Invesco Aim and the Affiliated execution services from Invesco Aim and
Sub-Advisers, and of Invesco Aim, as well the Affiliated Sub-Advisers to the funds
as the profitability of Invesco Aim in and therefore may reduce Invesco Aim's and
connection with managing the Fund. The the Affiliated Sub-Advisers' expenses. The
Board noted that Invesco Aim continues to Board concluded that Invesco Aim's and the
operate at a net profit, although the Affiliated Sub-Advisers' soft dollar
reduction of assets under management as a arrangements are appropriate. The Board
result of market movements and the also concluded that, based on their review
increase in voluntary fee waivers for and representations made by the Chief
affiliated money market funds have reduced Compliance Officer of Invesco Aim, these
the profitability of Invesco Aim and its arrangements are consistent with
affiliates. The Board concluded that the regulatory requirements.
Fund's fees are fair and reasonable, and
that the level of profits realized by
Invesco Aim and its affiliates from
providing services to the
AIM V.I. GLOBAL REAL ESTATE FUND
[INVESCO AIM LOGO] AIM V.I. GOVERNMENT SECURITIES FUND
--SERVICE MARK-- Semiannual Report to Shareholders o June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund
files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the SEC
Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by
calling 202 942 8090 or 800 732 0330, or by electronic request at the following E-mail address: publicinfo@sec.gov. The SEC file
numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent portfolio holdings, as filed on Form N-Q, have also been
made available to insurance companies issuing variable annuity contracts and variable life insurance policies ("variable products")
that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, from our Client Services department at 800 410 4246 or on the Invesco Aim Web site,
invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site,
sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2009, is
available at our Web site. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting
Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. will be merged into
Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc. Additional information
will be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN
MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
SERIES I SHARES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer Inception (5/5/93) 5.07%
charges. If variable product issuer charges were included, returns would be lower. 10 Years 5.16
5 Years 4.78
Series I Shares -1.92% 1 Years 6.87
Series II Shares -2.00
Barclays Capital U.S. Aggregate Index(Triangle)* (Broad Market Index) 1.90 SERIES II SHARES
Barclays Capital U.S. Government Index(Triangle)* (Style-Specific Index) -3.17 10 Years 4.90%
Lipper VUF General U.S. Government Funds Index(Triangle) (Peer Group Index) 2.27 5 Years 4.51
1 Years 6.62
(Triangle) Lipper Inc. ==========================================
* Effective 11/3/08, Lehman Brothers indexes were rebranded as Barclays Capital ACTUAL VARIABLE PRODUCT VALUES. THEY DO
indexes. NOT REFLECT SALES CHARGES, EXPENSES AND
FEES ASSESSED IN CONNECTION WITH A
The BARCLAYS CAPITAL U.S. AGGREGATE INDEX covers U.S. investment-grade fixed-rate bonds VARIABLE PRODUCT. SALES CHARGES, EXPENSES
with components for government and corporate securities, mortgage pass-throughs and AND FEES, WHICH ARE DETERMINED BY THE
asset-backed securities. VARIABLE PRODUCT ISSUERS, WILL VARY AND
WILL LOWER THE TOTAL RETURN.
The BARCLAYS CAPITAL 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 THE MOST RECENT MONTH-END PERFORMANCE
of one year or more or publicly issued debt of U.S. government agencies, quasi-federal DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
corporations and corporate or foreign debt guaranteed by the U.S. government. PRODUCT CHARGES, IS AVAILABLE ON THE
INVESCO AIM AUTOMATED INFORMATION LINE,
The LIPPER VUF GENERAL U.S. GOVERNMENT FUNDS INDEX is an equally weighted 866 702 4402. AS MENTIONED ABOVE, FOR THE
representation of the largest variable insurance underlying funds in the Lipper General MOST RECENT MONTH-END PERFORMANCE
U.S. Government Funds category. These funds invest at least 65% of their assets in U.S. INCLUDING VARIABLE PRODUCT CHARGES, PLEASE
government and agency issues. CONTACT YOUR VARIABLE PRODUCT ISSUER OR
FINANCIAL ADVISOR.
The Fund is not managed to track the performance of any particular index, including
the indexes defined here, and consequently, the performance of the Fund may deviate (1) Total annual operating expenses less
significantly from the performance of the indexes. any contractual fee waivers and/or
expense reimbursements by the advisor
A direct investment cannot be made in an index. Unless otherwise indicated, index in effect through at least April 30,
results include reinvested dividends, and they do not reflect sales charges. 2010. See current prospectus for more
Performance of the peer group reflects fund expenses; performance of a market index information.
does not.
(2) Total annual operating expenses less
======================================================================================= contractual advisory fee waivers by
the advisor in effect through at least
SERIES II SHARES' INCEPTION DATE IS PRINCIPAL VALUE WILL FLUCTUATE SO THAT June 30, 2010. See current prospectus
SEPTEMBER 19, 2001. RETURNS SINCE THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL for more information.
DATE ARE HISTORICAL. ALL OTHER RETURNS ARE SHARES.
THE BLENDED RETURNS OF THE HISTORICAL
PERFORMANCE OF SERIES II SHARES SINCE THE NET ANNUAL FUND OPERATING EXPENSE
THEIR INCEPTION AND THE RESTATED RATIO SET FORTH IN THE MOST RECENT FUND
HISTORICAL PERFORMANCE OF SERIES I SHARES PROSPECTUS AS OF THE DATE OF THIS REPORT
(FOR PERIODS PRIOR TO INCEPTION OF SERIES FOR SERIES I AND SERIES II SHARES WAS
II SHARES) ADJUSTED TO REFLECT THE RULE 0.74% AND 0.99%, RESPECTIVELY.(1, 2) THE
12B-1 FEES APPLICABLE TO SERIES II SHARES. TOTAL ANNUAL FUND OPERATING EXPENSE RATIO
THE INCEPTION DATE OF SERIES I SHARES IS SET FORTH IN THE MOST RECENT FUND
MAY 5, 1993. PROSPECTUS AS OF THE DATE OF THIS REPORT
FOR SERIES I AND SERIES II SHARES WAS
THE PERFORMANCE OF THE FUND'S SERIES I 0.77% AND 1.02%, RESPECTIVELY. THE EXPENSE
AND SERIES II SHARE CLASSES WILL DIFFER RATIOS PRESENTED ABOVE MAY VARY FROM THE
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES. EXPENSE RATIOS PRESENTED IN OTHER SECTIONS
OF THIS REPORT THAT ARE BASED ON EXPENSES
THE PERFORMANCE DATA QUOTED REPRESENT INCURRED DURING THE PERIOD COVERED BY THIS
PAST PERFORMANCE AND CANNOT GUARANTEE REPORT.
COMPARABLE FUTURE RESULTS; CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE AIM V.I. GOVERNMENT SECURITIES FUND, A
CONTACT YOUR VARIABLE PRODUCT ISSUER OR SERIES PORTFOLIO OF AIM VARIABLE INSURANCE
FINANCIAL ADVISOR FOR THE MOST RECENT FUNDS, IS CURRENTLY OFFERED THROUGH
MONTH-END VARIABLE PRODUCT PERFORMANCE. INSURANCE COMPANIES ISSUING VARIABLE
PERFORMANCE FIGURES REFLECT FUND EXPENSES, PRODUCTS. YOU CANNOT PURCHASE SHARES OF
REINVESTED DISTRIBUTIONS AND CHANGES IN THE FUND DIRECTLY. PERFORMANCE FIGURES
NET ASSET VALUE. INVESTMENT RETURN AND GIVEN REPRESENT THE FUND AND ARE NOT
INTENDED TO REFLECT
AIM V.I. GOVERNMENT SECURITIES FUND
SCHEDULE OF INVESTMENTS
June 30, 2009
(Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------
U.S. GOVERNMENT SPONSORED MORTGAGE-BACKED SECURITIES-86.91%
COLLATERALIZED MORTGAGE OBLIGATIONS-60.81%
Fannie Mae Grantor Trust, 5.34%, 04/25/12 $ 4,500,000 $ 4,768,479
- -----------------------------------------------------------------------------------
Fannie Mae REMICs,
4.50%, 11/25/14 to 07/25/28 27,141,633 27,553,207
- -----------------------------------------------------------------------------------
5.00%, 12/25/15 to 03/25/25 16,906,629 17,308,620
- -----------------------------------------------------------------------------------
4.00%, 03/25/16 172,238 173,084
- -----------------------------------------------------------------------------------
6.50%, 06/25/20 20,379 20,367
- -----------------------------------------------------------------------------------
6.00%, 02/25/21 to 10/25/33 67,659,180 69,511,762
- -----------------------------------------------------------------------------------
5.50%, 02/25/24 to 03/01/38 27,357,764 27,899,272
- -----------------------------------------------------------------------------------
Fannie Mae Whole Loan, 5.50%, 07/25/34 2,732,539 2,697,686
- -----------------------------------------------------------------------------------
Federal Home Loan Bank,
4.75%, 10/25/10 39,377,226 40,600,101
- -----------------------------------------------------------------------------------
5.27%, 12/28/12 3,023,813 3,206,197
- -----------------------------------------------------------------------------------
5.46%, 11/27/15 56,748,296 61,001,433
- -----------------------------------------------------------------------------------
Freddie Mac REMICs,
5.50%, 07/15/10 to 10/15/28 170,530,399 174,900,531
- -----------------------------------------------------------------------------------
6.75%, 06/15/11 409,001 419,902
- -----------------------------------------------------------------------------------
5.25%, 08/15/11 5,231,040 5,408,659
- -----------------------------------------------------------------------------------
5.38%, 08/15/11 to 09/15/11 7,166,102 7,439,610
- -----------------------------------------------------------------------------------
4.50%, 06/15/14 to 08/15/27 16,961,429 17,301,936
- -----------------------------------------------------------------------------------
5.00%, 06/15/14 to 09/15/27 57,324,582 58,544,968
- -----------------------------------------------------------------------------------
7.50%, 01/15/16 1,779,100 1,842,896
- -----------------------------------------------------------------------------------
6.00%, 09/15/16 to 09/15/29 117,679,594 121,018,001
- -----------------------------------------------------------------------------------
4.00%, 11/15/16 to 11/15/26 9,861,209 10,083,568
- -----------------------------------------------------------------------------------
5.75%, 12/15/18 23,595,948 24,150,385
- -----------------------------------------------------------------------------------
4.75%, 04/15/31 16,088,592 16,407,680
- -----------------------------------------------------------------------------------
Government National Mortgage Association (GNMA)
REMICs,
3.13%, 04/16/16 5,155,314 5,215,765
- -----------------------------------------------------------------------------------
5.15%, 06/16/23 2,657,656 2,686,138
- -----------------------------------------------------------------------------------
5.86%, 10/16/23 243,174 245,601
- -----------------------------------------------------------------------------------
2.17%, 02/16/24 23,424,847 23,315,748
- -----------------------------------------------------------------------------------
5.00%, 09/16/27 to 02/20/29 12,227,957 12,630,999
- -----------------------------------------------------------------------------------
4.21%, 01/16/28 10,128,534 10,360,848
- -----------------------------------------------------------------------------------
4.75%, 12/20/29 17,311,798 17,569,245
- -----------------------------------------------------------------------------------
4.50%, 08/20/35 1,232,325 1,278,902
===================================================================================
765,561,590
===================================================================================
FEDERAL HOME LOAN MORTGAGE CORP. (FHLMC)-7.82%
Pass Through Ctfs.,
6.00%, 08/01/10 to 02/01/34 6,130,681 6,500,267
- -----------------------------------------------------------------------------------
7.00%, 11/01/10 to 12/01/37 10,620,095 11,507,625
- -----------------------------------------------------------------------------------
8.00%, 09/01/11 to 09/01/36 17,841,266 19,806,502
- -----------------------------------------------------------------------------------
6.50%, 10/01/12 to 12/01/35 9,796,005 10,472,234
- -----------------------------------------------------------------------------------
7.50%, 03/01/16 to 08/01/36 7,460,559 8,030,395
- -----------------------------------------------------------------------------------
10.50%, 08/01/19 6,675 7,485
- -----------------------------------------------------------------------------------
8.50%, 09/01/20 to 08/01/31 1,312,067 1,444,685
- -----------------------------------------------------------------------------------
10.00%, 03/01/21 100,825 113,032
- -----------------------------------------------------------------------------------
9.00%, 06/01/21 to 06/01/22 814,108 900,251
- -----------------------------------------------------------------------------------
7.05%, 05/20/27 381,750 410,312
- -----------------------------------------------------------------------------------
Pass Through Ctfs., TBA,
4.50%, 07/01/39(a) 19,000,000 18,916,875
- -----------------------------------------------------------------------------------
5.00%, 07/01/39(a) 20,000,000 20,340,620
===================================================================================
98,450,283
===================================================================================
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)-13.86%
Pass Through Ctfs.,
6.50%, 10/01/10 to 11/01/37 12,042,130 12,846,500
- -----------------------------------------------------------------------------------
7.00%, 12/01/10 to 06/01/36 34,849,918 37,575,862
- -----------------------------------------------------------------------------------
7.50%, 08/01/11 to 07/01/37 22,734,439 24,863,656
- -----------------------------------------------------------------------------------
8.50%, 06/01/12 to 08/01/37 9,089,332 9,936,818
- -----------------------------------------------------------------------------------
8.00%, 06/01/12 to 11/01/37 25,174,948 27,379,584
- -----------------------------------------------------------------------------------
10.00%, 09/01/13 to 03/01/16 43,014 46,643
- -----------------------------------------------------------------------------------
6.00%, 09/01/17 to 03/01/37 6,735,829 7,104,912
- -----------------------------------------------------------------------------------
5.00%, 11/01/17 to 12/01/33 1,744,030 1,816,886
- -----------------------------------------------------------------------------------
5.50%, 03/01/21 797 836
- -----------------------------------------------------------------------------------
6.75%, 07/01/24 1,437,597 1,573,321
- -----------------------------------------------------------------------------------
6.95%, 10/01/25 to 09/01/26 204,210 224,466
- -----------------------------------------------------------------------------------
Pass Through Ctfs., TBA,
4.00%, 07/01/24(a) 14,000,000 14,004,368
- -----------------------------------------------------------------------------------
4.50%, 07/01/24 to 07/01/39(a) 24,000,000 24,287,805
- -----------------------------------------------------------------------------------
5.00%, 07/01/24 to 07/01/39(a) 12,500,000 12,778,201
===================================================================================
174,439,858
===================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. GOVERNMENT SECURITIES FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA)-4.42%
Pass Through Ctfs.,
7.50%, 09/15/09 to 10/15/35 $ 9,294,663 $ 10,070,877
- -----------------------------------------------------------------------------------
9.37%, 09/15/09 to 12/15/09 2,821 2,866
- -----------------------------------------------------------------------------------
6.50%, 02/20/12 to 01/15/37 21,658,720 23,398,828
- -----------------------------------------------------------------------------------
8.00%, 07/15/12 to 01/15/37 5,422,215 6,077,839
- -----------------------------------------------------------------------------------
6.75%, 08/15/13 55,358 58,923
- -----------------------------------------------------------------------------------
11.00%, 10/15/15 2,279 2,554
- -----------------------------------------------------------------------------------
9.50%, 09/15/16 3,091 3,389
- -----------------------------------------------------------------------------------
9.00%, 10/20/16 to 12/20/16 108,374 117,068
- -----------------------------------------------------------------------------------
7.00%, 04/15/17 to 01/15/37 7,290,981 7,950,473
- -----------------------------------------------------------------------------------
10.50%, 09/15/17 to 11/15/19 4,016 4,251
- -----------------------------------------------------------------------------------
8.50%, 12/15/17 to 01/15/37 1,192,122 1,286,695
- -----------------------------------------------------------------------------------
10.00%, 06/15/19 46,704 51,161
- -----------------------------------------------------------------------------------
6.00%, 09/15/20 to 08/15/33 3,994,204 4,210,997
- -----------------------------------------------------------------------------------
6.95%, 08/20/25 to 08/20/27 1,230,246 1,334,650
- -----------------------------------------------------------------------------------
6.25%, 06/15/27 190,261 202,407
- -----------------------------------------------------------------------------------
6.38%, 10/20/27 to 09/20/28 850,578 913,495
===================================================================================
55,686,473
===================================================================================
Total U.S. Government Sponsored Mortgage-
Backed Securities (Cost $1,078,797,004) 1,094,138,204
===================================================================================
U.S. GOVERNMENT SPONSORED AGENCY SECURITIES-16.38%
FEDERAL AGRICULTURAL MORTGAGE CORP.-8.49%
Bonds, 2.11%, 03/15/12 70,000,000 70,270,693
- -----------------------------------------------------------------------------------
Medium-Term Notes, 5.60%, 01/10/17 11,000,000 11,286,321
- -----------------------------------------------------------------------------------
Unsec. Medium-Term Notes, 2.20%, 11/09/11 25,000,000 25,325,264
===================================================================================
106,882,278
===================================================================================
FEDERAL FARM CREDIT BANK (FFCB)-5.12%
Bonds,
3.49%, 09/29/10 47,220,000 47,588,002
- -----------------------------------------------------------------------------------
5.59%, 10/04/21 10,075,000 10,631,371
- -----------------------------------------------------------------------------------
5.75%, 01/18/22 2,775,000 2,911,266
- -----------------------------------------------------------------------------------
Medium-Term Notes, 5.75%, 12/07/28 3,100,000 3,275,438
===================================================================================
64,406,077
===================================================================================
FEDERAL HOME LOAN BANK (FHLB)-1.65%
Global Bonds, 1.88%, 06/20/12 8,000,000 7,991,627
- -----------------------------------------------------------------------------------
Unsec. Bond, 4.72%, 09/20/12 1,481,432 1,552,750
- -----------------------------------------------------------------------------------
Series 1, Unsec. Bond, 5.77%, 03/23/18 10,420,375 11,161,379
===================================================================================
20,705,756
===================================================================================
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)-0.14%
Sr. Unsec. Global Bonds, 6.63%, 11/15/30(b) 700,000 865,243
- -----------------------------------------------------------------------------------
STRIPS,
6.74%, 10/09/19(c) 1,000,000 527,854
- -----------------------------------------------------------------------------------
7.37%, 10/09/19(c) 800,000 422,283
===================================================================================
1,815,380
===================================================================================
PRIVATE EXPORT FUNDING CORP.-0.53%
Private Export Funding Corp. Series G, Sec. Gtd.
Notes, 6.67%, 09/15/09 6,601,000 6,682,972
===================================================================================
TENNESSEE VALLEY AUTHORITY-0.45%
Tennessee Valley Authority Series A, Bonds, 6.79%,
05/23/12 5,000,000 5,687,546
===================================================================================
Total U.S. Government Sponsored Agency
Securities (Cost $203,104,532) 206,180,009
===================================================================================
U.S. TREASURY SECURITIES-1.60%
U.S. TREASURY BILLS-0.04%
0.22%, 07/30/09(b)(c) 130,000 129,976
- -----------------------------------------------------------------------------------
0.24%, 07/30/09(b)(c) 110,000 109,980
- -----------------------------------------------------------------------------------
0.49%, 10/22/09(b)(c) 300,000 299,823
===================================================================================
539,779
===================================================================================
U.S. TREASURY NOTES-1.14%
4.63%, 07/31/09(b) 8,346,000 8,370,290
- -----------------------------------------------------------------------------------
3.13%, 11/30/09(b) 160,000 161,856
- -----------------------------------------------------------------------------------
3.13%, 05/15/19 6,000,000 5,803,125
===================================================================================
14,335,271
===================================================================================
U.S. TREASURY BONDS-0.42%
7.50%, 11/15/24(b) 2,815,000 3,871,944
- -----------------------------------------------------------------------------------
7.63%, 02/15/25(b) 550,000 766,563
- -----------------------------------------------------------------------------------
6.88%, 08/15/25(b) 500,000 655,234
===================================================================================
5,293,741
===================================================================================
Total U.S. Treasury Securities (Cost
$19,342,156) 20,168,791
===================================================================================
FOREIGN SOVEREIGN BONDS-0.31%
SOVEREIGN DEBT-0.31%
Israel Government Agency for International
Development (AID) Bond (Israel), Gtd. Global
Bonds, 5.13%, 11/01/24 (Cost $3,832,103) 3,800,000 3,910,947
===================================================================================
<Caption>
SHARES
MONEY MARKET FUNDS-1.74%
Government & Agency Portfolio-Institutional Class
(Cost $21,958,071)(d) 21,958,071 21,958,071
===================================================================================
TOTAL INVESTMENTS-106.94% (Cost $1,327,033,866) 1,346,356,022
===================================================================================
OTHER ASSETS LESS LIABILITIES-(6.94)% (87,346,619)
===================================================================================
NET ASSETS-100.00% $1,259,009,403
___________________________________________________________________________________
===================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. GOVERNMENT SECURITIES FUND
Investment Abbreviations:
<Table>
Ctfs. - Certificates
Deb. - Debentures
Disc. - Discounted
Gtd. - Guaranteed
REMIC - Real Estate Mortgage Investment Conduits
Sec. - Secured
Sr. - Senior
STRIPS - Separately Traded Registered Interest and Principal Security
TBA - To Be Announced
Unsec. - Unsecured
</Table>
Notes to Schedule of Investments:
(a) Security purchased on forward commitment basis. This security is subject
to dollar roll transactions. See Note 1J.
(b) All or a portion of the value was pledged as collateral to cover margin
requirements for open futures contracts. See Note 1M and Note 4.
(c) Security traded on a discount basis. The interest rate shown represents
the discount rate at the time of purchase by the Fund.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
PORTFOLIO COMPOSITION
By security type, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
U.S. Government Sponsored Mortgage-Backed Securities 86.9%
- -------------------------------------------------------------------------
U.S. Government Sponsored Agency Securities 16.4
- -------------------------------------------------------------------------
U.S. Treasury Securities 1.6
- -------------------------------------------------------------------------
U.S. Dollar Denominated Bonds & Notes 0.3
- -------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities (5.2)
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. GOVERNMENT SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $1,305,075,795) $1,324,397,951
- ----------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 21,958,071
==================================================================================
Total investments, at value (Cost $1,327,033,866) 1,346,356,022
==================================================================================
Receivables for:
Fund shares sold 211,946
- ----------------------------------------------------------------------------------
Dividends and Interest 6,283,643
- ----------------------------------------------------------------------------------
Fund expenses absorbed 6,451
- ----------------------------------------------------------------------------------
Principal paydowns 15,242
- ----------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 34,241
- ----------------------------------------------------------------------------------
Other assets 8,665
==================================================================================
Total assets 1,352,916,210
__________________________________________________________________________________
==================================================================================
LIABILITIES:
Payables for:
Investments purchased 89,542,703
- ----------------------------------------------------------------------------------
Fund shares reacquired 2,205,763
- ----------------------------------------------------------------------------------
Amount due custodian 70,592
- ----------------------------------------------------------------------------------
Variation margin 926,339
- ----------------------------------------------------------------------------------
Accrued fees to affiliates 856,875
- ----------------------------------------------------------------------------------
Accrued other operating expenses 191,571
- ----------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 112,964
==================================================================================
Total liabilities 93,906,807
==================================================================================
Net assets applicable to shares outstanding $1,259,009,403
__________________________________________________________________________________
==================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,170,704,525
- ----------------------------------------------------------------------------------
Undistributed net investment income 87,135,280
- ----------------------------------------------------------------------------------
Undistributed net realized gain (loss) (20,682,808)
- ----------------------------------------------------------------------------------
Unrealized appreciation 21,852,406
==================================================================================
$1,259,009,403
__________________________________________________________________________________
==================================================================================
NET ASSETS:
Series I $1,241,879,491
__________________________________________________________________________________
==================================================================================
Series II $ 17,129,912
__________________________________________________________________________________
==================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 96,984,528
__________________________________________________________________________________
==================================================================================
Series II 1,347,460
__________________________________________________________________________________
==================================================================================
Series I:
Net asset value per share $ 12.80
__________________________________________________________________________________
==================================================================================
Series II:
Net asset value per share $ 12.71
__________________________________________________________________________________
==================================================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Interest $ 31,513,791
- ------------------------------------------------------
Dividends from affiliated money market
funds 106,770
======================================================
Total investment income 31,620,561
======================================================
EXPENSES:
Advisory fees 3,274,120
- ------------------------------------------------------
Administrative services fees 1,918,383
- ------------------------------------------------------
Custodian fees 55,051
- ------------------------------------------------------
Distribution fees -- Series II 23,953
- ------------------------------------------------------
Transfer agent fees 8,826
- ------------------------------------------------------
Trustees' and officers' fees and
benefits 34,910
- ------------------------------------------------------
Other 71,114
======================================================
Total expenses 5,386,357
======================================================
Less: Fees waived and expense offset
arrangement(s) (174,660)
======================================================
Net expenses 5,211,697
======================================================
Net investment income 26,408,864
======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (256,539)
- ------------------------------------------------------
Futures contracts (12,484,341)
======================================================
(12,740,880)
======================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 6,472,563
- ------------------------------------------------------
Futures contracts (49,044,547)
======================================================
(42,571,984)
======================================================
Net realized and unrealized gain (loss) (55,312,864)
======================================================
Net increase (decrease) in net assets
resulting from operations $(28,904,000)
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. GOVERNMENT SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- -----------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 26,408,864 $ 54,372,123
- -----------------------------------------------------------------------------------------------------------
Net realized gain (loss) (12,740,880) 53,200,708
- -----------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (42,571,984) 58,547,019
===========================================================================================================
Net increase (decrease) in net assets resulting from operations (28,904,000) 166,119,850
===========================================================================================================
Distributions to shareholders from net investment income:
Series I -- (56,114,206)
- -----------------------------------------------------------------------------------------------------------
Series II -- (694,714)
===========================================================================================================
Total distributions from net investment income -- (56,808,920)
===========================================================================================================
Share transactions-net:
Series I (321,445,578) 314,015,739
- -----------------------------------------------------------------------------------------------------------
Series II (2,802,211) 79,644
===========================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (324,247,789) 314,095,383
===========================================================================================================
Net increase (decrease) in net assets (353,151,789) 423,406,313
===========================================================================================================
NET ASSETS:
Beginning of period 1,612,161,192 1,188,754,879
===========================================================================================================
End of period (includes undistributed net investment income of
$87,135,280 and $60,726,416, respectively) $1,259,009,403 $1,612,161,192
___________________________________________________________________________________________________________
===========================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Government Securities Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is a high level of current income consistent
with reasonable concern for safety of principal.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
A security listed or traded on an exchange (except convertible bonds) is
valued at its 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, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date. Bond premiums
and discounts are amortized and/or accreted for financial reporting
purposes.
AIM V.I. GOVERNMENT SECURITIES FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. OTHER RISKS -- The Funds may invest in obligations issued by agencies and
instrumentalities of the U.S. Government that may vary in the level of
support they receive from the government. The government may choose not to
provide financial support to government sponsored agencies or
instrumentalities if it is not legally obligated to do so. In this 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. Many securities purchased by the Fund are not guaranteed by
the U.S. Government.
J. DOLLAR ROLL AND FORWARD COMMITMENT TRANSACTIONS -- The Fund may engage in
dollar roll and forward commitment transactions with respect to mortgage-
backed securities issued by GNMA, FNMA and FHLMC. These transactions are
often conducted on a to be announced ("TBA") basis. In a TBA mortgage-
backed transaction, the seller does not specify the particular securities
to be delivered. Rather, a Fund agrees to accept any security that meets
specified terms, such as an agreed upon issuer, coupon rate and terms of
the underlying mortgages. TBA mortgage-backed transactions generally
settle once a month on a specific date.
In a dollar roll transaction, the Fund sells a mortgage-backed security
held in the Fund to a financial institution such as a bank or broker-
dealer, and simultaneously agrees to purchase a substantially similar
security (same type, coupon and maturity) from the institution at an
agreed upon price and future date. The mortgage-backed securities to be
purchased will bear the same coupon as those sold, but generally will be
collateralized by different pools of mortgages with different prepayment
histories. Based on the typical structure of dollar roll transactions by
the Fund, the dollar roll transactions are accounted for as financing
transactions in which the Fund receives compensation as either a "fee" or
a "drop". "Fee" income which is agreed upon amongst the parties at the
commencement of the dollar roll and the "drop" which is the difference
between the selling price and the repurchase price of the mortgage-backed
securities are amortized to income. During the period between the sale and
purchase settlement dates, the Fund will not be entitled to receive
interest and principal payments on securities purchased and not yet
settled. Proceeds of the sale may be invested in short-term instruments,
and the income from these investments, together with any additional fee
income received on the sale, could generate income for the Fund exceeding
the yield on the security sold. Dollar roll transactions are considered
borrowings under the 1940 Act.
AIM V.I. GOVERNMENT SECURITIES FUND
Forward commitment transactions involve commitments by the Fund to
acquire or sell TBA mortgage-backed securities from/to a financial
institution, such as a bank or broker-dealer at a specified future date
and amount. The TBA mortgage-backed security is marked to market until
settlement and the unrealized appreciation or depreciation is recorded in
the statement of operations.
At the time the Fund enters into the dollar roll or forward commitment
transaction, mortgage-backed securities or other liquid assets held by the
Fund having a dollar value equal to the purchase price or in an amount
sufficient to honor the forward commitment will be segregated.
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 purchase under the
agreement. In the event that the buyer of securities in a dollar roll
transaction files for bankruptcy or becomes insolvent, the Fund's use of
the proceeds from the sale of the securities may be restricted pending a
determination by the other party, or its trustee or receiver, whether to
enforce the Fund's obligation to purchase the securities. The return
earned by the Fund with the proceeds of the dollar roll transaction may
not exceed the return on the securities sold.
Forward commitment transactions involve the risk that a counter-party to
the transaction may fail to complete the transaction. If this occurs, the
Fund may lose the opportunity to purchase or sell the security at the
agreed upon price. Settlement dates of forward commitment transactions may
be a month or more after entering into these transactions and as a result
the market values of the securities may vary from the purchase or sale
prices. Therefore, forward commitment transactions may increase the Fund's
overall interest rate exposure.
K. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
Reported net realized foreign currency gains or losses arise from (i)
sales of foreign currencies, (ii) currency gains or losses realized
between the trade and settlement dates on securities transactions, and
(iii) the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency gains and losses arise from changes in the fair values of
assets and liabilities, other than investments in securities at fiscal
period end, resulting from changes in exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
L. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed, realized gains (losses) are
recorded. Realized and unrealized gains (losses) on the contracts are
included in the Statement of Operations. The maximum risks associated with
foreign currency contracts include failure of the counterparty to meet the
terms of the contract and the value of the foreign currency changing
unfavorably. These risks may be in excess of the amounts reflected in the
Statement of Assets and Liabilities.
M. FUTURES CONTRACTS -- The Fund may enter into futures contracts to manage
exposure to interest rate and equity price movements and currency risks. A
futures contract is an agreement between two parties to purchase or sell a
specified underlying instrument for a fixed price at a future date. The
Fund currently invests only in exchange-traded futures and they are
standardized as to maturity date and underlying financial instrument.
Initial margin deposits required upon entering into futures contracts are
satisfied by the segregation of specific securities as collateral for the
account of the broker (the Fund's agent in acquiring the futures
position). During the period the futures contracts are open, changes in
the value of the contracts are recognized as unrealized gains or losses by
recalculating the value of the contracts on a daily basis. Subsequent or
variation margin payments are received or made depending upon whether
unrealized gains or losses are incurred. These amounts are reflected as
receivables or payables on the Statement of Assets and Liabilities. When
the contracts are closed or expire, the Fund recognizes a realized gain or
loss equal to the difference between the proceeds from, or cost of, the
closing transaction and the Fund's basis in the contract. The net realized
gain (loss) and the change in unrealized gain (loss) on futures contracts
held during the period is included on the Statement of Operations. The
primary risks associated with futures contracts are market risk and the
absence of a liquid secondary market. If the Fund were unable to liquidate
a futures contract and/or enter into an offsetting closing transaction,
the Fund would continue to be subject to market risk with respect to the
value of the contracts and continue to be required to maintain the margin
deposits on the futures contracts. Futures contracts have minimal
counterparty risk since the exchange's clearinghouse, as counterparty to
all exchange traded futures, guarantees the futures against default. Risks
may exceed amounts recognized in the Statement of Assets and Liabilities.
N. COLLATERAL -- To the extent the Fund has pledged or segregated a security
as collateral and that security is subsequently sold, it is the Fund's
practice to replace such collateral no later than the next business day.
AIM V.I. GOVERNMENT SECURITIES FUND
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
First $250 million 0.50%
- -------------------------------------------------------------------
Over $250 million 0.45%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 0.73% and Series
II shares to 0.98% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, the only 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. These credits are used to pay certain expenses incurred by the
Fund.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash in such affiliated money market
funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$174,529.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $169,135 for accounting and fund
administrative services and reimbursed $1,749,248 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
AIM V.I. GOVERNMENT SECURITIES FUND
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- --------------------------------------------------------------------------------------------------------------------------
Equity Securities $21,958,071 $ -- $-- $ 21,958,071
- --------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Securities 20,168,791 -- 20,168,791
- --------------------------------------------------------------------------------------------------------------------------
U.S. Government Sponsored Agency Securities 1,300,318,213 -- 1,300,318,213
- --------------------------------------------------------------------------------------------------------------------------
Foreign Government Debt Securities 3,910,947 -- 3,910,947
==========================================================================================================================
1,346,356,022
==========================================================================================================================
Other Investments* 2,530,250 -- 2,530,250
==========================================================================================================================
Total Investments $24,488,321 1,324,397,951 $-- $1,348,886,272
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
* Other investments include futures, which are included at unrealized
appreciation.
NOTE 4--DERIVATIVE INVESTMENTS
Effective with the beginning of the Fund's fiscal year, the Fund has adopted the
provisions of FASB Statement No. 161, Disclosures about Derivative Instruments
and Hedging Activities. The standard is intended to improve financial reporting
about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an
entity's financial position and financial performance. The adoption of this
provision has no impact on the results of operations reported in the financial
statements.
VALUE OF DERIVATIVE INSTRUMENTS AT PERIOD-END
The Table below summarizes the value of the Fund's derivative instruments,
detailed by primary risk exposure, held as of June 30, 2009:
<Table>
<Caption>
VALUE
--------------------------
RISK EXPOSURE/ DERIVATIVE TYPE ASSETS LIABILITIES
- -------------------------------------------------------------------------------------------------------
Interest rate risk
Futures contracts(a) $5,334,576 $(2,804,326)
_______________________________________________________________________________________________________
=======================================================================================================
</Table>
(a) Includes cumulative appreciation (depreciation) of futures contracts. Only
current day's variation margin receivable (payable) is reported within the
Statement of Assets & Liabilities.
EFFECT OF DERIVATIVE INSTRUMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009
The table below summarizes the gains (losses) on derivative instruments,
detailed by primary risk exposure, recognized in earnings during the period:
<Table>
<Caption>
LOCATION OF GAIN (LOSS) ON
STATEMENT OF OPERATIONS
--------------------------
FUTURES*
- ------------------------------------------------------------------------------------------------------
Realized Gain (Loss)
Interest rate risk $(12,484,341)
======================================================================================================
Change in Unrealized Appreciation (Depreciation)
Interest rate risk (49,044,547)
======================================================================================================
Total $(61,528,888)
______________________________________________________________________________________________________
======================================================================================================
</Table>
* The average value outstanding of futures during the period was $821,426,016.
AIM V.I. GOVERNMENT SECURITIES FUND
FUTURES CONTRACTS AT PERIOD-END
<Table>
<Caption>
OPEN FUTURES CONTRACTS
- ---------------------------------------------------------------------------------------------------------------------------
UNREALIZED
NUMBER OF MONTH/ APPRECIATION
CONTRACT CONTRACTS COMMITMENT VALUE (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------------------------
U.S. Treasury 2 Year Notes 652 September-2009/Long $140,974,625 $ (299,818)
- ---------------------------------------------------------------------------------------------------------------------------
U.S. Treasury 5 Year Notes 2,655 September-2009/Long 304,578,281 (2,473,146)
- ---------------------------------------------------------------------------------------------------------------------------
U.S. Treasury 10 Year Notes 843 September-2009/Long 98,011,922 754,553
- ---------------------------------------------------------------------------------------------------------------------------
U.S. Treasury 30 Year Bonds 1,763 September-2009/Long 208,667,578 4,548,661
===========================================================================================================================
Total $752,232,406 $ 2,530,250
___________________________________________________________________________________________________________________________
===========================================================================================================================
</Table>
NOTE 5--EXPENSE OFFSET ARRANGEMENT
The expense offset arrangement is comprised of custodian credits which result
from periodic overnight cash balances at the custodian. For the six months ended
June 30, 2009, the Fund received credits from this arrangement, which resulted
in the reduction of the Fund's total expenses of $131.
NOTE 6--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $3,438
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 7--CASH BALANCES
The Fund may borrow for leveraging in an amount up to 5% of the Fund's total
assets (excluding the amount borrowed) at the time the borrowing is made. In
doing so, the Fund is permitted to temporarily carry a negative or overdrawn
balance in its account with The State Street Bank and Trust Company, the
custodian bank. To compensate the custodian bank for such overdrafts, the
overdrawn Fund may either (i) leave funds as a compensating balance in the
account so the custodian bank can be compensated by earning the additional
interest; or (ii) compensate by paying the custodian bank at a rate agreed upon
by the custodian bank and Invesco Aim, not to exceed the contractually agreed
upon rate. A Fund may not purchase additional securities when any borrowings
from banks exceeds 5% of the Fund's total assets.
NOTE 8--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
The Fund did not have a capital loss carryforward as of December 31, 2008.
NOTE 9--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $329,716,927 and
$484,370,670, respectively. During the same period, purchases and sales of U.S.
Treasury obligations were $51,147,432 and $45,847,830. Cost of investments on a
tax basis includes the adjustments for financial reporting purposes as of the
most recently completed Federal income tax reporting period end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- -----------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $21,157,011
- -----------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (268,956)
===============================================================================================
Net unrealized appreciation of investment securities $20,888,055
_______________________________________________________________________________________________
===============================================================================================
Cost of investments for tax purposes is $1,325,467,967.
</Table>
AIM V.I. GOVERNMENT SECURITIES FUND
NOTE 10--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- --------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 5,379,022 $ 69,318,378 42,340,755 $ 529,835,003
- --------------------------------------------------------------------------------------------------------------------------
Series II 286,338 3,670,638 722,852 8,979,278
==========================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 4,387,350 56,114,206
- --------------------------------------------------------------------------------------------------------------------------
Series II -- -- 54,659 694,714
==========================================================================================================================
Reacquired:
Series I (30,386,510) (390,763,956) (21,773,179) (271,933,470)
- --------------------------------------------------------------------------------------------------------------------------
Series II (508,762) (6,472,849) (772,520) (9,594,348)
==========================================================================================================================
Net increase (decrease) in share activity (25,229,912) $(324,247,789) 24,959,917 $ 314,095,383
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 94% of the
outstanding shares of the Fund. IADI has an agreement with these entities
to sell Fund shares. The Fund, Invesco Aim and/or Invesco Aim affiliates
may make payments to these entities, which are considered to be related to
the Fund, for providing services to the Fund, Invesco Aim and/or Invesco
Aim affiliates including but not limited to services such as securities
brokerage, distribution, third party record keeping and account servicing.
The Trust has no knowledge as to whether all or any portion of the shares
owned of record by these entities are also owned beneficially.
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
(LOSSES)
NET ASSET ON SECURITIES DIVIDENDS
VALUE, NET (BOTH TOTAL FROM FROM NET NET ASSET NET ASSETS,
BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT VALUE, END TOTAL END OF PERIOD
OF PERIOD INCOME(a) UNREALIZED) OPERATIONS INCOME OF PERIOD RETURN(b) (000S OMITTED)
- ------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $13.05 $0.24 $(0.49) $(0.25) $ -- $12.80 (1.92)% $1,241,879
Year ended 12/31/08 12.06 0.50 0.96 1.46 (0.47) 13.05 12.22 1,591,799
Year ended 12/31/07 11.80 0.59 0.16 0.75 (0.49) 12.06 6.43 1,169,985
Year ended 12/31/06 11.87 0.55 (0.13) 0.42 (0.49) 11.80 3.55 907,403
Year ended 12/31/05 12.07 0.45 (0.25) 0.20 (0.40) 11.87 1.66 812,824
Year ended 12/31/04 12.23 0.40 (0.09) 0.31 (0.47) 12.07 2.56 652,226
- ------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 12.97 0.22 (0.48) (0.26) -- 12.71 (2.00) 17,130
Year ended 12/31/08 11.99 0.46 0.97 1.43 (0.45) 12.97 11.98 20,362
Year ended 12/31/07 11.74 0.56 0.15 0.71 (0.46) 11.99 6.11 18,770
Year ended 12/31/06 11.81 0.52 (0.13) 0.39 (0.46) 11.74 3.28 16,218
Year ended 12/31/05 12.01 0.41 (0.24) 0.17 (0.37) 11.81 1.41 18,863
Year ended 12/31/04 12.17 0.36 (0.08) 0.28 (0.44) 12.01 2.27 17,728
______________________________________________________________________________________________________________________________
==============================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
WITH FEE WAIVERS FEE WAIVERS INCOME
AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
ABSORBED ABSORBED NET ASSETS TURNOVER(c)
- ---------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 0.73%(d) 0.75%(d) 3.70%(d) 28%
Year ended 12/31/08 0.73 0.76 3.96 109
Year ended 12/31/07 0.73 0.76 4.93 106
Year ended 12/31/06 0.71 0.77 4.62 89
Year ended 12/31/05 0.85 0.88 3.68 174
Year ended 12/31/04 0.87 0.87 3.20 95
- ---------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 0.98(d) 1.00(d) 3.45(d) 28
Year ended 12/31/08 0.98 1.01 3.71 109
Year ended 12/31/07 0.98 1.01 4.68 106
Year ended 12/31/06 0.96 1.02 4.37 89
Year ended 12/31/05 1.10 1.13 3.43 174
Year ended 12/31/04 1.12 1.12 2.95 95
_______________________________________________________________________________________
=======================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Total returns are not annualized for periods less than one
year, if applicable and do not reflect charges assessed in connection with
a variable product, which if included would reduce total returns.
(c) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(d) Ratios are annualized and based on average daily net assets (000's omitted)
of $1,420,124 and $19,321 for Series I and Series II shares, respectively.
AIM V.I. GOVERNMENT SECURITIES FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $980.80 $3.59 $1,021.17 $3.66 0.73%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 980.00 4.81 1,019.93 4.91 0.98
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. GOVERNMENT SECURITIES FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM In addition to their meetings particular factor that was controlling.
Variable Insurance Funds is required under throughout the year, the Sub-Committees Each Trustee may have evaluated the
the Investment Company Act of 1940 to meet at designated contract renewal information provided differently from
approve annually the renewal of the AIM meetings each year to conduct an in-depth another Trustee and attributed different
V.I. Government Securities Fund (the Fund) review of the performance, fees, expenses, weight to the various factors. The
investment advisory agreement with Invesco and other matters related to their Trustees recognized that the advisory
Aim Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract arrangements and resulting advisory fees
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive for the Fund and the other AIM Funds are
for Mutual Funds (the sub-advisory comparative performance and fee data the result of years of review and
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an negotiation between the Trustees and
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Invesco Aim, that the Trustees may focus
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and to a greater extent on certain aspects of
Limited, Invesco Australia Limited, supervision of the Senior Officer who also these arrangements in some years than in
Invesco Global Asset Management (N.A.), prepares a separate analysis of this others, and that the Trustees'
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each deliberations and conclusions in a
Institutional (N.A.), Inc., Invesco Senior Sub-Committee then makes recommendations particular year may be based in part on
Secured Management, Inc. and Invesco to the Investments Committee regarding the their deliberations and conclusions
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. regarding these same arrangements
Sub-Advisers). During contract renewal The Investments Committee considers each throughout the year and in prior years.
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes
Board as a whole, and the disinterested or its own recommendations regarding the fees The discussion below serves as a
"independent" Trustees voting separately, and expenses of the AIM Funds to the full summary of the Senior Officer's
approved the continuance of the Fund's Board. The Investments Committee also independent written evaluation with
investment advisory agreement and the considers each Sub-Committee's respect to the Fund's investment advisory
sub-advisory contracts for another year, recommendations in making its annual agreement as well as a discussion of the
effective July 1, 2009. In doing so, the recommendation to the Board whether to material factors and related conclusions
Board determined that the Fund's approve the continuance of each AIM Fund's that formed the basis for the Board's
investment advisory agreement and the investment advisory agreement and approval of the Fund's investment advisory
sub-advisory contracts are in the best sub-advisory contracts for another year. agreement and sub-advisory contracts.
interests of the Fund and its shareholders Unless otherwise stated, information set
and that the compensation to Invesco Aim The independent Trustees met separately forth below is as of June 17, 2009, and
and the Affiliated Sub-Advisers under the during their evaluation of the Fund's does not reflect any changes that may have
Fund's investment advisory agreement and investment advisory agreement and occurred since that date, including but
sub-advisory contracts is fair and sub-advisory contracts with independent not limited to changes to the Fund's
reasonable. legal counsel. The independent Trustees performance, advisory fees, expense
were also assisted in their annual limitations and/or fee waivers.
THE BOARD'S FUND EVALUATION PROCESS evaluation of the Fund's investment
advisory agreement by the Senior Officer. FACTORS AND CONCLUSIONS AND SUMMARY OF
The Board's Investments Committee has One responsibility of the Senior Officer INDEPENDENT WRITTEN FEE EVALUATION
established three Sub-Committees that are is to manage the process by which the AIM
responsible for overseeing the management Funds' proposed management fees are A. Nature, Extent and Quality of
of a number of the series portfolios of negotiated during the annual contract Services Provided by Invesco Aim
the AIM Funds. This Sub-Committee renewal process to ensure that they are
structure permits the Trustees to focus on negotiated in a manner that is at arms' The Board reviewed the advisory
the performance of the AIM Funds that have length and reasonable. Accordingly, the services provided to the Fund by Invesco
been assigned to them. The Sub-Committees Senior Officer must either supervise a Aim under the Fund's investment advisory
meet throughout the year to review the competitive bidding process or prepare an agreement, the performance of Invesco Aim
performance of their assigned funds, and independent written evaluation. The Senior in providing these services, and the
the Sub-Committees review monthly and Officer recommended that an independent credentials and experience of the officers
quarterly comparative performance written evaluation be provided and, at the and employees of Invesco Aim who provide
information and periodic asset flow data direction of the Board, prepared an these services. The Board's review of the
for their assigned funds. These materials independent written evaluation. qualifications of Invesco Aim to provide
are prepared under the direction and these services included the Board's
supervision of the independent Senior During the annual contract renewal consideration of Invesco Aim's portfolio
Officer, an officer of the AIM Funds who process, the Board considered the factors and product review process, various back
reports directly to the independent discussed below in evaluating the fairness office support functions provided by
Trustees. Over the course of each year, and reasonableness of the Fund's Invesco Aim and its affiliates, and
the Sub-Committees meet with portfolio investment advisory agreement and Invesco Aim's equity and fixed income
managers for their assigned funds and sub-advisory contracts. The Board trading operations. The Board concluded
other members of management and review considered all of the information provided that the nature, extent and quality of the
with these individuals the performance, to them, including information provided at advisory services provided to the Fund by
investment objective(s), policies, their meetings throughout the year as part Invesco Aim are appropriate and that
strategies and limitations of these funds. of their ongoing oversight of the Fund, Invesco Aim currently is providing
and did not identify any satisfactory advisory services in
accordance with the terms of the Fund's
investment advisory
AIM V.I. GOVERNMENT SECURITIES FUND continued
agreement. In addition, based on their C. Fund Performance with investment strategies comparable
ongoing meetings throughout the year with to those of the Fund.
the Fund's portfolio manager or managers, The Board considered fund performance
the Board concluded that these individuals as a relevant factor in considering The Board noted that Invesco Aim has
are competent and able to continue to whether to approve the investment advisory contractually agreed to waive fees and/or
carry out their responsibilities under the agreement as well as the sub-advisory limit expenses of the Fund through at
Fund's investment advisory agreement. contracts for the Fund, as Invesco least April 30, 2010 in an amount
Institutional currently manages assets of necessary to limit total annual operating
In determining whether to continue the the Fund. expenses to a specified percentage of
Fund's investment advisory agreement, the average daily net assets for each class of
Board considered the prior relationship The Board compared the Fund's the Fund. The Board also considered the
between Invesco Aim and the Fund, as well performance during the past one, three and effect this expense limitation would have
as the Board's knowledge of Invesco Aim's five calendar years to the performance of on the Fund's estimated total expenses.
operations, and concluded that it is all funds in the Lipper performance
beneficial to maintain the current universe that are not managed by Invesco The Board also considered the services
relationship, in part, because of such Aim or an Affiliated Sub-Adviser, and provided by the Affiliated Sub-Advisers
knowledge. The Board also considered the against the Lipper VA Underlying Funds - pursuant to the sub-advisory contracts and
steps that Invesco Aim and its affiliates General U.S. Government Index. The Board the services provided by Invesco Aim
continue to take to improve the quality noted that the Fund's performance was in pursuant to the Fund's advisory agreement,
and efficiency of the services they the first quintile of its performance as well as the allocation of fees between
provide to the AIM Funds in the areas of universe for the one, three and five year Invesco Aim and the Affiliated
investment performance, product line periods (the first quintile being the best Sub-Advisers pursuant to the sub-advisory
diversification, distribution, fund performing funds and the fifth quintile contracts. The Board noted that the
operations, shareholder services and being the worst performing funds). The sub-advisory fees have no direct effect on
compliance. The Board concluded that the Board noted that the Fund's performance the Fund or its shareholders, as they are
quality and efficiency of the services was above the performance of the Index for paid by Invesco Aim to the Affiliated
Invesco Aim and its affiliates provide to the one, three and five year periods. Sub-Advisers, and that Invesco Aim and the
the AIM Funds in each of these areas Although the independent written Affiliated Sub-Advisers are affiliates.
support the Board's approval of the evaluation of the Fund's Senior Officer
continuance of the Fund's investment only considered Fund performance through After taking account of the Fund's
advisory agreement. the most recent calendar year, the Board contractual advisory fee rate, the
also reviewed more recent Fund performance contractual sub-advisory fee rate, the
B. Nature, Extent and Quality of and this review did not change their comparative advisory fee information
Services Provided by Affiliated conclusions. The Board noted that, in discussed above, the expense limitations
Sub-Advisers response to the Board's focus on fund and other relevant factors, the Board
performance, Invesco Aim has taken a concluded that the Fund's advisory and
The Board reviewed the services number of actions intended to improve the sub-advisory fees are fair and reasonable.
provided by the Affiliated Sub-Advisers investment process for the funds.
under the sub-advisory contracts and the E. Economies of Scale and Breakpoints
credentials and experience of the officers D. Advisory and Sub-Advisory Fees and
and employees of the Affiliated Fee Waivers The Board considered the extent to
Sub-Advisers who provide these services. which there are economies of scale in the
The Board concluded that the nature, The Board compared the Fund's provision of advisory services to the
extent and quality of the services contractual advisory fee rate to the Fund. The Board also considered whether
provided by the Affiliated Sub-Advisers contractual advisory fee rates of funds in the Fund benefits from such economies of
are appropriate. The Board noted that the the Fund's Lipper expense group that are scale through contractual breakpoints in
Affiliated Sub-Advisers, which have not managed by Invesco Aim or an the Fund's advisory fee schedule. The
offices and personnel that are Affiliated Sub-Adviser, at a common asset Board noted that the Fund's contractual
geographically dispersed in financial level. The Board noted that the Fund's advisory fee schedule includes one
centers around the world, can provide contractual advisory fee rate was below breakpoint and that the level of the
research and other information and make the median contractual advisory fee rate Fund's advisory fees, as a percentage of
recommendations on the markets and of funds in its expense group. The Board the Fund's net assets, has decreased as
economies of various countries and also reviewed the methodology used by net assets increased because of the
securities of companies located in such Lipper in determining contractual fee breakpoint. Based on this information, the
countries or on various types of rates, which includes using audited Board concluded that the Fund's advisory
investments and investment techniques. The financial data from the most recent annual fees appropriately reflect economies of
Board noted that investment decisions for report of each fund in the expense group scale at current asset levels. The Board
the Fund are made by Invesco Institutional that was publicly available as of the end also noted that the Fund shares directly
(N.A.), Inc. (Invesco Institutional). The of the past calendar year. The Board noted in economies of scale through lower fees
Board concluded that the sub-advisory that some comparative data was at least charged by third party service providers
contracts benefit the Fund and its one year old and did not reflect the based on the combined size of all of the
shareholders by permitting Invesco Aim to market downturn that occurred in the AIM Funds and affiliates.
utilize the additional resources and fourth quarter of 2008. The Board noted
talent of the Affiliated Sub-Advisers in that neither Invesco Aim nor its F. Profitability and Financial
managing the Fund. affiliates serve as an adviser to other Resources
domestic mutual funds or other domestic
clients The Board reviewed information from
Invesco Aim concerning the costs of the
advisory and other services that Invesco
Aim and its affiliates provide to the Fund
AIM V.I. GOVERNMENT SECURITIES FUND continued
and the profitability of Invesco Aim affiliates are providing these services
and its affiliates in providing these in a satisfactory manner and in accordance
services. The Board also reviewed with the terms of their contracts, and are
information concerning the financial qualified to continue to provide these
condition of Invesco Aim and its services to the Fund.
affiliates. The Board reviewed with
Invesco Aim the methodology used to The Board considered the benefits
prepare the profitability information. The realized by Invesco Aim and the Affiliated
Board considered the overall profitability Sub-Advisers as a result of portfolio
of Invesco Ltd., the ultimate parent of brokerage transactions executed through
Invesco Aim and the Affiliated "soft dollar" arrangements. The Board
Sub-Advisers, and of Invesco Aim, as well noted that soft dollar arrangements shift
as the profitability of Invesco Aim in the payment obligation for research and
connection with managing the Fund. The execution services from Invesco Aim and
Board noted that Invesco Aim continues to the Affiliated Sub-Advisers to the funds
operate at a net profit, although the and therefore may reduce Invesco Aim's and
reduction of assets under management as a the Affiliated Sub-Advisers' expenses. The
result of market movements and the Board concluded that Invesco Aim's and the
increase in voluntary fee waivers for Affiliated Sub-Advisers' soft dollar
affiliated money market funds have reduced arrangements are appropriate. The Board
the profitability of Invesco Aim and its also concluded that, based on their review
affiliates. The Board concluded that the and representations made by the Chief
Fund's fees are fair and reasonable, and Compliance Officer of Invesco Aim, these
that the level of profits realized by arrangements are consistent with
Invesco Aim and its affiliates from regulatory requirements.
providing services to the Fund is not
excessive in light of the nature, quality The Board considered the fact that the
and extent of the services provided. The Fund's uninvested cash and cash collateral
Board considered whether Invesco Aim is from any securities lending arrangements
financially sound and has the resources may be invested in money market funds
necessary to perform its obligations under advised by Invesco Aim pursuant to
the Fund's investment advisory agreement, procedures approved by the Board. The
and concluded that Invesco Aim has the Board noted that Invesco Aim will receive
financial resources necessary to fulfill advisory fees from these affiliated money
these obligations. The Board also market funds attributable to such
considered whether each Affiliated investments, although Invesco Aim has
Sub-Adviser is financially sound and has contractually agreed to waive through at
the resources necessary to perform its least June 30, 2010, the advisory fees
obligations under the sub-advisory payable by the Fund in an amount equal to
contracts, and concluded that each 100% of the net advisory fees Invesco Aim
Affiliated Sub-Adviser has the financial receives from the affiliated money market
resources necessary to fulfill these funds with respect to the Fund's
obligations. investment in the affiliated money market
funds of uninvested cash, but not cash
G. Collateral Benefits to Invesco Aim collateral. The Board concluded that the
and its Affiliates Fund's investment of uninvested cash and
cash collateral from any securities
The Board considered various other lending arrangements in the affiliated
benefits received by Invesco Aim and its money market funds is in the best
affiliates resulting from Invesco Aim's interests of the Fund and its
relationship with the Fund, including the shareholders.
fees received by Invesco Aim and its
affiliates for their provision of
administrative, transfer agency and
distribution services to the Fund. The
Board considered the performance of
Invesco Aim and its affiliates in
providing these services and the
organizational structure employed by
Invesco Aim and its affiliates to provide
these services. The Board also considered
that these services are provided to the
Fund pursuant to written contracts that
are reviewed and approved on an annual
basis by the Board. The Board concluded
that Invesco Aim and its
AIM V.I. GOVERNMENT SECURITIES FUND
[INVESCO AIM LOGO] AIM V.I. HIGH YIELD FUND
- SERVICE MARK - Semiannual Report to Shareholders - June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal
year, at the quarter-ends. For the second and fourth quarters, the lists appear
in the Fund's semiannual and annual reports to shareholders. For the first and
third quarters, the Fund files the lists with the Securities and Exchange
Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the
SEC Website, sec. gov. Copies of the Fund's Forms N-Q may be reviewed and
copied at the SEC Public Reference Room in Washington, D.C. You can obtain
information on the operation of the Public Reference Room, including information
about duplicating fee charges, by calling 202 942 8090 or 800 732 0330, or by
electronic request at the following E-mail address: publicinfo@sec.gov. The SEC
file numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent
portfolio holdings, as filed on Form N-Q, have also been made available to
insurance companies issuing variable annuity contracts and variable life
insurance policies ("variable products") that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, from our Client Services department at 800 410 4246 or on the
Invesco Aim Web site, invescoaim.com. On the home page, scroll down and click on
Proxy Policy. The information is also available on the SEC Web site, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio
securities during the 12 months ended June 30, 2009, is available at our Web
site. Go to invescoaim.com, access the About Us tab, click on Required Notices
and then click on Proxy Voting Activity. Next, select the Fund from the
drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009,
Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco
Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc.
will be merged into Invesco Institutional (N.A.), Inc., and the consolidated
adviser firm will be renamed Invesco Advisers, Inc. Additional information will
be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND
PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN MORE COMPLETE
INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH
CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
SERIES I SHARES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer Inception (5/1/98) 1.13%
charges. If variable product issuer charges were included, returns would be lower. 10 Year 1.47
5 Years 3.32
Series I Shares 25.75% 1 Year -6.07
Series II Shares 25.47
Barclays Capital U.S. Aggregate Index(Triangle)* (Broad Market Index) 1.90 SERIES II SHARES
Barclays Capital U.S. Corporate High Yield Index(Triangle)* (Style-Specific 10 Years 1.24%
Index) 30.43 5 Years 3.09
Lipper VUF High Current Yield Bond Funds Category Average(Triangle) (Peer 1 Year -6.41
Group) 20.55 ==========================================
(Triangle) Lipper Inc. REFLECT SALES CHARGES, EXPENSES AND FEES
ASSESSED IN CONNECTION WITH A VARIABLE
* Effective 11/3/08, Lehman Brothers indexes were rebranded as Barclays PRODUCT. SALES CHARGES, EXPENSES AND FEES,
Capital indexes. WHICH ARE DETERMINED BY THE VARIABLE
PRODUCT ISSUERS, WILL VARY AND WILL LOWER
The BARCLAYS CAPITAL U.S. AGGREGATE INDEX covers U.S. investment-grade fixed-rate bonds THE TOTAL RETURN.
with components for government and corporate securities, mortgage pass-throughs and
asset-backed securities. THE MOST RECENT MONTH-END PERFORMANCE
DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
The BARCLAYS CAPITAL U.S. CORPORATE HIGH YIELD INDEX covers the universe of fixed PRODUCT CHARGES, IS AVAILABLE ON THE
rate, non-investment grade debt. Pay-in-kind bonds, Eurobonds and debt issues from INVESCO AIM AUTOMATED INFORMATION LINE,
countries designated as emerging markets are excluded, but Canadian and global bonds 866 702 4402. AS MENTIONED ABOVE, FOR THE
(SEC registered) of issuers in non-emerging countries are included. MOST RECENT MONTH-END PERFORMANCE
INCLUDING VARIABLE PRODUCT CHARGES, PLEASE
The LIPPER VUF HIGH CURRENT YIELD BOND FUNDS CATEGORY AVERAGE represents an average CONTACT YOUR VARIABLE PRODUCT ISSUER OR
of all of the variable insurance underlying funds in the Lipper High Current Yield Bond FINANCIAL ADVISOR.
Funds category. These funds have no credit rating restriction, but tend to invest in
fixed-income securities with lower credit ratings. HAD THE ADVISOR NOT WAIVED FEES AND/OR
REIMBURSED EXPENSES, PERFORMANCE WOULD
The Fund is not managed to track the performance of any particular index, including HAVE BEEN LOWER.
the indexes defined here, and consequently, the performance of the Fund may deviate
significantly from the performance of the indexes. (1) Total annual operating expenses less
any contractual fee waivers and/or
A direct investment cannot be made in an index. Unless otherwise indicated, index expense reimbursements by the advisor
results include reinvested dividends, and they do not reflect sales charges. in effect through at least April 30,
Performance of the peer group reflects fund expenses; performance of a market index 2010. See current prospectus for more
does not. information.
=======================================================================================
(2) Total annual operating expenses less
SERIES II SHARES' INCEPTION DATE IS MARCH YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL contractual advisory fee waivers by
26, 2002. RETURNS SINCE THAT DATE ARE SHARES. the advisor in effect through at least
HISTORICAL. ALL OTHER RETURNS ARE THE June 30, 2010. See current prospectus
BLENDED RETURNS OF THE HISTORICAL THE NET ANNUAL FUND OPERATING EXPENSE for more information.
PERFORMANCE OF SERIES II SHARES SINCE RATIO SET FORTH IN THE MOST RECENT FUND
THEIR INCEPTION AND THE RESTATED PROSPECTUS AS OF THE DATE OF THIS REPORT
HISTORICAL PERFORMANCE OF SERIES I SHARES FOR SERIES I AND SERIES II SHARES WAS
(FOR PERIODS PRIOR TO INCEPTION OF SERIES 0.96% AND 1.21%, RESPECTIVELY.(1, 2) THE
II SHARES) ADJUSTED TO REFLECT THE RULE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO
12B-1 FEES APPLICABLE TO SERIES II SHARES. SET FORTH IN THE MOST RECENT FUND
THE INCEPTION DATE OF SERIES I SHARES IS PROSPECTUS AS OF THE DATE OF THIS REPORT
MAY 1, 1998. FOR SERIES I AND SERIES II SHARES WAS
1.23% AND 1.48%, RESPECTIVELY. THE EXPENSE
THE PERFORMANCE OF THE FUND'S SERIES I RATIOS PRESENTED ABOVE MAY VARY FROM THE
AND SERIES II SHARE CLASSES WILL DIFFER EXPENSE RATIOS PRESENTED IN OTHER SECTIONS
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES. OF THIS REPORT THAT ARE BASED ON EXPENSES
INCURRED DURING THE PERIOD COVERED BY THIS
THE PERFORMANCE DATA QUOTED REPRESENT REPORT.
PAST PERFORMANCE AND CANNOT GUARANTEE
COMPARABLE FUTURE RESULTS; CURRENT AIM V.I. HIGH YIELD FUND, A SERIES
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE PORTFOLIO OF AIM VARIABLE INSURANCE FUNDS,
CONTACT YOUR VARIABLE PRODUCT ISSUER OR IS CURRENTLY OFFERED THROUGH INSURANCE
FINANCIAL ADVISOR FOR THE MOST RECENT COMPANIES ISSUING VARIABLE PRODUCTS. YOU
MONTH-END VARIABLE PRODUCT PERFORMANCE. CANNOT PURCHASE SHARES OF THE FUND
PERFORMANCE FIGURES REFLECT FUND EXPENSES, DIRECTLY. PERFORMANCE FIGURES GIVEN
REINVESTED DISTRIBUTIONS AND CHANGES IN REPRESENT THE FUND AND ARE NOT INTENDED TO
NET ASSET VALUE. INVESTMENT RETURN AND REFLECT ACTUAL VARIABLE PRODUCT VALUES.
PRINCIPAL VALUE WILL FLUCTUATE SO THAT THEY DO NOT
AIM V.I. HIGH YIELD FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
BONDS & NOTES-95.93%
AEROSPACE & DEFENSE-0.12%
Alliant Techsystems Inc.,
Sr. Sub. Unsec. Gtd. Notes,
6.75%, 04/01/16 $ 60,000 $ 55,650
===============================================================================
AIRLINES-3.53%
American Airlines,
Series 1999-1, Class A-2, Sec. Notes, Pass
Through Ctfs.,
7.02%, 10/15/09 465,000 463,256
- -------------------------------------------------------------------------------
Series 2009-1A, Sec. Pass Through Ctfs.,
10.38%, 07/02/19 70,000 70,963
- -------------------------------------------------------------------------------
Continental Airlines Inc.,
Pass Through Ctfs.,
9.00%, 07/08/16 165,000 165,825
- -------------------------------------------------------------------------------
Sr. Unsec. Unsub. Notes,
8.75%, 12/01/11 185,000 123,950
- -------------------------------------------------------------------------------
Series 2000-1, Class C-1, Sec. Sub. Pass Through
Ctfs.,
8.50%, 05/01/11 39,186 33,308
- -------------------------------------------------------------------------------
Series 2000-2, Class B, Sec. Sub. Pass Through
Ctfs.,
8.31%, 04/02/18 138,636 106,750
- -------------------------------------------------------------------------------
Series 2001-1, Class B, Sec. Sub. Pass Through
Ctfs.,
7.37%, 12/15/15 113,153 85,430
- -------------------------------------------------------------------------------
Delta Air Lines, Inc.,
Series 2002-1, Class C, Sec. Pass Through Ctfs.,
7.78%, 01/02/12 397,066 373,242
- -------------------------------------------------------------------------------
Series 2007-1, Class C, Sec. Global Pass Through
Ctfs.,
8.95%, 08/10/14 252,191 163,924
- -------------------------------------------------------------------------------
UAL Corporation,-
Series 2007-1, Class B, Sr. Sec. Gtd. Global
Pass Through Ctfs.,
7.34%, 07/02/19(b) 128,997 67,724
- -------------------------------------------------------------------------------
Series 2000-2, Class A-2, Sec. Pass Through
Ctfs.,
7.19%, 04/01/11 49,528 48,537
===============================================================================
1,702,909
===============================================================================
ALTERNATIVE CARRIERS-0.85%
Intelsat Subsidiary Holding Co. Ltd. (Bermuda),
Sr. Unsec. Gtd. Global,
8.50%, 01/15/13 170,000 164,688
- -------------------------------------------------------------------------------
Level 3 Financing Inc.,
Sr. Unsec. Gtd. Unsub. Global Notes,
9.25%, 11/01/14 295,000 244,850
===============================================================================
409,538
===============================================================================
ALUMINUM-1.15%
Century Aluminum Co.,
Sr. Unsec. Gtd. Global Notes,
7.50%, 08/15/14 103,000 72,357
- -------------------------------------------------------------------------------
Novelis Inc. (Canada),
Sr. Unsec. Gtd. Global Notes,
7.25%, 02/15/15 634,000 485,010
===============================================================================
557,367
===============================================================================
APPAREL RETAIL-1.18%
Collective Brands, Inc.,
Sr. Unsec. Gtd. Sub. Global Notes,
8.25%, 08/01/13 350,000 325,500
- -------------------------------------------------------------------------------
Ltd. Brands Inc.,
Sr. Notes,
8.50%, 06/15/19(b) 40,000 38,900
- -------------------------------------------------------------------------------
Sr. Unsec. Notes,
6.13%, 12/01/12 120,000 116,400
- -------------------------------------------------------------------------------
5.25%, 11/01/14 105,000 90,956
===============================================================================
571,756
===============================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-3.05%
American Achievement Corp.,
Sr. Unsec. Gtd. Sub. Notes,
8.25%, 04/01/12(b) 205,000 192,188
- -------------------------------------------------------------------------------
Hanesbrands, Inc.-
Series B, Sr. Unsec. Gtd. Floating Rate Global
Notes,
4.59%, 12/15/14(c) 370,000 300,625
- -------------------------------------------------------------------------------
Levi Strauss & Co.,
Sr. Unsec. Unsub. Global Notes,
8.88%, 04/01/16 365,000 358,612
- -------------------------------------------------------------------------------
Liz Claiborne Inc.,
Sr. Conv. Notes,
6.00%, 06/15/14(b) 265,000 263,728
- -------------------------------------------------------------------------------
Perry Ellis International, Inc.-
Series B, Sr. Unsec. Gtd. Sub. Global Notes,
8.88%, 09/15/13 325,000 265,687
- -------------------------------------------------------------------------------
Warnaco Inc.,
Sr. Unsec. Gtd. Global Notes,
8.88%, 06/15/13 90,000 91,125
===============================================================================
1,471,965
===============================================================================
AUTO PARTS & EQUIPMENT-0.71%
Tenneco Inc.,
Sr. Unsec. Gtd. Global Notes,
8.13%, 11/15/15 45,000 36,338
- -------------------------------------------------------------------------------
Series B, Sr. Sec. Gtd. Second Lien Global
Notes,
10.25%, 07/15/13 210,000 201,600
- -------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. HIGH YIELD FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
AUTO PARTS & EQUIPMENT-(CONTINUED)
TRW Automotive Inc.,
Sr. Unsec. Gtd. Unsub. Notes,
7.25%, 03/15/17(b) $135,000 $ 95,850
- -------------------------------------------------------------------------------
Visteon Corp.,
Sr. Unsec. Unsub. Notes,
7.00%, 03/10/14(d) 180,000 7,200
===============================================================================
340,988
===============================================================================
AUTOMOBILE MANUFACTURERS-0.94%
Ford Motor Co.,
Sr. Unsec. Unsub. Global Notes,
7.45%, 07/16/31 545,000 321,550
- -------------------------------------------------------------------------------
Motors Liquidation Co.,
Sr. Unsec. Unsub. Global Notes,
7.20%, 01/15/11(d) 445,000 56,738
- -------------------------------------------------------------------------------
Sr. Unsec. Unsub. Notes,
8.38%, 07/15/33(d) 525,000 73,500
===============================================================================
451,788
===============================================================================
BROADCASTING-2.50%
Charter Communications Operating, LLC/Charter
Communications Operating Capital Corp.,
Sr. Sec. Gtd. Second Lien Notes,
10.00%, 04/30/12(b)(d) 410,000 396,675
- -------------------------------------------------------------------------------
CSC Holdings Inc.,
Sr. Unsec. Notes,
8.50%, 04/15/14(b) 115,000 114,425
- -------------------------------------------------------------------------------
8.63%, 02/15/19(b) 30,000 29,550
- -------------------------------------------------------------------------------
Hughes Network Systems LLC/HNS Finance Corp.,
Sr. Unsec. Gtd. Global Notes,
9.50%, 04/15/14 150,000 147,000
- -------------------------------------------------------------------------------
Unitymedia GmbH (Germany),
Sr. Sec. Gtd. Notes,
10.38%, 02/15/15(b) 280,000 286,650
- -------------------------------------------------------------------------------
Virgin Media Finance PLC (United Kingdom),
Sr. Unsec. Gtd. Global Notes,
8.75%, 04/15/14 240,000 234,600
===============================================================================
1,208,900
===============================================================================
BUILDING PRODUCTS-1.97%
AMH Holdings Inc.,
Sr. Unsec. Disc. Global Notes,
11.25%, 03/01/14 655,000 284,925
- -------------------------------------------------------------------------------
Building Materials Corp. of America, Sec. Gtd.
Second Lien Global Notes,
7.75%, 08/01/14 460,000 414,000
- -------------------------------------------------------------------------------
Nortek, Inc.,
Sr. Sec. Gtd. Global Notes,
10.00%, 12/01/13 110,000 88,550
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Sub. Global Notes,
8.50%, 09/01/14 165,000 48,675
- -------------------------------------------------------------------------------
Ply Gem Industries Inc.,
Sr. Sec. Gtd. First & Second Lien Global Notes,
11.75%, 06/15/13 175,000 114,187
===============================================================================
950,337
===============================================================================
CASINOS & GAMING-4.25%
Great Canadian Gaming Corp. (Canada),
Sr. Unsec. Gtd. Sub. Notes,
7.25%, 02/15/15(b) 240,000 215,100
- -------------------------------------------------------------------------------
Mandalay Resort Group,
Sr. Unsec. Gtd. Sub. Global Notes,
9.38%, 02/15/10 60,000 57,450
- -------------------------------------------------------------------------------
MGM Mirage,
Sr. Sec. Gtd. Notes,
13.00%, 11/15/13(b) 130,000 144,625
- -------------------------------------------------------------------------------
Sr. Sec. Notes,
10.38%, 05/15/14(b) 165,000 174,488
- -------------------------------------------------------------------------------
11.13%, 11/15/17(b) 165,000 176,137
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Global Notes,
6.63%, 07/15/15 273,000 178,132
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Unsub. Notes,
8.50%, 09/15/10 310,000 285,200
- -------------------------------------------------------------------------------
Pinnacle Entertainment, Inc.,
Sr. Unsec. Gtd. Sub. Notes,
8.75%, 10/01/13 190,000 194,750
- -------------------------------------------------------------------------------
Scientific Games Corp.,
Sr. Sub. Unsec. Gtd. Notes Conv. Putable,
0.75%, 12/01/24 125,000 121,200
- -------------------------------------------------------------------------------
Seneca Gaming Corp.,
Sr. Unsec. Unsub. Global Notes,
7.25%, 05/01/12 160,000 138,400
- -------------------------------------------------------------------------------
Series B, Sr. Unsec. Global Notes,
7.25%, 05/01/12 95,000 82,175
- -------------------------------------------------------------------------------
Snoqualmie Entertainment Authority,
Sr. Sec. Floating Rate Notes,
5.38%, 02/01/14 (Acquired 05/04/09; Cost
$64,125)(b)(c) 150,000 64,500
- -------------------------------------------------------------------------------
Sr. Sec. Notes,
9.13%, 02/01/15(b) 220,000 110,000
- -------------------------------------------------------------------------------
Wynn Las Vegas Capital LLC/Corp.,
Sr. Sec. Gtd. Global First Mortgage Notes,
6.63%, 12/01/14 65,000 57,005
- -------------------------------------------------------------------------------
6.63%, 12/01/14 60,000 51,120
===============================================================================
2,050,282
===============================================================================
COMMODITY CHEMICALS-0.55%
Westlake Chemical Corp.,
Sr. Unsec. Gtd. Notes,
6.63%, 01/15/16 300,000 264,000
===============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. HIGH YIELD FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
COMPUTER STORAGE & PERIPHERALS-0.11%
Seagate Technology International,
Sr. Sec. Gtd. Notes,
10.00%, 05/01/14(b) $ 50,000 $ 52,750
===============================================================================
CONSTRUCTION & ENGINEERING-0.82%
Great Lakes Dredge & Dock Corp.,
Sr. Unsec. Gtd. Sub. Global Notes,
7.75%, 12/15/13 106,000 91,690
- -------------------------------------------------------------------------------
MasTec, Inc.,
Sr. Unsec. Gtd. Global Notes,
7.63%, 02/01/17 350,000 306,250
===============================================================================
397,940
===============================================================================
CONSTRUCTION MATERIALS-1.08%
Texas Industries, Inc.,
Sr. Unsec. Gtd. Unsub. Global Notes,
7.25%, 07/15/13 65,000 59,800
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Unsub. Notes,
7.25%, 07/15/13(b) 170,000 156,400
- -------------------------------------------------------------------------------
U.S. Concrete, Inc.,
Sr. Unsec. Gtd. Sub. Global Notes,
8.38%, 04/01/14 475,000 306,375
===============================================================================
522,575
===============================================================================
CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS-0.79%
Terex Corp.,
Sr. Unsec. Global Notes,
10.88%, 06/01/16 95,000 95,713
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Sub. Global Notes,
7.38%, 01/15/14 95,000 88,350
- -------------------------------------------------------------------------------
Titan International, Inc.,
Sr. Unsec. Gtd. Global Notes,
8.00%, 01/15/12 220,000 199,100
===============================================================================
383,163
===============================================================================
CONSUMER FINANCE-3.37%
Ford Motor Credit Co. LLC,
Sr. Unsec. Global Notes,
9.75%, 09/15/10 185,000 179,450
- -------------------------------------------------------------------------------
Sr. Unsec. Unsub. Global Notes,
7.00%, 10/01/13 145,000 118,175
- -------------------------------------------------------------------------------
Sr. Unsec. Unsub. Notes,
8.63%, 11/01/10 405,000 388,800
- -------------------------------------------------------------------------------
9.88%, 08/10/11 120,000 112,800
- -------------------------------------------------------------------------------
GMAC Inc.,
Sr. Unsec. Gtd. Notes,
7.50%, 12/31/13 (Acquired 12/31/08; Cost
$21,227)(b) 29,000 22,910
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Unsub. Notes,
6.75%, 12/01/14 (Acquired 12/31/08; Cost
$211,683)(b) 294,000 235,200
- -------------------------------------------------------------------------------
8.00%, 11/01/31 (Acquired 12/31/08; Cost
$168,910)(b) 266,000 187,530
- -------------------------------------------------------------------------------
Sr. Unsec. Unsub. Global Notes,
6.88%, 09/15/11 415,000 361,050
- -------------------------------------------------------------------------------
Unsec. Sub. Notes,
8.00%, 12/31/18 (Acquired 12/31/08; Cost
$18,407)(b) 35,000 23,100
===============================================================================
1,629,015
===============================================================================
DATA PROCESSING & OUTSOURCED SERVICES-1.80%
First Data Corp.,
Sr. Unsec. Gtd. Global Notes,
9.88%, 09/24/15 415,000 297,244
- -------------------------------------------------------------------------------
Sr. Unsec. Unsub. Gtd. Notes,
9.88%, 09/24/15(b) 155,000 111,406
- -------------------------------------------------------------------------------
Lender Processing Services Inc.,
Sr. Unsec. Gtd. Unsub. Global Notes,
8.13%, 07/01/16 95,000 94,050
- -------------------------------------------------------------------------------
Sungard Data Systems Inc.,
Sr. Unsec. Gtd. Global Notes,
9.13%, 08/15/13 386,000 368,630
===============================================================================
871,330
===============================================================================
DEPARTMENT STORES-0.85%
Macy's Retail Holdings Inc.,
Sr. Unsec. Gtd. Notes,
6.63%, 04/01/11 215,000 208,550
- -------------------------------------------------------------------------------
5.35%, 03/15/12 220,000 201,300
===============================================================================
409,850
===============================================================================
DIVERSIFIED CHEMICALS-0.26%
Dow Chemical Co. (The),
Sr. Unsec. Unsub. Global Notes,
8.55%, 05/15/19 125,000 126,494
===============================================================================
DIVERSIFIED METALS & MINING-2.34%
FMG Finance Pty. Ltd. (Australia),
Sr. Sec. Notes,
10.63%, 09/01/16(b) 370,000 357,050
- -------------------------------------------------------------------------------
Freeport-McMoRan Copper & Gold Inc., Sr. Unsec.
Notes,
8.25%, 04/01/15 120,000 120,840
- -------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. HIGH YIELD FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
DIVERSIFIED METALS & MINING-(CONTINUED)
Teck Resources Ltd. (Canada),
Sr. Sec. Notes,
9.75%, 05/15/14(b) $115,000 $ 121,325
- -------------------------------------------------------------------------------
10.75%, 05/15/19(b) 230,000 250,700
- -------------------------------------------------------------------------------
Vedanta Resources PLC (United Kingdom),
Sr. Unsec. Unsub. Notes,
9.50%, 07/18/18(b) 320,000 281,600
===============================================================================
1,131,515
===============================================================================
DIVERSIFIED SUPPORT SERVICES-1.56%
Education Management LLC/ Education Management
Finance Corp.,
Sr. Unsec. Gtd. Global Notes,
8.75%, 06/01/14 105,000 102,375
- -------------------------------------------------------------------------------
Geo Group, Inc. (The), Sr. Unsec. Global Notes,
8.25%, 07/15/13 150,000 147,000
- -------------------------------------------------------------------------------
Mobile Mini, Inc.,
Sr. Unsec. Gtd. Global Notes,
9.75%, 08/01/14 60,000 58,050
- -------------------------------------------------------------------------------
Travelport LLC,
Sr. Unsec. Gtd. Sub. Global Notes,
11.88%, 09/01/16 190,000 114,000
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Unsub. Global Notes,
9.88%, 09/01/14 485,000 329,800
===============================================================================
751,225
===============================================================================
DRUG RETAIL-0.96%
General Nutrition Centers Inc.,
Sr. Unsec. Gtd. PIK Floating Rate Global Notes,
6.40%, 03/15/14(c) 450,000 362,250
- -------------------------------------------------------------------------------
Rite Aid Corp.,
Sr. Sec. Notes,
9.75%, 06/12/16(b) 100,000 101,000
===============================================================================
463,250
===============================================================================
ELECTRIC UTILITIES-1.12%
Elwood Energy LLC,
Sr. Sec. Global Notes,
8.16%, 07/05/26 137,360 114,696
- -------------------------------------------------------------------------------
LSP Energy L.P./LSP Batesville Funding
Corp.-Series C, Sr. Sec. Mortgage Bonds,
7.16%, 01/15/14 122,616 115,894
- -------------------------------------------------------------------------------
Tenaska Alabama Partners L.P.,
Sr. Sec. Mortgage Notes,
7.00%, 06/30/21(b) 358,977 309,617
===============================================================================
540,207
===============================================================================
ELECTRONIC MANUFACTURING SERVICES-0.02%
Flextronics International Ltd.,
Sr. Sub. Unsec. Global Notes,
6.50%, 05/15/13 10,000 9,725
===============================================================================
FOOD RETAIL-1.01%
Ahold Finance USA, Inc.,
Sr. Unsec. Gtd. Unsub. Notes,
8.25%, 07/15/10 10,000 10,363
- -------------------------------------------------------------------------------
American Stores Co.,
Sr. Unsec. Bonds,
8.00%, 06/01/26 285,000 249,019
- -------------------------------------------------------------------------------
New Albertsons Inc.,
Sr. Unsec. Bonds,
8.00%, 05/01/31 205,000 176,556
- -------------------------------------------------------------------------------
SUPERVALU Inc.,
Sr. Unsec. Notes,
8.00%, 05/01/16 50,000 49,250
===============================================================================
485,188
===============================================================================
GAS UTILITIES-0.36%
Ferrellgas Escrow LLC/Ferrellgas Finance Escrow
Corp.,
Sr. Unsec. Global Notes,
6.75%, 05/01/14 200,000 175,000
===============================================================================
GENERAL MERCHANDISE STORES-0.26%
Susser Holdings LLC & Susser Finance Corp.,
Sr. Unsec. Gtd. Global Notes,
10.63%, 12/15/13 125,000 126,563
===============================================================================
HEALTH CARE EQUIPMENT-0.67%
DJO Finance LLC/DJO Finance Corp.,
Sr. Unsec. Gtd. Global Notes,
10.88%, 11/15/14 365,000 322,113
===============================================================================
HEALTH CARE FACILITIES-2.74%
Community Health Systems Inc.,
Sr. Unsec. Gtd. Unsub. Global Notes,
8.88%, 07/15/15 405,000 398,925
- -------------------------------------------------------------------------------
HCA, Inc.,
Sr. Sec. Gtd. Global Notes,
9.13%, 11/15/14 140,000 139,650
- -------------------------------------------------------------------------------
9.25%, 11/15/16 285,000 282,150
- -------------------------------------------------------------------------------
Sr. Sec. Notes,
9.88%, 02/15/17(b) 130,000 133,575
- -------------------------------------------------------------------------------
8.50%, 04/15/19(b) 120,000 117,600
- -------------------------------------------------------------------------------
Sr. Unsec. Global Notes,
6.38%, 01/15/15 55,000 44,825
- -------------------------------------------------------------------------------
Healthsouth Corp.,
Sr. Unsec. Gtd. Floating Rate Global Notes,
7.22%, 06/15/14(c) 105,000 95,813
- -------------------------------------------------------------------------------
Tenet Healthcare Corp.,
Sr. Unsec. Unsub. Notes,
6.38%, 12/01/11 109,000 109,272
===============================================================================
1,321,810
===============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. HIGH YIELD FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
HEALTH CARE SERVICES-1.93%
Multiplan Inc.,
Sr. Unsec. Sub. Notes,
10.38%, 04/15/16(b) $285,000 $ 273,600
- -------------------------------------------------------------------------------
Rural/Metro Corp.,
Sr. Gtd. Sub. Global Notes,
9.88%, 03/15/15 56,000 47,460
- -------------------------------------------------------------------------------
Universal Hospital Services Inc.,
Sr. Sec. PIK Global Notes,
8.50%, 06/01/15 190,000 180,500
- -------------------------------------------------------------------------------
US Oncology Inc.,
Sr. Unsec. Gtd. Global Notes,
9.00%, 08/15/12 225,000 231,187
- -------------------------------------------------------------------------------
Viant Holdings Inc.,
Sr. Unsec. Gtd. Sub. Notes,
10.13%, 07/15/17(b) 247,000 200,070
===============================================================================
932,817
===============================================================================
HEALTH CARE SUPPLIES-0.27%
Inverness Medical Innocations Inc.,
Sr. Sub. Notes,
9.00%, 05/15/16 135,000 131,625
===============================================================================
HOMEBUILDING-0.03%
TOUSA, Inc.,
Sr. Unsec. Gtd. Global Notes,
9.00%, 07/01/10(d) 163,000 11,410
- -------------------------------------------------------------------------------
9.00%, 07/01/10(d) 60,000 4,200
===============================================================================
15,610
===============================================================================
HOMEFURNISHING RETAIL-0.36%
Rent-A-Center Inc.-
Series B, Sr. Unsec. Gtd. Sub. Global Notes,
7.50%, 05/01/10 174,000 174,000
===============================================================================
HOTELS, RESORTS & CRUISE LINES-1.66%
NCL Corp. Ltd.,
Sr. Unsec. Unsub. Global Notes,
10.63%, 07/15/14 258,000 245,442
- -------------------------------------------------------------------------------
Royal Caribbean Cruises Ltd.,
Sr. Unsec. Unsub. Global Notes,
8.00%, 05/15/10 65,000 64,513
- -------------------------------------------------------------------------------
6.88%, 12/01/13 160,000 136,000
- -------------------------------------------------------------------------------
Sr. Unsec. Unsub. Yankee Notes,
7.25%, 03/15/18 160,000 122,800
- -------------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc.,
Sr. Unsec. Notes,
7.88%, 10/15/14 245,000 234,169
===============================================================================
802,924
===============================================================================
HOUSEWARES & SPECIALTIES-0.76%
Yankee Acquisition Corp.-
Series B, Sr. Gtd. Global Notes,
8.50%, 02/15/15 430,000 366,575
===============================================================================
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS-3.63%
AES Corp. (The),
Sr. Unsec. Notes,
9.75%, 04/15/16(b) 150,000 152,625
- -------------------------------------------------------------------------------
AES Red Oak LLC-
Series A, Sr. Sec. Bonds,
8.54%, 11/30/19 316,565 284,908
- -------------------------------------------------------------------------------
Dynegy Holdings Inc.,
Sr. Unsec. Global Notes,
8.38%, 05/01/16 325,000 277,063
- -------------------------------------------------------------------------------
Energy Future Holdings Corp.,
Sr. Unsec. Gtd. Global Notes,
10.88%, 11/01/17 775,000 573,500
- -------------------------------------------------------------------------------
Intergen N.V. (Netherlands),
Sr. Sec. Gtd. Bonds,
9.00%, 06/30/17(b) 50,000 48,000
- -------------------------------------------------------------------------------
Ipalco Enterprises Inc.,
Sr. Sec. Notes,
7.25%, 04/01/16(b) 90,000 86,400
- -------------------------------------------------------------------------------
NRG Energy, Inc.,
Sr. Unsec. Gtd. Notes,
7.38%, 02/01/16 190,000 180,500
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Unsub. Notes,
7.38%, 01/15/17 155,000 147,250
===============================================================================
1,750,246
===============================================================================
INDUSTRIAL CONGLOMERATES-0.77%
Aleris International Inc.,
Sr. Unsec. Gtd. PIK Global Notes,
9.00%, 12/15/14(d) 215,000 2,150
- -------------------------------------------------------------------------------
Indalex Holding Corp.-
Series B, Sr. Sec. Gtd. Global Notes,
11.50%, 02/01/14(d) 230,000 14,950
- -------------------------------------------------------------------------------
RBS Global Inc./Rexnord LLC,
Sr. Unsec. Gtd. Unsub. Global Notes,
9.50%, 08/01/14 410,000 352,600
===============================================================================
369,700
===============================================================================
INDUSTRIAL MACHINERY-0.18%
Columbus McKinnon Corp.,
Sr. Unsec. Gtd. Sub. Global Notes,
8.88%, 11/01/13 88,000 88,330
===============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-1.85%
Frontier Communications Corp.,
Sr. Unsec. Global Notes,
7.88%, 01/15/27 340,000 268,600
- -------------------------------------------------------------------------------
Hawaiian Telcom Communications Inc.-
Series B, Sr. Unsec. Gtd. Unsub. Global Notes,
9.75%, 05/01/13(d) 360,000 7,200
- -------------------------------------------------------------------------------
Intelsat Jackson Holdings Ltd. (Bermuda),
Sr. Unsec. Gtd. Global Notes,
11.25%, 06/15/16 380,000 391,400
- -------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. HIGH YIELD FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
INTEGRATED TELECOMMUNICATION SERVICES-(CONTINUED)
Qwest Communications International Inc.,
Sr. Unsec. Gtd. Global Notes,
7.25%, 02/15/11 $170,000 $ 166,175
- -------------------------------------------------------------------------------
Qwest Corp.,
Sr. Unsec. Notes,
8.38%, 05/01/16(b) 60,000 57,900
===============================================================================
891,275
===============================================================================
INVESTMENT BANKING & BROKERAGE-0.43%
E*Trade Financial Corp.,
Sr. Unsec. Notes,
7.88%, 12/01/15 265,000 206,700
===============================================================================
IT CONSULTING & OTHER SERVICES-0.01%
Unisys Corp.,
Sr. Unsec. Unsub. Notes,
8.00%, 10/15/12 10,000 6,200
===============================================================================
LEISURE FACILITIES-0.83%
Speedway Motorsports Inc.,
Sr. Unsec. Notes,
8.75%, 06/01/16(b) 55,000 56,100
- -------------------------------------------------------------------------------
Universal City Development Partners Ltd.,
Sr. Unsec. Unsub. Global Notes,
11.75%, 04/01/10 360,000 344,700
===============================================================================
400,800
===============================================================================
LIFE & HEALTH INSURANCE-0.70%
Metlife Inc.,
Jr. Sub. Global Notes,
10.75%, 08/01/39 210,000 232,188
- -------------------------------------------------------------------------------
Pacific Life Insurance Co.,
Notes,
9.25%, 06/15/39(b) 105,000 104,320
===============================================================================
336,508
===============================================================================
MARINE PORTS & SERVICES-0.20%
Novorossiysk Commercial Sea Port (Luxembourg),
Sec. Bond,
7.00%, 05/17/12 100,000 94,668
===============================================================================
METAL & GLASS CONTAINERS-0.25%
Owens-Brockway Glass Container Inc.,
Sr. Gtd. Notes,
7.38%, 05/15/16 (Acquired 05/07/09; Cost
$120,905)(b) 125,000 120,625
===============================================================================
MOVIES & ENTERTAINMENT-1.13%
AMC Entertainment Inc.,
Sr. Notes,
8.75%, 06/01/19(b) 35,000 33,250
- -------------------------------------------------------------------------------
Sr. Unsec. Sub. Global Notes,
8.00%, 03/01/14 375,000 322,500
- -------------------------------------------------------------------------------
Cinemark USA Inc.,
Sr. Gtd. Notes,
8.63%, 06/15/19(b) 95,000 93,812
- -------------------------------------------------------------------------------
Marquee Holdings Inc.,
Sr. Unsec. Global Notes,
12.00%, 08/15/14 125,000 97,500
===============================================================================
547,062
===============================================================================
MULTI-SECTOR HOLDINGS-0.35%
Stena A.B. (Sweden),
Sr. Unsec. Global Notes,
7.50%, 11/01/13 195,000 167,213
===============================================================================
OFFICE SERVICES & SUPPLIES-0.14%
ACCO Brands Corp.,
Sr. Unsec. Gtd. Sub. Global Notes,
7.63%, 08/15/15 130,000 69,550
===============================================================================
OIL & GAS EQUIPMENT & SERVICES-0.13%
Bristow Group, Inc.,
Sr. Unsec. Gtd. Global Notes,
7.50%, 09/15/17 70,000 63,700
===============================================================================
OIL & GAS EXPLORATION & PRODUCTION-6.76%
Chaparral Energy Inc.,
Sr. Unsec. Gtd. Global Notes,
8.50%, 12/01/15 140,000 88,200
- -------------------------------------------------------------------------------
8.88%, 02/01/17 305,000 192,150
- -------------------------------------------------------------------------------
Chesapeake Energy Corp.,
Sr. Unsec. Gtd. Global Notes,
6.38%, 06/15/15 279,000 249,705
- -------------------------------------------------------------------------------
6.88%, 11/15/20 100,000 81,500
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Notes,
9.50%, 02/15/15 90,000 90,900
- -------------------------------------------------------------------------------
Cimarex Energy Co.,
Sr. Unsec. Gtd. Notes,
7.13%, 05/01/17 165,000 146,850
- -------------------------------------------------------------------------------
Delta Petroleum Corp.,
Sr. Unsec. Gtd. Sub. Global Notes,
7.00%, 04/01/15 575,000 327,031
- -------------------------------------------------------------------------------
Denbury Resources Inc.,
Sr. Gtd. Sub. Notes,
9.75%, 03/01/16 175,000 180,250
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Sub. Global Notes,
7.50%, 04/01/13 155,000 149,188
- -------------------------------------------------------------------------------
Encore Acquisition Co.,
Sr. Unsec. Gtd. Sub. Global Notes,
6.00%, 07/15/15 295,000 244,850
- -------------------------------------------------------------------------------
Forest Oil Corp.,
Sr. Notes,
8.50%, 02/15/14(b) 110,000 109,450
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Global Notes,
7.25%, 06/15/19 165,000 149,738
- -------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. HIGH YIELD FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
OIL & GAS EXPLORATION & PRODUCTION-(CONTINUED)
Gaz Capital S.A. (Luxembourg),
Sr. Sec. Gtd. Notes,
8.15%, 04/11/18(b) $250,000 $ 229,450
- -------------------------------------------------------------------------------
Newfield Exploration Co.,
Sr. Unsec. Sub. Global Notes,
7.13%, 05/15/18 40,000 36,550
- -------------------------------------------------------------------------------
Plains Exploration & Production Co.,
Sr. Unsec. Gtd. Notes,
7.75%, 06/15/15 230,000 216,487
- -------------------------------------------------------------------------------
7.63%, 06/01/18 185,000 166,962
- -------------------------------------------------------------------------------
Quicksilver Resources Inc.,
Sr. Notes,
11.75%, 01/01/16 80,000 82,800
- -------------------------------------------------------------------------------
Range Resources Corp.,
Sr. Unsec. Gtd. Sub. Notes,
7.50%, 05/15/16 20,000 19,300
- -------------------------------------------------------------------------------
7.50%, 10/01/17 250,000 238,125
- -------------------------------------------------------------------------------
SandRidge Energy, Inc.,
Sr. Unsec. Gtd. Unsub. Notes,
8.00%, 06/01/18(b) 140,000 119,000
- -------------------------------------------------------------------------------
Swift Energy Co.,
Sr. Unsec. Gtd. Notes,
7.13%, 06/01/17 195,000 142,838
===============================================================================
3,261,324
===============================================================================
OIL & GAS REFINING & MARKETING-0.85%
Tesoro Corp.,
Sr. Unsec. Gtd.,
9.75%, 06/01/19 120,000 118,650
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Unsub. Global Bonds,
6.50%, 06/01/17 90,000 77,400
- -------------------------------------------------------------------------------
United Refining Co.-
Series 2, Sr. Unsec. Gtd. Global Notes,
10.50%, 08/15/12 275,000 213,125
===============================================================================
409,175
===============================================================================
OIL & GAS STORAGE & TRANSPORTATION-2.09%
Copano Energy LLC/Capano Energy Finance Corp.,
Sr. Unsec. Gtd. Global Notes,
8.13%, 03/01/16 215,000 204,250
- -------------------------------------------------------------------------------
DCP Midstream LLC,
Sr. Unsec. Unsub. Notes,
9.75%, 03/15/19(b) 290,000 324,297
- -------------------------------------------------------------------------------
Inergy L.P./Inergy Finance Corp.,
Sr. Unsec. Gtd. Notes,
8.75%, 03/01/15(b) 135,000 132,637
- -------------------------------------------------------------------------------
MarkWest Energy Partners L.P./MarkWest Energy
Finance Corp.-
Series B, Sr. Unsec. Gtd. Global Notes,
8.75%, 04/15/18 280,000 242,900
- -------------------------------------------------------------------------------
Williams Partners L.P./Williams Partners Finance
Corp.,
Sr. Unsec. Global Notes,
7.25%, 02/01/17 115,000 104,938
===============================================================================
1,009,022
===============================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-1.56%
BankAmerica Capital II-
Series 2, Jr. Unsec. Gtd. Sub. Trust Pfd.
Capital Securities,
8.00%, 12/15/26 120,000 101,400
- -------------------------------------------------------------------------------
Citigroup Inc.,
Sub. Unsec. Global Notes,
5.00%, 09/15/14 180,000 170,210
- -------------------------------------------------------------------------------
Merrill Lynch & Co. Inc.,
Unsec. Sub. Global Notes,
6.11%, 01/29/37 630,000 482,140
===============================================================================
753,750
===============================================================================
PACKAGED FOODS & MEATS-1.59%
Chiquita Brands International, Inc.,
Sr. Unsec. Unsub. Global Notes,
7.50%, 11/01/14 60,000 49,800
- -------------------------------------------------------------------------------
8.88%, 12/01/15 60,000 52,200
- -------------------------------------------------------------------------------
Dole Food Co. Inc.,
Sr. Unsec. Gtd. Global Notes,
7.25%, 06/15/10 287,000 284,130
- -------------------------------------------------------------------------------
Sr. Unsec. Notes,
13.88%, 03/15/14(b) 95,000 104,500
- -------------------------------------------------------------------------------
Tyson Foods Inc.,
Sr. Unsec. Notes,
10.50%, 03/01/14(b) 250,000 275,812
===============================================================================
766,442
===============================================================================
PAPER PACKAGING-0.30%
Graham Packaging Co. L.P./GPC Capital Corp. I, Sr.
Unsec. Gtd. Sub. Global Notes,
9.88%, 10/15/14 130,000 121,550
- -------------------------------------------------------------------------------
Graphic Packaging International Inc.,
Sr. Unsec. Gtd. Global Notes,
8.50%, 08/15/11 4,000 3,980
- -------------------------------------------------------------------------------
Sealed Air Corp.,
Sr. Notes,
7.88%, 06/15/17(b) 20,000 19,935
===============================================================================
145,465
===============================================================================
PAPER PRODUCTS-2.26%
Abitibi-Consolidated Co. of Canada (Canada),
Sr. Sec. Gtd. Notes,
13.75%, 04/01/11(b)(d) 140,000 130,550
- -------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. HIGH YIELD FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
PAPER PRODUCTS-(CONTINUED)
Domtar Corp.,
Sr. Unsec. Gtd. Global Notes,
5.38%, 12/01/13 $205,000 $ 170,150
- -------------------------------------------------------------------------------
Exopack Holding Corp.,
Sr. Unsec. Gtd. Global Notes,
11.25%, 02/01/14 210,000 174,300
- -------------------------------------------------------------------------------
Georgia-Pacific LLC,
Sr. Unsec. Gtd. Notes,
7.00%, 01/15/15(b) 90,000 84,600
- -------------------------------------------------------------------------------
Mercer International Inc.,
Sr. Unsec. Global Notes,
9.25%, 02/15/13 537,000 230,910
- -------------------------------------------------------------------------------
Neenah Paper, Inc.,
Sr. Unsec. Gtd. Global Notes,
7.38%, 11/15/14 179,000 116,350
- -------------------------------------------------------------------------------
Verso Paper Holdings LLC/Verso Paper Inc.,-
Series B, Sr. Sec. Gtd. Sub. Global Notes,
9.13%, 08/01/14 175,000 84,875
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Sub. Global Notes,
11.38%, 08/01/16 350,000 99,750
===============================================================================
1,091,485
===============================================================================
PERSONAL PRODUCTS-0.50%
NBTY, Inc.,
Sr. Unsec. Gtd. Sub. Global Notes,
7.13%, 10/01/15 259,000 242,813
===============================================================================
PHARMACEUTICALS-1.11%
Elan Finance PLC/Elan Finance Corp. (Ireland),
Sr. Unsec. Gtd. Global Notes,
7.75%, 11/15/11 586,000 536,922
===============================================================================
PROPERTY & CASUALTY INSURANCE-0.61%
Crum & Forster Holdings Corp.,
Sr. Unsec. Unsub. Global Notes,
7.75%, 05/01/17 335,000 293,125
===============================================================================
PUBLISHING-1.95%
Dex Media Inc.,
Sr. Unsec. Disc. Global Notes,
9.00%, 11/15/13(d) 318,000 49,290
- -------------------------------------------------------------------------------
Dex Media West LLC/Dex Media West Finance
Co.-Series B, Sr. Unsec. Sub. Global Notes,
9.88%, 08/15/13(d) 300,000 52,500
- -------------------------------------------------------------------------------
MediMedia USA Inc.,
Sr. Sub. Notes,
11.38%, 11/15/14(b) 30,000 18,375
- -------------------------------------------------------------------------------
Nielsen Finance LLC/Nielsen Finance Co.,
Sr. Notes,
11.63%, 02/01/14(b) 85,000 84,787
- -------------------------------------------------------------------------------
11.50%, 05/01/16(b) 190,000 185,725
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Sub. Disc. Global Notes,
12.50%, 08/01/16(e) 820,000 538,125
- -------------------------------------------------------------------------------
Reader's Digest Association Inc. (The),
Sr. Unsec. Gtd. Sub. Global Notes,
9.00%, 02/15/17 210,000 12,075
===============================================================================
940,877
===============================================================================
RAILROADS-0.19%
Kansas City Southern Railway,
Sr. Unsec. Gtd. Unsub. Notes,
8.00%, 06/01/15 100,000 93,500
===============================================================================
SEMICONDUCTOR EQUIPMENT-0.71%
Amkor Technology Inc.,
Sr. Unsec. Global Notes,
7.13%, 03/15/11 325,000 322,156
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Notes,
9.25%, 06/01/16 20,000 18,700
===============================================================================
340,856
===============================================================================
SEMICONDUCTORS-4.30%
Avago Technologies Finance Pte./Avago Technologies
U.S./Avago Technologies Wireless (Singapore),
Sr. Unsec. Gtd. Global Notes,
10.13%, 12/01/13 507,000 522,210
- -------------------------------------------------------------------------------
Sr. Unsec. Sub. Gtd. Global Notes,
11.88%, 12/01/15 120,000 121,200
- -------------------------------------------------------------------------------
Freescale Semiconductor Inc.,
Sr. Unsec. Gtd. Notes,
8.88%, 12/15/14 545,000 277,950
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Sub. Notes,
10.13%, 12/15/16 290,000 101,500
- -------------------------------------------------------------------------------
MagnaChip Semiconductor S.A./MagnaChip
Semiconductor Finance Co. (South Korea),
Sr. Sec. Gtd. Global Notes,
6.88%, 12/15/11(d) 360,000 5,400
- -------------------------------------------------------------------------------
NXP BV/NXP Funding LLC (Netherlands),
Sr. Sec. Gtd. Global Notes,
7.88%, 10/15/14 570,000 265,050
- -------------------------------------------------------------------------------
Spansion Inc.,
Sr. Sec. Notes,
3.79%, 06/01/13(b)(c)(d) 440,000 290,400
- -------------------------------------------------------------------------------
Viasystems Inc.,
Sr. Unsec. Gtd. Global Notes,
10.50%, 01/15/11 545,000 490,500
===============================================================================
2,074,210
===============================================================================
SPECIALIZED REIT'S-0.50%
Host Hotels & Resorts L.P.,
Sr. Unsec. Gtd. Unsub. Conv. Putable Notes,
3.25%, 04/15/10(b) 250,000 242,888
===============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. HIGH YIELD FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
SPECIALTY CHEMICALS-2.55%
Huntsman International LLC,
Sr. Unsec. Gtd. Sub. Global Notes,
7.88%, 11/15/14 $220,000 $ 174,900
- -------------------------------------------------------------------------------
7.38%, 01/01/15 205,000 160,925
- -------------------------------------------------------------------------------
JohnsonDiversey Holdings Inc.-
Series B, Sr. Unsec. Sub. Global Notes,
10.67%, 05/15/13 75,000 63,375
- -------------------------------------------------------------------------------
Nalco Co.,
Sr. Unsec. Gtd. Global Notes,
7.75%, 11/15/11 2,862 2,891
- -------------------------------------------------------------------------------
Unsec. Gtd. Sub. Global Notes,
8.88%, 11/15/13 445,000 455,012
- -------------------------------------------------------------------------------
NewMarket Corp.,
Sr. Unsec. Gtd. Unsub. Global Notes,
7.13%, 12/15/16 150,000 135,375
- -------------------------------------------------------------------------------
PolyOne Corp.,
Sr. Unsec. Notes,
8.88%, 05/01/12 65,000 55,575
- -------------------------------------------------------------------------------
Polypore Inc.,
Sr. Unsec. Gtd. Sub. Global Notes,
8.75%, 05/15/12 205,000 182,963
===============================================================================
1,231,016
===============================================================================
SPECIALTY PROPERTIES-0.46%
Ventas Realty L.P./Ventas Capital Corp.-
Series 1, Sr. Unsec. Gtd. Global Notes,
6.50%, 06/01/16 245,000 222,338
===============================================================================
SPECIALTY STORES-1.29%
Michaels Stores, Inc.,
Sr. Unsec. Gtd. Unsub. Global Notes,
10.00%, 11/01/14 395,000 335,750
- -------------------------------------------------------------------------------
Sally Holdings LLC/Sally Capital Inc.,
Sr. Unsec. Gtd. Global Notes,
9.25%, 11/15/14 285,000 285,356
===============================================================================
621,106
===============================================================================
STEEL-0.97%
Metals USA, Inc.,
Sr. Sec. Gtd. Global Notes,
11.13%, 12/01/15 185,000 153,319
- -------------------------------------------------------------------------------
Steel Dynamics Inc.,
Sr. Unsec. Gtd. Unsub. Global Notes,
7.38%, 11/01/12 185,000 177,600
- -------------------------------------------------------------------------------
Sr. Unsec. Unsub. Notes,
8.25%, 04/15/16(b) 145,000 139,200
===============================================================================
470,119
===============================================================================
TEXTILES-0.42%
Invista,
Sr. Unsec. Unsub. Notes,
9.25%, 05/01/12(b) 215,000 204,250
===============================================================================
TIRES & RUBBER-1.44%
Cooper Tire & Rubber Co.,
Sr. Unsec. Unsub. Notes,
8.00%, 12/15/19 245,000 186,812
- -------------------------------------------------------------------------------
7.63%, 03/15/27 260,000 167,700
- -------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. (The),
Sr. Unsec. Gtd. Unsub. Global Notes,
9.00%, 07/01/15 340,000 342,550
===============================================================================
697,062
===============================================================================
TRADING COMPANIES & DISTRIBUTORS-1.29%
Ashtead Capital Inc.,
Sr. Sec. Gtd. Notes,
9.00%, 08/15/16(b) 150,000 127,875
- -------------------------------------------------------------------------------
H&E Equipment Services Inc.,
Sr. Unsec. Gtd. Global Notes,
8.38%, 07/15/16 230,000 185,725
- -------------------------------------------------------------------------------
Noble Group Ltd.,
Sr. Unsec. Unsub. Notes,
6.63%, 03/17/15(b) 140,000 120,400
- -------------------------------------------------------------------------------
United Rentals North America, Inc.,
Sr. Unsec. Gtd. Global Notes,
6.50%, 02/15/12 172,000 167,270
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Sub. Global Notes,
7.75%, 11/15/13 25,000 21,437
===============================================================================
622,707
===============================================================================
TRUCKING-1.01%
Hertz Corp. (The),
Sr. Unsec. Gtd. Global Notes,
8.88%, 01/01/14 525,000 486,938
===============================================================================
WIRELESS TELECOMMUNICATION SERVICES-4.69%
CC Holdings GS V LLC/Crown Castle GS III Corp.,
Sr. Sec. Notes,
7.75%, 05/01/17(b) 60,000 59,100
- -------------------------------------------------------------------------------
Cricket Communications Inc.,
Sr. Unsec. Gtd. Unsub. Global Notes,
9.38%, 11/01/14 60,000 59,700
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Unsub. Notes,
10.00%, 07/15/15(b) 190,000 190,950
- -------------------------------------------------------------------------------
Crown Castle International Corp.,
Sr. Unsec. Notes,
9.00%, 01/15/15 175,000 178,938
- -------------------------------------------------------------------------------
Digicel Group Ltd. (Bermuda),
Sr. Unsec. Notes,
12.00%, 04/01/14(b) 110,000 111,650
- -------------------------------------------------------------------------------
8.88%, 01/15/15(b) 270,000 226,462
- -------------------------------------------------------------------------------
iPCS Inc.,
Sr. Sec. Gtd. Floating Rate First Lien Global
Notes,
3.15%, 05/01/13(c) 260,000 205,400
- -------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. HIGH YIELD FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES-(CONTINUED)
MetroPCS Wireless Inc.,
Sr. Notes,
9.25%, 11/01/14(b) $ 95,000 $ 95,356
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Global Notes,
9.25%, 11/01/14 100,000 100,375
- -------------------------------------------------------------------------------
Sprint Capital Corp.,
Sr. Unsec. Gtd. Global Notes,
8.38%, 03/15/12 145,000 143,188
- -------------------------------------------------------------------------------
Sr. Unsec. Gtd. Unsub. Global Notes,
7.63%, 01/30/11 305,000 305,000
- -------------------------------------------------------------------------------
6.88%, 11/15/28 410,000 292,637
- -------------------------------------------------------------------------------
VIP Finance Ireland Ltd. (Ireland), Sec. Loan
Participation Notes,
8.38%, 04/30/13(b) 315,000 297,478
===============================================================================
2,266,234
===============================================================================
Total Bonds & Notes (Cost $49,872,648) 46,314,945
===============================================================================
NON-U.S. DOLLAR DENOMINATED BONDS & NOTES-1.70%(f)
FRANCE-0.53%
Tereos Europe,
Sr. Gtd. Bonds,
6.38%, 04/15/14(b) EUR 215,000 254,772
===============================================================================
IRELAND-0.14%
Ardagh Glass Finance PLC,
Sr. Unsec. Unsub. Notes,
9.25%, 07/01/16 (Acquired 06/19/09; Cost
$68,146)(b) EUR 50,000 69,942
===============================================================================
LUXEMBOURG-0.21%
Lecta S.A.,
Sr. Sec. Gtd. Floating Rate Notes,
3.91%, 02/15/14(b)(c) EUR 120,000 100,128
===============================================================================
NETHERLANDS-0.20%
Carlson Wagonlit B.V.,
Sr. Floating Rate Gtd. Notes,
7.12%, 05/01/15(b)(c) EUR 140,000 95,220
===============================================================================
UNITED KINGDOM-0.22%
ITV PLC,
Unsec. Unsub. Gtd. Medium Term Loan Notes,
5.38%, 10/19/15 GBP 85,000 103,808
===============================================================================
UNITED STATES-0.40%
Levi Strauss & Co.,
Sr. Unsec. Unsub. Global Notes,
8.63%, 04/01/13 EUR 150,000 194,577
===============================================================================
Total Non-U.S. Dollar Denominated Bonds &
Notes (Cost $731,349) 818,447
===============================================================================
BUNDLED SECURITIES-1.00%
INVESTMENT BANKING & BROKERAGE-1.00%
Targeted Return Index Securities Trust Series HY
2006-1 Sec. Bonds (Acquired 08/15/08; Cost
$510,300) (Cost $512,802)(b)(c) 540,000 483,816
===============================================================================
<Caption>
SHARES
PREFERRED STOCKS-0.56%
INVESTMENT BANKING & BROKERAGE-0.17%
Preferred Blocker Inc.,
7.00%-Pfd. (Acquired 12/31/08-06/26/09; Cost
$60,436)(b) 195 83,874
===============================================================================
PACKAGED FOODS & MEATS-0.39%
Heinz (H.J.) Finance Co.-
Series B,
8.00%-Pfd.(b) 2 188,500
===============================================================================
Total Preferred Stocks (Cost $260,437) 272,374
===============================================================================
COMMON STOCKS & OTHER EQUITY INTERESTS-0.46%
BROADCASTING-0.16%
Adelphia Communications Corp.,
Sr. Notes,
10.88%, 10/01/10(g) -- 6,560
- -------------------------------------------------------------------------------
Adelphia Recovery Trust-Series ACC-1(g) 318,570 9,557
- -------------------------------------------------------------------------------
Adelphia Recovery Trust-Series ARAHOVA(g) 109,170 26,201
- -------------------------------------------------------------------------------
Sirius XM Radio Inc.-Wts., expiring 03/15/10(i) 182 37
- -------------------------------------------------------------------------------
Virgin Media Inc. 4,129 38,606
===============================================================================
80,961
===============================================================================
CABLE & SATELLITE-0.14%
Time Warner Cable, Inc.-Class A(h) 2,107 66,729
===============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.00%
XO Holdings Inc.(h) 33 10
- -------------------------------------------------------------------------------
XO Holdings Inc.-Series A-Wts., expiring
01/16/10(i) 1,533 9
- -------------------------------------------------------------------------------
XO Holdings Inc.-Series B-Wts., expiring
01/16/10(i) 1,148 1
- -------------------------------------------------------------------------------
XO Holdings Inc.-Series C-Wts., expiring
01/16/10(i) 1,148 3
===============================================================================
23
===============================================================================
MULTI-LINE INSURANCE-0.05%
Hartford Financial Services Group Inc. (The) Sr.
Unsec. Global Notes 35,000 23,897
===============================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.11%
iPCS, Inc.(h) 3,489 52,195
===============================================================================
Total Common Stocks & Other Equity Interests
(Cost $526,685) 223,805
===============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. HIGH YIELD FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
SENIOR SECURED FLOATING RATE INTEREST LOANS-0.12%
AIRLINES-0.12%
Evergreen International Aviation, Inc. Sr. Gtd.
First Lien Term Loan (Cost $95,737)(c) $ 95,737 $ 57,825
===============================================================================
TOTAL INVESTMENTS-99.77% (Cost $51,999,658) 48,171,212
===============================================================================
OTHER ASSETS LESS LIABILITIES-0.23% 109,579
===============================================================================
NET ASSETS-100.00% $48,280,791
_______________________________________________________________________________
===============================================================================
</Table>
Investment Abbreviations:
<Table>
Conv. - Convertible
Ctfs. - Certificates
Disc. - Discounted
EUR - Euro
GBP - Great British Pound
Gtd. - Guaranteed
Jr. - Junior
Pfd. - Preferred
PIK - Payment in Kind
REIT - Real Estate Investment Trust
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
Wts. - Warrants
</Table>
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) Security purchased or received in a transaction exempt from registration
under the Securities Act of 1933, as amended. The security may be resold
pursuant to an exemption from registration under the 1933 Act, typically
to qualified institutional buyers. The aggregate value of these securities
at June 30, 2009 was $11,260,384, which represented 23.32% of the Fund's
Net Assets.
(c) Interest or dividend rate is redetermined periodically. Rate shown is the
rate in effect on June 30, 2009.
(d) Defaulted security. Currently, the issuer is partially or fully in default
with respect to interest payments. The aggregate market value of these
securities at June 30, 2009 was $1,102,163, which represented 2.28% of the
Fund's Net Assets.
(e) Step coupon bond issued at discount. The interest rate represents the
coupon rate at which the bond will accrue at a specified future date.
(f) Foreign denominated security. Principal amount is denominated in currency
indicated.
(g) Non-income producing security acquired as part of the Adelphia
Communications bankruptcy reorganization.
(h) Non-income producing security.
(i) Non-income producing security acquired as part of a unit with or in
exchange for other securities or acquired through a corporate action.
PORTFOLIO COMPOSITION
By credit quality, based on Net Assets,
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
A 1.6%
- -------------------------------------------------------------------------
BBB 5.6
- -------------------------------------------------------------------------
BB 31.4
- -------------------------------------------------------------------------
B 41.2
- -------------------------------------------------------------------------
CCC 13.5
- -------------------------------------------------------------------------
CC 1.3
- -------------------------------------------------------------------------
C 2.2
- -------------------------------------------------------------------------
NR 2.2
- -------------------------------------------------------------------------
Equity 1.0
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. HIGH YIELD FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $51,999,658) $ 48,171,212
- --------------------------------------------------------------------------------
Foreign currencies, at value (Cost $682,488) 693,228
- --------------------------------------------------------------------------------
Receivables for:
Investments sold 886,217
- --------------------------------------------------------------------------------
Fund shares sold 35,758
- --------------------------------------------------------------------------------
Dividends and Interest 1,235,064
- --------------------------------------------------------------------------------
Principal paydowns 4,781
- --------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 22,431
- --------------------------------------------------------------------------------
Other assets 1,652
================================================================================
Total assets 51,050,343
________________________________________________________________________________
================================================================================
LIABILITIES:
Payables for:
Investments purchased 745,626
- --------------------------------------------------------------------------------
Credit default swap agreements close-out 25,106
- --------------------------------------------------------------------------------
Fund shares reacquired 89,168
- --------------------------------------------------------------------------------
Amount due custodian 1,788,662
- --------------------------------------------------------------------------------
Foreign currency contracts 24,541
- --------------------------------------------------------------------------------
Accrued fees to affiliates 28,365
- --------------------------------------------------------------------------------
Accrued other operating expenses 40,377
- --------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 27,707
================================================================================
Total liabilities 2,769,552
================================================================================
Net assets applicable to shares outstanding $ 48,280,791
________________________________________________________________________________
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 61,905,444
- --------------------------------------------------------------------------------
Undistributed net investment income 7,107,370
- --------------------------------------------------------------------------------
Undistributed net realized gain (loss) (16,895,002)
- --------------------------------------------------------------------------------
Unrealized appreciation (depreciation) (3,837,021)
================================================================================
$ 48,280,791
________________________________________________________________________________
================================================================================
NET ASSETS:
Series I $ 47,842,439
________________________________________________________________________________
================================================================================
Series II $ 438,352
________________________________________________________________________________
================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 10,309,347
________________________________________________________________________________
================================================================================
Series II 94,651
________________________________________________________________________________
================================================================================
Series I:
Net asset value per share $ 4.64
________________________________________________________________________________
================================================================================
Series II:
Net asset value per share $ 4.63
________________________________________________________________________________
================================================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Interest $ 2,763,617
- ------------------------------------------------------
Dividends 78,888
- ------------------------------------------------------
Dividends from affiliated money market
funds (includes securities lending
income of $50,000) 64,411
======================================================
Total investment income 2,906,916
======================================================
EXPENSES:
Advisory fees 142,020
- ------------------------------------------------------
Administrative services fees 79,399
- ------------------------------------------------------
Custodian fees 8,908
- ------------------------------------------------------
Distribution fees -- Series II 488
- ------------------------------------------------------
Transfer agent fees 6,631
- ------------------------------------------------------
Trustees' and officers' fees and
benefits 10,727
- ------------------------------------------------------
Professional services fees 23,435
- ------------------------------------------------------
Other 11,089
======================================================
Total expenses 282,697
======================================================
Less: Fees waived (69,178)
======================================================
Net expenses 213,519
======================================================
Net investment income 2,693,397
======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (1,039,120)
- ------------------------------------------------------
Foreign currencies 19,639
- ------------------------------------------------------
Foreign currency contracts (16,527)
- ------------------------------------------------------
Swap agreements (518)
======================================================
(1,036,526)
======================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 9,872,040
- ------------------------------------------------------
Foreign currencies 10,250
- ------------------------------------------------------
Foreign currency contracts (18,825)
- ------------------------------------------------------
Swap agreements 12
======================================================
9,863,477
======================================================
Net realized and unrealized gain 8,826,951
======================================================
Net increase in net assets resulting
from operations $11,520,348
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. HIGH YIELD FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- ------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 2,693,397 $ 4,361,948
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) (1,036,526) (5,201,273)
- ------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 9,863,477 (11,459,373)
======================================================================================================
Net increase (decrease) in net assets resulting from operations 11,520,348 (12,298,698)
======================================================================================================
Distributions to shareholders from net investment income:
Series I -- (4,318,865)
- ------------------------------------------------------------------------------------------------------
Series II -- (48,535)
======================================================================================================
Total distributions from net investment income -- (4,367,400)
======================================================================================================
Share transactions-net:
Series I (3,505,050) 5,152,523
- ------------------------------------------------------------------------------------------------------
Series II (26,219) (85,487)
======================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (3,531,269) 5,067,036
======================================================================================================
Net increase (decrease) in net assets 7,989,079 (11,599,062)
======================================================================================================
NET ASSETS:
Beginning of period 40,291,712 51,890,774
======================================================================================================
End of period (includes undistributed net investment income of
$7,107,370 and $4,413,973, respectively) $48,280,791 $ 40,291,712
______________________________________________________________________________________________________
======================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. High Yield Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is a high level of current income.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Senior secured floating rate loans and senior secured floating rate debt
securities are fair valued using an evaluated quote provided by an
independent pricing service. Evaluated quotes provided by the pricing
service may reflect appropriate factors such as ratings, tranche type,
industry, company performance, spread, individual trading characteristics,
institution-size trading in similar groups of securities and other market
data.
A security listed or traded on an exchange (except convertible bonds) is
valued at its 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, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
AIM V.I. HIGH YIELD FUND
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Paydown gains and losses on mortgage and asset-backed securities are
recounted as adjustments to interest income. Dividend income is recorded
on the ex-dividend date. Bond premiums and discounts are amortized and/or
accreted for financial reporting purposes.
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. LOWER-RATED SECURITIES -- The Fund normally invests at least 80% of its
net assets in lower-quality debt securities, i.e., "junk bonds".
Investments in lower-rated securities or unrated securities of comparable
quality tend to be more sensitive to economic conditions than higher rated
securities. Junk bonds involve a greater risk of default by the issuer
because such securities are generally unsecured and are often subordinated
to other creditors' claims.
J. SECURITIES LENDING -- The Fund may lend portfolio securities having a
market value up to one-third of the Fund's total assets. Such loans are
secured by collateral equal to no less than the market value of the loaned
securities determined daily by the securities lending provider. Such
collateral will be cash or debt securities issued or guaranteed by the
U.S. Government or any of its sponsored agencies. Cash collateral received
in connection with these loans is invested in short-term money market
instruments or affiliated money market funds and is shown as such on the
Schedule of Investments. It is the Fund's policy to obtain additional
collateral from or return excess collateral to the borrower by the end of
the next business day, following the valuation date of the securities
loaned. Therefore, the value of the collateral held may be temporarily
less than the value of the securities on loan. Lending securities entails
a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase
the collateral accordingly, and the borrower fails to return the
securities. Upon the failure of the borrower to return the securities,
collateral may be liquidated and the securities may be purchased on the
open market to replace the loaned securities. The Fund could experience
delays and costs in gaining access to the collateral. The Fund bears the
risk of any deficiency in the amount of the collateral available for
return to the borrower due to any loss on the collateral invested.
Dividends received on cash collateral investments for securities lending
transactions, which are net of compensation to counterparties, is included
in Dividends from affiliates on the Statement of Operations. The aggregate
value of securities out on loan is shown as a footnote on the Statement of
Assets and Liabilities, if any.
AIM V.I. HIGH YIELD FUND
K. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
Reported net realized foreign currency gains or losses arise from (i)
sales of foreign currencies, (ii) currency gains or losses realized
between the trade and settlement dates on securities transactions, and
(iii) the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency gains and losses arise from changes in the fair values of
assets and liabilities, other than investments in securities at fiscal
period end, resulting from changes in exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
L. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed, realized gains (losses) are
recorded. Realized and unrealized gains (losses) on the contracts are
included in the Statement of Operations. The maximum risks associated with
foreign currency contracts include failure of the counterparty to meet the
terms of the contract and the value of the foreign currency changing
unfavorably. These risks may be in excess of the amounts reflected in the
Statement of Assets and Liabilities.
M. SWAP AGREEMENTS -- The Fund may enter into various swap transactions,
including interest rate, index, currency exchange rate and credit default
swap contracts ("CDS") for investment purposes or to manage interest rate,
currency or credit risk.
Interest rate, index, and currency exchange rate swap agreements are
two-party contracts entered into primarily to exchange the returns (or
differentials in rates of returns) earned or realized on particular
predetermined investments or instruments. The gross returns to be
exchanged or "swapped" between the parties are calculated with respect to
a notional amount, i.e., the return on or increase in value of a
particular dollar amount invested at a particular interest rate, in a
particular foreign currency, or in a "basket" of securities representing a
particular index.
A CDS is an agreement between two parties ("Counterparties") to exchange
the credit risk of an issuer. A buyer of a CDS is said to buy protection
by paying a fixed payment over the life of the agreement and in some
situations an upfront payment to the seller of the CDS. If a defined
credit event occurs (such as payment default or bankruptcy), the Fund as a
protection buyer would cease paying its fixed payment, the Fund would
deliver eligible bonds issued by the reference entity to the seller, and
the seller would pay the full notional value, or the "par value", of the
referenced obligation to the Fund. A seller of a CDS is said to sell
protection and thus would receive a fixed payment over the life of the
agreement and an upfront payment, if applicable. If a credit event occurs,
the Fund as a protection seller would cease to receive the fixed payment
stream, the Fund would pay the buyer "par value" or the full notional
value of the referenced obligation, and the Fund would receive the
eligible bonds issued by the reference entity. In turn, these bonds may be
sold in order to realize a recovery value. Alternatively, the seller of
the CDS and its counterparty may agree to net the notional amount and the
market value of the bonds and make a cash payment equal to the difference
to the buyer of protection. If no credit event occurs, the Fund receives
the fixed payment over the life of the agreement. As the seller, the Fund
would effectively add leverage to its portfolio because, in addition to
its total net assets, the Fund would be subject to investment exposure on
the notional amount of the CDS. In connection with these agreements, cash
and securities may be identified as collateral in accordance with the
terms of the respective swap agreements to provide assets of value and
recourse in the event of default under the swap agreement or
bankruptcy/insolvency of a party to the swap agreement. The Fund's maximum
risk of loss from counterparty risk, either as the protection seller or as
the protection buyer, is the value of the contract. The risk may be
mitigated by having a master netting arrangement between the Fund and the
counterparty and by the posting of collateral by the counterparty to cover
the Fund's exposure to the counterparty.
Implied credit spreads represent the current level at which protection
could be bought or sold given the terms of the existing CDS contract and
serve as an indicator of the current status of the payment/performance
risk of the CDS. An implied spread that has widened or increased since
entry into the initial contract may indicate a deteriorating credit
profile and increased risk of default for the reference entity. A
declining or narrowing spread may indicate an improving credit profile or
decreased risk of default for the reference entity. Alternatively, credit
spreads may increase or decrease reflecting the general tolerance for risk
in the credit markets.
Changes in the value of swap agreements are recognized as unrealized
gains (losses) in the Statement of Operations by "marking to market" on a
daily basis to reflect the value of the swap agreement at the end of each
trading day. Payments received or paid at the beginning of the agreement
are reflected as such on the Statement of Assets and Liabilities and may
be referred to as upfront payments. The Fund accrues for the fixed payment
stream and amortizes upfront payments, if any, on swap agreements on a
daily basis with the net amount, recorded as a component of realized gain
(loss) on the Statement of Operations. A liquidation payment received or
made at the termination of a swap agreement is recorded as realized gain
(loss) on the Statement of Operations. The Fund segregates liquid
securities having a value at least equal to the amount of the potential
obligation of a Fund under any swap transaction. Entering into these
agreements involves, to varying degrees, lack of liquidity and elements of
credit, market, and counterparty risk in excess of amounts recognized on
the Statement of Assets and Liabilities. Such risks involve the
possibility that a swap is difficult to sell or liquidate; the
counterparty does not honor its obligations under the agreement and
unfavorable interest rates and market fluctuations.
AIM V.I. HIGH YIELD FUND
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
First $200 million 0.625%
- -------------------------------------------------------------------
Next $300 million 0.55%
- -------------------------------------------------------------------
Next $500 million 0.50%
- -------------------------------------------------------------------
Over $1 billion 0.45%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 0.95% and Series
II shares to 1.20% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, the only 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. These credits are used to pay certain expenses incurred by the
Fund.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash (excluding investments of cash
collateral from securities lending) in such affiliated money market funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$69,178.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $24,795 for accounting and fund
administrative services and reimbursed $54,604 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
AIM V.I. HIGH YIELD FUND
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
=========================================================================================================================
Equity Securities $157,590 $ 308,132 $ 6,560 $ 472,282
- -------------------------------------------------------------------------------------------------------------------------
Corporate Debt Securities -- 47,453,488 245,442 47,698,930
=========================================================================================================================
-- -- -- 48,171,212
=========================================================================================================================
Other Investments* (18,825) -- -- (18,825)
=========================================================================================================================
Total Investments $138,765 $47,761,620 $252,002 $48,152,387
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
* Other Investments includes foreign currency contracts, which are included at
unrealized appreciation/(depreciation).
NOTE 4--DERIVATIVE INVESTMENTS
Effective with the beginning of the Fund's fiscal year, the Fund has adopted the
provisions of FASB Statement No. 161, Disclosures about Derivative Instruments
and Hedging Activities. The standard is intended to improve financial reporting
about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an
entity's financial position and financial performance. The adoption of this
provision has no impact on the results of operations reported in the financial
statements.
VALUE OF DERIVATIVE INSTRUMENTS AT PERIOD-END
The Table below summarizes the value of the Fund's derivative instruments,
detailed by primary risk exposure, held as of June 30, 2009:
<Table>
<Caption>
VALUE
----------------------
RISK EXPOSURE/ DERIVATIVE TYPE ASSETS LIABILITIES
- ----------------------------------------------------------------------------------------------------
Credit risk
Credit Default Swaps(a) $-- $(25,106)
====================================================================================================
Currency risk
Foreign Currency Contracts(b) -- (24,541)
====================================================================================================
$-- $(49,647)
____________________________________________________________________________________________________
====================================================================================================
</Table>
(a) Value is disclosed on the Statement of Assets and Liabilities under Credit
default swap agreements close-out. Contracts were closed upon the
declaration of bankruptcy by Lehman Brothers Holdings Inc. on September
15, 2008.
(b) Value is disclosed on the Statement of Assets and Liabilities under
Foreign currency contracts.
EFFECT OF DERIVATIVE INSTRUMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009
The table below summarizes the gains (losses) on derivative instruments,
detailed by primary risk exposure, recognized in earnings during the period:
<Table>
<Caption>
LOCATION OF GAIN (LOSS) ON
STATEMENT OF OPERATIONS
--------------------------------
SWAP FOREIGN CURRENCY
AGREEMENTS* CONTRACTS*
- -------------------------------------------------------------------------------------------------------
Realized Gain (Loss)
Credit risk $(518) $ --
- -------------------------------------------------------------------------------------------------------
Currency risk -- (16,527)
=======================================================================================================
Subtotal $(518) $(16,527)
=======================================================================================================
Change in Unrealized Appreciation (Depreciation)
Credit risk $ 12 $ --
- -------------------------------------------------------------------------------------------------------
Currency risk -- (18,825)
=======================================================================================================
Subtotal $ 12 $(18,825)
=======================================================================================================
Total $(506) $(35,352)
_______________________________________________________________________________________________________
=======================================================================================================
</Table>
* The average value outstanding of swap agreements and foreign currency
contracts during the period was $65,000 and $301,377, respectively.
AIM V.I. HIGH YIELD FUND
FOREIGN CURRENCY CONTRACTS AT PERIOD-END
<Table>
<Caption>
OPEN FOREIGN CURRENCY CONTRACTS
- ---------------------------------------------------------------------------------------------------------------
CONTRACT TO UNREALIZED
SETTLEMENT --------------------------------------- APPRECIATION
DATE DELIVER RECEIVE VALUE (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------------
8/20/09 EUR 500,000 USD 682,316 $ 701,141 $ (18,825)
===============================================================================================================
</Table>
<Table>
<Caption>
CLOSED FOREIGN CURRENCY CONTRACTS
- --------------------------------------------------------------------------------------------------------------
CONTRACT TO
CLOSED --------------------------------------- REALIZED
DATE DELIVER RECEIVE VALUE GAIN (LOSS)
- --------------------------------------------------------------------------------------------------------------
6/29/09 EUR 114,000 USD 154,226 $ 159,942 $ (5,716)
==============================================================================================================
Total foreign currency
contracts $ (24,541)
______________________________________________________________________________________________________________
==============================================================================================================
</Table>
<Table>
Currency Abbreviations:
EUR - Euro
USD - U.S. Dollar
</Table>
NOTE 5--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $1,470
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 6--CASH BALANCES
The Fund may borrow for leveraging in an amount up to 5% of the Fund's total
assets (excluding the amount borrowed) at the time the borrowing is made. In
doing so, the Fund is permitted to temporarily carry a negative or overdrawn
balance in its account with The State Street Bank and Trust Company, the
custodian bank. To compensate the custodian bank for such overdrafts, the
overdrawn Fund may either (i) leave funds as a compensating balance in the
account so the custodian bank can be compensated by earning the additional
interest; or (ii) compensate by paying the custodian bank at a rate agreed upon
by the custodian bank and Invesco Aim, not to exceed the contractually agreed
upon rate. A Fund may not purchase additional securities when any borrowings
from banks exceeds 5% of the Fund's total assets.
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions. Under these limitation rules, the Fund is limited to utilizing
$11,026,795 of capital loss carryforward in the fiscal year ending December 31,
2009.
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
December 31, 2010 $10,225,025
- -----------------------------------------------------------------------------------------------
December 31, 2016 3,203,621
===============================================================================================
Total capital loss carryforward $13,428,646
_______________________________________________________________________________________________
===============================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
AIM V.I. HIGH YIELD FUND
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $40,498,031 and
$32,979,625, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 2,814,976
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (7,036,031)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $(4,221,055)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $52,392,267.
</Table>
NOTE 9--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- ------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 6,916,366 $ 26,400,516 6,943,158 $ 35,095,084
- ------------------------------------------------------------------------------------------------------------------------
Series II 23 88 20,816 115,600
========================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 1,251,845 4,318,865
- ------------------------------------------------------------------------------------------------------------------------
Series II -- -- 14,068 48,535
========================================================================================================================
Reacquired:
Series I (7,435,846) (29,905,566) (6,290,819) (34,261,426)
- ------------------------------------------------------------------------------------------------------------------------
Series II (6,790) (26,307) (49,870) (249,622)
========================================================================================================================
Net increase (decrease) in share activity (526,247) $ (3,531,269) 1,889,198 $ 5,067,036
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 75% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
AIM V.I. HIGH YIELD FUND
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
(LOSSES)
NET ASSET ON SECURITIES DIVIDENDS
VALUE, NET (BOTH TOTAL FROM FROM NET NET ASSET NET ASSETS,
BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT VALUE, END TOTAL END OF PERIOD
OF PERIOD INCOME(a) UNREALIZED) OPERATIONS INCOME OF PERIOD RETURN(b) (000S OMITTED)
- -------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $3.69 $0.24 $ 0.71 $ 0.95 $ -- $4.64 25.75% $47,842
Year ended 12/31/08 5.74 0.49 (2.00) (1.51) (0.54) 3.69 (25.69) 39,918
Year ended 12/31/07 6.12 0.46 (0.38) 0.08 (0.46) 5.74 1.24 51,225
Year ended 12/31/06 6.03 0.45 0.19 0.64 (0.55) 6.12 10.74 58,336
Year ended 12/31/05 6.45 0.43 (0.26) 0.17 (0.59) 6.03 2.72 54,731
Year ended 12/31/04 5.97 0.42 0.25(e) 0.67 (0.19) 6.45 11.25(f) 96,602
- -------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 3.68 0.23 0.72 0.95 -- 4.63 25.82 438
Year ended 12/31/08 5.72 0.47 (1.99) (1.52) (0.52) 3.68 (26.00) 374
Year ended 12/31/07 6.09 0.44 (0.38) 0.06 (0.43) 5.72 1.01 666
Year ended 12/31/06 6.00 0.43 0.19 0.62 (0.53) 6.09 10.41 919
Year ended 12/31/05 6.43 0.41 (0.26) 0.15 (0.58) 6.00 2.43 1,556
Year ended 12/31/04 5.95 0.41 0.25(e) 0.66 (0.18) 6.43 11.14(f) 1,072
_______________________________________________________________________________________________________________________________
===============================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
WITH FEE WAIVERS FEE WAIVERS INCOME
AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
ABSORBED ABSORBED NET ASSETS TURNOVER(c)
- ---------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 0.94%(d) 1.24%(d) 11.85%(d) 79%
Year ended 12/31/08 0.95 1.22 9.19 85
Year ended 12/31/07 0.96 1.15 7.42 113
Year ended 12/31/06 0.96 1.18 7.22 135
Year ended 12/31/05 1.01 1.16 6.58 69
Year ended 12/31/04 1.04 1.04 6.79 131
- ---------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 1.19(d) 1.49(d) 11.60(d) 79
Year ended 12/31/08 1.20 1.47 8.94 85
Year ended 12/31/07 1.21 1.40 7.17 113
Year ended 12/31/06 1.21 1.43 6.97 135
Year ended 12/31/05 1.22 1.41 6.37 69
Year ended 12/31/04 1.24 1.29 6.59 131
_______________________________________________________________________________________
=======================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net
asset values may differ from the net asset value and returns for
shareholder transactions. Total returns are not annualized for periods
less than one year, if applicable and do not reflect charges assessed in
connection with a variable product, which if included would reduce total
returns.
(c) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(d) Ratios are annualized and based on average daily net assets (000's
omitted) of $45,429 and $394 for Series I and Series II shares,
respectively.
(e) Includes net increase from payments by affiliates of $0.02 and $0.01 for
Series I and Series II shares, respectively.
(f) Total return is after reimbursement the advisor has agreed to pay for an
economic loss due to a trading error. Total return before reimbursement by
the advisor was 10.90% and 10.96% for Series I and Series II shares,
respectively.
AIM V.I. HIGH YIELD FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,257.50 $5.26 $1,020.13 $4.71 0.94%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,254.70 6.65 1,018.89 5.96 1.19
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. HIGH YIELD FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM In addition to their meetings was controlling. Each Trustee may have
Variable Insurance Funds is required under throughout the year, the Sub-Committees evaluated the information provided
the Investment Company Act of 1940 to meet at designated contract renewal differently from another Trustee and
approve annually the renewal of the AIM meetings each year to conduct an in-depth attributed different weight to the various
V.I. High Yield Fund (the Fund) investment review of the performance, fees, expenses, factors. The Trustees recognized that the
advisory agreement with Invesco Aim and other matters related to their advisory arrangements and resulting
Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract advisory fees for the Fund and the other
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive AIM Funds are the result of years of
for Mutual Funds (the sub-advisory comparative performance and fee data review and negotiation between the
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an Trustees and Invesco Aim, that the
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Trustees may focus to a greater extent on
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and certain aspects of these arrangements in
Limited, Invesco Australia Limited, supervision of the Senior Officer who also some years than in others, and that the
Invesco Global Asset Management (N.A.), prepares a separate analysis of this Trustees' deliberations and conclusions in
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each Sub- a particular year may be based in part on
Institutional (N.A.), Inc., Invesco Senior Committee then makes recommendations to their deliberations and conclusions
Secured Management, Inc. and Invesco the Investments Committee regarding the regarding these same arrangements
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. throughout the year and in prior years.
Sub-Advisers). During contract renewal The Investments Committee considers each
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes The discussion below serves as a
Board as a whole, and the disinterested or its own recommendations regarding the fees summary of the Senior Officer's
"independent" Trustees voting separately, and expenses of the AIM Funds to the full independent written evaluation with
approved the continuance of the Fund's Board. The Investments Committee also respect to the Fund's investment advisory
investment advisory agreement and the considers each Sub-Committee's agreement as well as a discussion of the
sub-advisory contracts for another year, recommendations in making its annual material factors and related conclusions
effective July 1, 2009. In doing so, the recommendation to the Board whether to that formed the basis for the Board's
Board determined that the Fund's approve the continuance of each AIM Fund's approval of the Fund's investment advisory
investment advisory agreement and the investment advisory agreement and agreement and sub-advisory contracts.
sub-advisory contracts are in the best sub-advisory contracts for another year. Unless otherwise stated, information set
interests of the Fund and its shareholders forth below is as of June 17, 2009, and
and that the compensation to Invesco Aim The independent Trustees met separately does not reflect any changes that may have
and the Affiliated Sub-Advisers under the during their evaluation of the Fund's occurred since that date, including but
Fund's investment advisory agreement and investment advisory agreement and not limited to changes to the Fund's
sub-advisory contracts is fair and sub-advisory contracts with independent performance, advisory fees, expense
reasonable. legal counsel. The independent Trustees limitations and/or fee waivers.
were also assisted in their annual
THE BOARD'S FUND EVALUATION PROCESS evaluation of the Fund's investment FACTORS AND CONCLUSIONS AND SUMMARY OF
advisory agreement by the Senior Officer. INDEPENDENT WRITTEN FEE EVALUATION
The Board's Investments Committee has One responsibility of the Senior Officer
established three Sub-Committees that are is to manage the process by which the AIM A. Nature, Extent and Quality of
responsible for overseeing the management Funds' proposed management fees are Services Provided by Invesco Aim
of a number of the series portfolios of negotiated during the annual contract
the AIM Funds. This Sub-Committee renewal process to ensure that they are The Board reviewed the advisory services
structure permits the Trustees to focus on negotiated in a manner that is at arms' provided to the Fund by Invesco Aim under
the performance of the AIM Funds that have length and reasonable. Accordingly, the the Fund's investment advisory agreement,
been assigned to them. The Sub-Committees Senior Officer must either supervise a the performance of Invesco Aim in
meet throughout the year to review the competitive bidding process or prepare an providing these services, and the
performance of their assigned funds, and independent written evaluation. The Senior credentials and experience of the officers
the Sub-Committees review monthly and Officer recommended that an independent and employees of Invesco Aim who provide
quarterly comparative performance written evaluation be provided and, at the these services. The Board's review of the
information and periodic asset flow data direction of the Board, prepared an qualifications of Invesco Aim to provide
for their assigned funds. These materials independent written evaluation. these services included the Board's
are prepared under the direction and consideration of Invesco Aim's portfolio
supervision of the independent Senior During the annual contract renewal and product review process, various back
Officer, an officer of the AIM Funds who process, the Board considered the factors office support functions provided by
reports directly to the independent discussed below in evaluating the fairness Invesco Aim and its affiliates, and
Trustees. Over the course of each year, and reasonableness of the Fund's Invesco Aim's equity and fixed income
the Sub-Committees meet with portfolio investment advisory agreement and trading operations. The Board concluded
managers for their assigned funds and sub-advisory contracts. The Board that the nature, extent and quality of the
other members of management and review considered all of the information provided advisory services provided to the Fund by
with these individuals the performance, to them, including information provided at Invesco Aim are appropriate and that
investment objective(s), policies, their meetings throughout the year as part Invesco Aim currently is providing
strategies and limitations of these funds. of their ongoing oversight of the Fund, satisfactory advisory services in
and did not identify any particular factor accordance with the terms of the Fund's
that investment advisory agreement. In
addition, based on their
AIM V.I. HIGH YIELD FUND continued
ongoing meetings throughout the year with C. Fund Performance any advisory fee waivers and before any
the Fund's portfolio manager or managers, expense limitations/waivers) to the
the Board concluded that these individuals The Board considered fund performance as a advisory fee rates of other clients of
are competent and able to continue to relevant factor in considering whether to Invesco Aim and its affiliates with
carry out their responsibilities under the approve the investment advisory agreement investment strategies comparable to those
Fund's investment advisory agreement. as well as the sub-advisory contracts for of the Fund, including one mutual fund
the Fund, as Invesco Institutional advised by Invesco Aim and sub-advised by
In determining whether to continue the currently manages assets of the Fund. Invesco Institutional. The Board noted
Fund's investment advisory agreement, the that the Fund's rate was above the
Board considered the prior relationship The Board compared the Fund's effective fee rate for the other mutual
between Invesco Aim and the Fund, as well performance during the past one, three and fund. The Board also noted that Invesco
as the Board's knowledge of Invesco Aim's five calendar years to the performance of Institutional sub-advises three foreign
operations, and concluded that it is all funds in the Lipper performance funds with comparable investment
benefi- cial to maintain the current universe that are not managed by Invesco strategies.
relationship, in part, because of such Aim or an Affiliated Sub-Adviser, and
knowledge. The Board also considered the against the Lipper VA Underlying Funds - Additionally, the Board compared the
steps that Invesco Aim and its affiliates High Current Yield Index. The Board noted Fund's sub-advisory fee rate to the
continue to take to improve the quality that the Fund's performance was in the effective fee rate of one separately
and efficiency of the services they fourth quintile of its performance managed account/ wrap account sub-advised
provide to the AIM Funds in the areas of universe for the one, three and five year by Invesco Institutional. The Board noted
investment performance, product line periods (the first quintile being the best that the Fund's sub-advisory fee rate was
diversification, distribution, fund performing funds and the fifth quintile above the rate for the separately managed
operations, shareholder services and being the worst performing funds). The account/ wrap account. The Board
compliance. The Board concluded that the Board noted that the Fund's performance considered that management of the
quality and efficiency of the services was below the performance of the Index for separately managed accounts/wrap accounts
Invesco Aim and its affiliates provide to the one, three and five year periods. by Invesco Institutional involves
the AIM Funds in each of these areas Although the independent written different levels of services and different
support the Board's approval of the evaluation of the Fund's Senior Officer operational and regulatory requirements
continuance of the Fund's investment only considered Fund performance through than Invesco Aim's and Invesco
advisory agreement. the most recent calendar year, the Board Institutional's management of the Fund.
also reviewed more recent Fund performance The Board concluded that these differences
B. Nature, Extent and Quality of and this review did not change their are appropriately reflected in the fee
Services Provided by Affiliated conclusions. The Board noted that, in structure for the Fund.
Sub-Advisers response to the Board's focus on fund
performance, Invesco Aim has taken a The Board noted that Invesco Aim has
The Board reviewed the services provided number of actions intended to improve the contractually agreed to waive fees and/or
by the Affiliated Sub-Advisers under the investment process for the funds. limit expenses of the Fund through at
sub-advisory contracts and the credentials least April 30, 2010 in an amount
and experience of the officers and D. Advisory and Sub-Advisory Fees and necessary to limit total annual operating
employees of the Affiliated Sub-Advisers Fee Waivers expenses to a specified percentage of
who provide these services. The Board average daily net assets for each class of
concluded that the nature, extent and The Board compared the Fund's contractual the Fund. The Board also considered the
quality of the services provided by the advisory fee rate to the contractual effect this expense limitation would have
Affiliated Sub- Advisers are appropriate. advisory fee rates of funds in the Fund's on the Fund's estimated total expenses.
The Board noted that the Affiliated Lipper expense group that are not managed
Sub-Advisers, which have offices and by Invesco Aim or an Affiliated The Board also considered the services
personnel that are geographically Sub-Adviser, at a common asset level. The provided by the Affiliated Sub-Advisers
dispersed in financial centers around the Board noted that the Fund's contractual pursuant to the sub-advisory contracts and
world, can provide research and other advisory fee rate was below the median the services provided by Invesco Aim
information and make recommendations on contractual advisory fee rate of funds in pursuant to the Fund's advisory agreement,
the markets and economies of various its expense group. The Board also reviewed as well as the allocation of fees between
countries and securities of companies the methodology used by Lipper in Invesco Aim and the Affiliated
located in such countries or on various determining contractual fee rates, which Sub-Advisers pursuant to the sub-advisory
types of investments and investment includes using audited financial data from contracts. The Board noted that the
techniques. The Board noted that the most recent annual report of each fund sub-advisory fees have no direct effect on
investment decisions for the Fund are made in the expense group that was publicly the Fund or its shareholders, as they are
by Invesco Institutional (N.A.), Inc. available as of the end of the past paid by Invesco Aim to the Affiliated
(Invesco Institutional). The Board calendar year. The Board noted that some Sub-Advisers, and that Invesco Aim and the
concluded that the sub-advisory contracts comparative data was at least one year old Affiliated Sub-Advisers are affiliates.
benefit the Fund and its shareholders by and that other data did not reflect the
permitting Invesco Aim to utilize the market downturn that occurred in the After taking account of the Fund's
additional resources and talent of the fourth quarter of 2008. contractual advisory fee rate, the
Affiliated Sub-Advisers in managing the contractual sub-advisory fee rate, the
Fund. The Board also compared the Fund's comparative advisory fee information
effective fee rate (the advisory fee after discussed above, the expense limitations
AIM V.I. HIGH YIELD FUND continued
and other relevant factors, the Board Invesco Aim has the financial resources market funds attributable to such
concluded that the Fund's advisory and necessary to fulfill these obligations. investments, although Invesco Aim has
sub-advisory fees are fair and reasonable. The Board also considered whether each contractually agreed to waive through at
Affiliated Sub-Adviser is financially least June 30, 2010, the advisory fees
E. Economies of Scale and Breakpoints sound and has the resources necessary to payable by the Fund in an amount equal to
The Board considered the extent to which perform its obligations under the 100% of the net advisory fee Invesco Aim
there are economies of scale in the sub-advisory contracts, and concluded that receives from the affiliated money market
provision of advisory services to the each Affiliated Sub-Adviser has the funds with respect to the Fund's
Fund. The Board also considered whether financial resources necessary to fulfill investment in the affiliated money market
the Fund benefits from such economies of these obligations. funds of uninvested cash, but not cash
scale through contractual breakpoints in collateral. The Board concluded that the
the Fund's advisory fee schedule. The G. Collateral Benefits to Invesco Aim Fund's investment of uninvested cash and
Board noted that the Fund's contractual and its Affiliates cash collateral from any securities
advisory fee schedule includes three lending arrangements in the affiliated
breakpoints but that, due to the Fund's The Board considered various other money market funds is in the best
asset level at the end of the past benefits received by Invesco Aim and its interests of the Fund and its
calendar year, the Fund has yet to benefit affiliates resulting from Invesco Aim's shareholders.
from the breakpoints. Based on this relationship with the Fund, including the
information, the Board concluded that the fees received by Invesco Aim and its
Fund's advisory fees would reflect affiliates for their provision of
economies of scale at higher asset levels. administrative, transfer agency and
The Board also noted that the Fund shares distribution services to the Fund. The
directly in economies of scale through Board considered the performance of
lower fees charged by third party service Invesco Aim and its affiliates in
providers based on the combined size of providing these services and the
all of the AIM Funds and affiliates. organizational structure employed by
Invesco Aim and its affiliates to provide
F. Profitability and Financial these services. The Board also considered
Resources that these services are provided to the
Fund pursuant to written contracts that
The Board reviewed information from are reviewed and approved on an annual
Invesco Aim concerning the costs of the basis by the Board. The Board concluded
advisory and other services that Invesco that Invesco Aim and its affiliates are
Aim and its affiliates provide to the Fund providing these services in a satisfactory
and the profitability of Invesco Aim and manner and in accordance with the terms of
its affiliates in providing these their contracts, and are qualified to
services. The Board also reviewed continue to provide these services to the
information concerning the financial Fund.
condition of Invesco Aim and its
affiliates. The Board reviewed with The Board considered the benefits
Invesco Aim the methodology used to realized by Invesco Aim and the Affiliated
prepare the profitability information. The Sub-Advisers as a result of portfolio
Board considered the overall profitability brokerage transactions executed through
of Invesco Ltd., the ultimate parent of "soft dollar" arrangements. The Board
Invesco Aim and the Affiliated noted that soft dollar arrangements shift
Sub-Advisers, and of Invesco Aim, as well the payment obligation for research and
as the profitability of Invesco Aim in execution services from Invesco Aim and
connection with managing the Fund. The the Affiliated Sub-Advisers to the funds
Board noted that Invesco Aim continues to and therefore may reduce Invesco Aim's and
operate at a net profit, although the the Affiliated Sub-Advisers' expenses. The
reduction of assets under management as a Board concluded that Invesco Aim's and the
result of market movements and the Affiliated Sub-Advisers' soft dollar
increase in voluntary fee waivers for arrangements are appropriate. The Board
affiliated money market funds have reduced also concluded that, based on their review
the profitability of Invesco Aim and its and representations made by the Chief
affiliates. The Board concluded that the Compliance Officer of Invesco Aim, these
Fund's fees are fair and reasonable, and arrangements are consistent with
that the level of profits realized by regulatory requirements.
Invesco Aim and its affiliates from
providing services to the Fund is not The Board considered the fact that the
excessive in light of the nature, quality Fund's uninvested cash and cash collateral
and extent of the services provided. The from any securities lending arrangements
Board considered whether Invesco Aim is may be invested in money market funds
financially sound and has the resources advised by Invesco Aim pursuant to
necessary to perform its obligations under procedures approved by the Board. The
the Fund's investment advisory agreement, Board noted that Invesco Aim will receive
and concluded that advisory fees from these affiliated money
AIM V.I. HIGH YIELD FUND
[INVESCO AIM LOGO] AIM V.I. INTERNATIONAL GROWTH FUND
--SERVICE MARK-- Semiannual Report to Shareholders o June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund
files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the SEC
Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by
calling 202 942 8090 or 800 732 0330, or by electronic request at the following E-mail address: publicinfo@sec.gov. The SEC file
numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent portfolio holdings, as filed on Form N-Q, have also been
made available to insurance companies issuing variable annuity contracts and variable life insurance policies ("variable products")
that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, from our Client Services department at 800 410 4246 or on the Invesco Aim Web site,
invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site,
sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2009, is
available at our Web site. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting
Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. will be merged into
Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc. Additional information
will be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN
MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
SERIES I SHARES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer Inception (5/5/93) 6.45%
charges. If variable product issuer charges were included, returns would be lower. 10 Years 2.60
5 Years 6.00
Series I Shares 10.83% 1 Year -24.91
Series II Shares 10.71
MSCI EAFE Index(Triangle) (Broad Market Index) 7.95 SERIES II SHARES
MSCI EAFE Growth Index(Triangle) (Style-Specific Index) 6.34 10 Years 2.34
Lipper VUF International Growth Funds Index(Triangle) (Peer Group Index) 10.66 5 Years 5.73
1 Year -25.10
(Triangle) Lipper Inc. ==========================================
The MSCI EAFE--REGISTERED TRADEMARK-- INDEX is a free float-adjusted market FEES ASSESSED IN CONNECTION WITH A
capitalization index that is designed to measure developed market equity performance, VARIABLE PRODUCT. SALES CHARGES, EXPENSES
excluding the U.S. and Canada. AND FEES, WHICH ARE DETERMINED BY THE
VARIABLE PRODUCT ISSUERS, WILL VARY AND
The MSCI EAFE--REGISTERED TRADEMARK-- GROWTH INDEX is an unmanaged index considered WILL LOWER THE TOTAL RETURN.
representative of growth stocks of Europe, Australasia and the Far East.
THE MOST RECENT MONTH-END PERFORMANCE
The LIPPER VUF INTERNATIONAL GROWTH FUNDS INDEX is an equally weighted DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
representation of the largest variable insurance underlying funds in the Lipper PRODUCT CHARGES, IS AVAILABLE ON THE
International Growth Funds category. These funds invest at least 75% of their equity INVESCO AIM AUTOMATED INFORMATION LINE,
assets in companies strictly outside the U.S. and typically have an above-average 866 702 4402. AS MENTIONED ABOVE, FOR THE
price-to-cash flow ratio, price-to-book ratio, and three-year sales-per-share growth MOST RECENT MONTH-END PERFORMANCE
value compared to the S&P/Citigroup World ex-U.S. BMI. INCLUDING VARIABLE PRODUCT CHARGES, PLEASE
CONTACT YOUR VARIABLE PRODUCT ISSUER OR
The Fund is not managed to track the performance of any particular index, including FINANCIAL ADVISOR.
the indexes defined here, and consequently, the performance of the Fund may deviate
significantly from the performance of the indexes. (1) Total annual operating expenses less
any contractual fee waivers and/or
A direct investment cannot be made in an index. Unless otherwise indicated, index expense reimbursements by the advisor
results include reinvested dividends, and they do not reflect sales charges. in effect through at least April 30,
Performance of the peer group reflects fund expenses; performance of a market index 2010. See current prospectus for more
does not. information.
=======================================================================================
(2) Total annual operating expenses less
SERIES II SHARES' INCEPTION DATE IS YOU MAY HAVE A GAIN OR LOSS WHEN YOU contractual advisory fee waivers by
SEPTEMBER 19, 2001. RETURNS SINCE THAT SELL SHARES. the advisor in effect through at least
DATE ARE HISTORICAL. ALL OTHER RETURNS ARE June 30, 2010. See current prospectus
THE BLENDED RETURNS OF THE HISTORICAL THE NET ANNUAL FUND OPERATING EXPENSE for more information.
PERFORMANCE OF SERIES II SHARES SINCE RATIO SET FORTH IN THE MOST RECENT FUND
THEIR INCEPTION AND THE RESTATED PROSPECTUS AS OF THE DATE OF THIS REPORT
HISTORICAL PERFORMANCE OF SERIES I SHARES FOR SERIES I AND SERIES II SHARES WAS
(FOR PERIODS PRIOR TO INCEPTION OF SERIES 1.07% AND 1.32%, RESPECTIVELY.(1, 2) THE
II SHARES) ADJUSTED TO REFLECT THE RULE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO
12B-1 FEES APPLICABLE TO SERIES II SHARES. SET FORTH IN THE MOST RECENT FUND
THE INCEPTION DATE OF SERIES I SHARES IS PROSPECTUS AS OF THE DATE OF THIS REPORT
MAY 5, 1993. FOR SERIES I AND SERIES II SHARES WAS
1.08% AND 1.33%, RESPECTIVELY. THE EXPENSE
THE PERFORMANCE OF THE FUND'S SERIES I RATIOS PRESENTED ABOVE MAY VARY FROM THE
AND SERIES II SHARE CLASSES WILL DIFFER EXPENSE RATIOS PRESENTED IN OTHER SECTIONS
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES. OF THIS REPORT THAT ARE BASED ON EXPENSES
INCURRED DURING THE PERIOD COVERED BY THIS
THE PERFORMANCE DATA QUOTED REPRESENT REPORT.
PAST PERFORMANCE AND CANNOT GUARANTEE
COMPARABLE FUTURE RESULTS; CURRENT AIM V.I. INTERNATIONAL GROWTH FUND, A
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE SERIES PORTFOLIO OF AIM VARIABLE INSURANCE
CONTACT YOUR VARIABLE PRODUCT ISSUER OR FUNDS, IS CURRENTLY OFFERED THROUGH
FINANCIAL ADVISOR FOR THE MOST RECENT INSURANCE COMPANIES ISSUING VARIABLE
MONTH-END VARIABLE PRODUCT PERFORMANCE. PRODUCTS. YOU CANNOT PURCHASE SHARES OF
PERFORMANCE FIGURES REFLECT FUND EXPENSES, THE FUND DIRECTLY. PERFORMANCE FIGURES
REINVESTED DISTRIBUTIONS AND CHANGES IN GIVEN REPRESENT THE FUND AND ARE NOT
NET ASSET VALUE. INVESTMENT RETURN AND INTENDED TO REFLECT ACTUAL VARIABLE
PRINCIPAL VALUE WILL FLUCTUATE SO THAT PRODUCT VALUES. THEY DO NOT REFLECT SALES
CHARGES, EXPENSES AND
AIM V.I. INTERNATIONAL GROWTH FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-86.63%
AUSTRALIA-4.44%
BHP Billiton Ltd. 966,238 $ 26,477,983
- ---------------------------------------------------------------------------------
Cochlear Ltd. 408,485 18,989,425
- ---------------------------------------------------------------------------------
CSL Ltd. 596,972 15,426,886
- ---------------------------------------------------------------------------------
QBE Insurance Group Ltd. 335,525 5,352,746
=================================================================================
66,247,040
=================================================================================
BELGIUM-2.63%
Anheuser-Busch InBev N.V. 1,085,538 39,285,301
- ---------------------------------------------------------------------------------
Anheuser-Busch InBev N.V.-Ctfs.(b) 274,612 1,155
=================================================================================
39,286,456
=================================================================================
CANADA-3.43%
Canadian National Railway Co. 267,570 11,509,609
- ---------------------------------------------------------------------------------
Canadian Natural Resources Ltd. 234,906 12,370,660
- ---------------------------------------------------------------------------------
EnCana Corp. 215,747 10,697,625
- ---------------------------------------------------------------------------------
Suncor Energy, Inc. 548,014 16,679,674
=================================================================================
51,257,568
=================================================================================
DENMARK-1.82%
Novo Nordisk A.S.-Class B 500,467 27,192,313
=================================================================================
FINLAND-0.59%
Nokia Corp. 602,234 8,785,686
=================================================================================
FRANCE-4.21%
Axa S.A. 307,960 5,820,021
- ---------------------------------------------------------------------------------
BNP Paribas 270,079 17,516,994
- ---------------------------------------------------------------------------------
Cap Gemini S.A. 167,165 6,172,248
- ---------------------------------------------------------------------------------
Danone S.A. 158,579 7,839,571
- ---------------------------------------------------------------------------------
Total S.A. 470,935 25,497,813
=================================================================================
62,846,647
=================================================================================
GERMANY-5.30%
Bayer AG 519,832 27,861,900
- ---------------------------------------------------------------------------------
Deutsche Boerse AG 94,900 7,356,840
- ---------------------------------------------------------------------------------
Merck KGaA 264,600 26,966,450
- ---------------------------------------------------------------------------------
Puma AG Rudolf Dassler Sport 77,081 16,913,109
=================================================================================
79,098,299
=================================================================================
GREECE-0.52%
OPAP S.A. 289,872 7,695,721
=================================================================================
HONG KONG-2.92%
Esprit Holdings Ltd. 1,868,700 10,428,484
- ---------------------------------------------------------------------------------
Hutchison Whampoa Ltd. 3,450,000 22,494,108
- ---------------------------------------------------------------------------------
Li & Fung Ltd. 3,978,000 10,676,370
=================================================================================
43,598,962
=================================================================================
INDIA-2.70%
Bharat Heavy Electricals Ltd. 303,541 13,965,550
- ---------------------------------------------------------------------------------
Infosys Technologies Ltd. 710,658 26,290,453
=================================================================================
40,256,003
=================================================================================
IRELAND-0.63%
CRH PLC 413,550 9,477,747
=================================================================================
ISRAEL-3.20%
Teva Pharmaceutical Industries Ltd.-ADR 967,789 47,750,709
=================================================================================
ITALY-3.47%
Eni S.p.A. 1,120,077 26,561,997
- ---------------------------------------------------------------------------------
Finmeccanica S.p.A. 1,786,377 25,198,585
=================================================================================
51,760,582
=================================================================================
JAPAN-5.90%
Denso Corp.(b) 429,000 10,934,816
- ---------------------------------------------------------------------------------
Fanuc Ltd.(b) 186,600 14,887,384
- ---------------------------------------------------------------------------------
Hoya Corp.(b) 733,500 14,684,952
- ---------------------------------------------------------------------------------
Keyence Corp. 79,200 16,116,277
- ---------------------------------------------------------------------------------
Nidec Corp. 311,700 18,833,124
- ---------------------------------------------------------------------------------
Toyota Motor Corp.(b) 333,100 12,591,304
=================================================================================
88,047,857
=================================================================================
MEXICO-3.07%
America Movil S.A.B de C.V.-Series L-ADR 740,520 28,672,934
- ---------------------------------------------------------------------------------
Grupo Televisa S.A.-ADR 1,008,568 17,145,656
=================================================================================
45,818,590
=================================================================================
NETHERLANDS-3.04%
Heineken Holding N.V. 388,884 12,346,775
- ---------------------------------------------------------------------------------
Koninklijke (Royal) KPN N.V. 1,511,634 20,816,587
- ---------------------------------------------------------------------------------
TNT N.V. 629,371 12,254,229
=================================================================================
45,417,591
=================================================================================
NORWAY-0.37%
Petroleum Geo-Services A.S.A.(b) 891,163 5,553,012
=================================================================================
PHILIPPINES-1.66%
Philippine Long Distance Telephone Co. 497,190 24,735,564
=================================================================================
SINGAPORE-3.70%
Keppel Corp. Ltd. 4,233,000 20,096,136
- ---------------------------------------------------------------------------------
Singapore Technologies Engineering Ltd. 7,433,000 12,545,791
- ---------------------------------------------------------------------------------
United Overseas Bank Ltd. 2,236,000 22,586,243
=================================================================================
55,228,170
=================================================================================
SPAIN-1.78%
Telefonica S.A. 1,172,778 26,583,300
=================================================================================
SWITZERLAND-8.73%
Nestle S.A. 1,013,180 38,233,409
- ---------------------------------------------------------------------------------
Roche Holding AG 309,166 42,020,746
- ---------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. INTERNATIONAL GROWTH FUND
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------------
SWITZERLAND-(CONTINUED)
Sonova Holding AG 286,807 $ 23,304,618
- ---------------------------------------------------------------------------------
Syngenta AG 115,082 26,713,458
=================================================================================
130,272,231
=================================================================================
TAIWAN-1.17%
Taiwan Semiconductor Manufacturing Co. Ltd.-ADR 1,859,286 17,495,881
=================================================================================
TURKEY-0.64%
Akbank T.A.S. 2,144,176 9,531,476
=================================================================================
UNITED KINGDOM-20.71%
Aviva PLC 1,050,688 5,936,297
- ---------------------------------------------------------------------------------
BAE Systems PLC 2,719,587 15,178,057
- ---------------------------------------------------------------------------------
BG Group PLC 1,022,301 17,173,516
- ---------------------------------------------------------------------------------
British American Tobacco PLC 629,690 17,392,268
- ---------------------------------------------------------------------------------
Capita Group PLC 1,142,516 13,466,943
- ---------------------------------------------------------------------------------
Compass Group PLC 4,641,117 26,147,863
- ---------------------------------------------------------------------------------
Imperial Tobacco Group PLC 1,435,545 37,330,652
- ---------------------------------------------------------------------------------
Informa PLC 3,066,248 11,045,640
- ---------------------------------------------------------------------------------
International Power PLC 4,651,703 18,259,799
- ---------------------------------------------------------------------------------
Reckitt Benckiser Group PLC 643,891 29,339,390
- ---------------------------------------------------------------------------------
Reed Elsevier PLC 2,152,141 16,044,050
- ---------------------------------------------------------------------------------
Shire PLC 2,095,692 28,898,967
- ---------------------------------------------------------------------------------
Smith & Nephew PLC 924,312 6,851,383
- ---------------------------------------------------------------------------------
Tesco PLC 4,524,639 26,367,592
- ---------------------------------------------------------------------------------
Vodafone Group PLC 14,129,987 27,307,912
- ---------------------------------------------------------------------------------
WPP PLC 1,850,962 12,308,676
=================================================================================
309,049,005
=================================================================================
Total Common Stocks & Other Equity Interests
(Cost $1,361,781,164) 1,292,986,410
=================================================================================
PREFERRED STOCKS-0.94%
BRAZIL-0.94%
Petroleo Brasileiro S.A.-ADR-Pfd. (Cost
$11,156,293) 421,935 14,075,752
=================================================================================
MONEY MARKET FUNDS-11.01%
Liquid Assets Portfolio-Institutional Class(c) 82,184,349 82,184,349
- ---------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(c) 82,184,349 82,184,349
=================================================================================
Total Money Market Funds (Cost $164,368,698) 164,368,698
=================================================================================
TOTAL INVESTMENTS-98.58% (Cost $1,537,306,155) 1,471,430,860
=================================================================================
OTHER ASSETS LESS LIABILITIES-1.42% 21,181,672
=================================================================================
NET ASSETS-100.00% $1,492,612,532
_________________________________________________________________________________
=================================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
Ctfs. - Certificates
Pfd. - Preferred
</Table>
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) Non-income producing security.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
PORTFOLIO COMPOSITION
By sector, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
Health Care 17.8%
- -------------------------------------------------------------------------
Consumer Staples 13.9
- -------------------------------------------------------------------------
Industrials 10.8
- -------------------------------------------------------------------------
Consumer Discretionary 10.2
- -------------------------------------------------------------------------
Energy 8.6
- -------------------------------------------------------------------------
Telecommunication Services 8.6
- -------------------------------------------------------------------------
Information Technology 7.3
- -------------------------------------------------------------------------
Financials 5.0
- -------------------------------------------------------------------------
Materials 4.2
- -------------------------------------------------------------------------
Utilities 1.2
- -------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities 12.4
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. INTERNATIONAL GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $1,372,937,457) $1,307,062,162
- ----------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 164,368,698
==================================================================================
Total investments, at value (Cost $1,537,306,155) 1,471,430,860
==================================================================================
Foreign currencies, at value (Cost $18,510,635) 18,604,285
- ----------------------------------------------------------------------------------
Receivables for:
Investments sold 918,124
- ----------------------------------------------------------------------------------
Fund shares sold 875,153
- ----------------------------------------------------------------------------------
Dividends 4,672,081
- ----------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 34,859
- ----------------------------------------------------------------------------------
Other assets 190
==================================================================================
Total assets 1,496,535,552
__________________________________________________________________________________
==================================================================================
LIABILITIES:
Payables for:
Investments purchased 592,226
- ----------------------------------------------------------------------------------
Fund shares reacquired 734,562
- ----------------------------------------------------------------------------------
Amount due custodian 21,292
- ----------------------------------------------------------------------------------
Accrued fees to affiliates 1,428,204
- ----------------------------------------------------------------------------------
Accrued other operating expenses 1,041,901
- ----------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 104,835
==================================================================================
Total liabilities 3,923,020
==================================================================================
Net assets applicable to shares outstanding $1,492,612,532
__________________________________________________________________________________
==================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,773,040,064
- ----------------------------------------------------------------------------------
Undistributed net investment income 41,113,037
- ----------------------------------------------------------------------------------
Undistributed net realized gain (loss) (255,851,216)
- ----------------------------------------------------------------------------------
Unrealized appreciation (depreciation) (65,689,353)
==================================================================================
$1,492,612,532
__________________________________________________________________________________
==================================================================================
NET ASSETS:
Series I $ 468,222,727
__________________________________________________________________________________
==================================================================================
Series II $1,024,389,805
__________________________________________________________________________________
==================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 21,681,245
__________________________________________________________________________________
==================================================================================
Series II 48,118,049
__________________________________________________________________________________
==================================================================================
Series I:
Net asset value per share $ 21.60
__________________________________________________________________________________
==================================================================================
Series II:
Net asset value per share $ 21.29
__________________________________________________________________________________
==================================================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding
taxes of $2,313,654) $ 23,437,785
- -------------------------------------------------------
Dividends from affiliated money market
funds 621,400
=======================================================
Total investment income 24,059,185
=======================================================
EXPENSES:
Advisory fees 4,466,801
- -------------------------------------------------------
Administrative services fees 1,691,030
- -------------------------------------------------------
Custodian fees 313,316
- -------------------------------------------------------
Distribution fees -- Series II 1,042,837
- -------------------------------------------------------
Transfer agent fees 40,854
- -------------------------------------------------------
Trustees' and officers' fees and
benefits 30,192
- -------------------------------------------------------
Other 76,618
=======================================================
Total expenses 7,661,648
=======================================================
Less: Fees waived (101,672)
=======================================================
Net expenses 7,559,976
=======================================================
Net investment income 16,499,209
=======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (121,089,080)
- -------------------------------------------------------
Foreign currencies (341,710)
=======================================================
(121,430,790)
=======================================================
Change in net unrealized appreciation
of:
Investment securities (net of foreign
taxes on holdings of $(806,731)) 244,490,806
- -------------------------------------------------------
Foreign currencies 1,015,673
=======================================================
245,506,479
=======================================================
Net realized and unrealized gain 124,075,689
=======================================================
Net increase in net assets resulting
from operations $ 140,574,898
_______________________________________________________
=======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. INTERNATIONAL GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- ----------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 16,499,209 $ 26,345,327
- ----------------------------------------------------------------------------------------------------------
Net realized gain (loss) (121,430,790) (132,063,478)
- ----------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 245,506,479 (627,616,561)
==========================================================================================================
Net increase (decrease) in net assets resulting from operations 140,574,898 (733,334,712)
==========================================================================================================
Distributions to shareholders from net investment income:
Series I -- (3,478,321)
- ----------------------------------------------------------------------------------------------------------
Series II -- (5,065,468)
==========================================================================================================
Total distributions from net investment income -- (8,543,789)
==========================================================================================================
Distributions to shareholders from net realized gains:
Series I -- (8,411,008)
- ----------------------------------------------------------------------------------------------------------
Series II -- (14,727,306)
==========================================================================================================
Total distributions from net realized gains -- (23,138,314)
==========================================================================================================
Share transactions-net:
Series I (21,562,333) (13,325,486)
- ----------------------------------------------------------------------------------------------------------
Series II 133,798,235 480,159,184
==========================================================================================================
Net increase in net assets resulting from share transactions 112,235,902 466,833,698
==========================================================================================================
Net increase (decrease) in net assets 252,810,800 (298,183,117)
==========================================================================================================
NET ASSETS:
Beginning of period 1,239,801,732 1,537,984,849
- ----------------------------------------------------------------------------------------------------------
End of period (includes undistributed net investment income of
$41,113,037 and $24,613,828, respectively) $1,492,612,532 $1,239,801,732
__________________________________________________________________________________________________________
==========================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. INTERNATIONAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. International Growth Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
AIM V.I. INTERNATIONAL GROWTH FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
Reported net realized foreign currency gains or losses arise from (i)
sales of foreign currencies, (ii) currency gains or losses realized
between the trade and settlement dates on securities transactions, and
(iii) the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency gains and losses arise from changes in the fair values of
assets and liabilities, other than investments in securities at fiscal
period end, resulting from changes in exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
J. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed,
AIM V.I. INTERNATIONAL GROWTH FUND
realized gains (losses) are recorded. Realized and unrealized gains
(losses) on the contracts are included in the Statement of Operations. The
maximum risks associated with foreign currency contracts include failure
of the counterparty to meet the terms of the contract and the value of the
foreign currency changing unfavorably. These risks may be in excess of the
amounts reflected in the Statement of Assets and Liabilities.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
First $250 million 0.75%
- -------------------------------------------------------------------
Over $250 million 0.70%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit net annual operating expenses
(excluding certain items discussed below) of Series I shares to 1.30% and Series
II shares to 1.45% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, the only 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. These credits are used to pay certain expenses incurred by the
Fund. The Advisor did not waive fees and/or reimburse expenses during the period
under this expense limitation.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash (excluding investments of cash
collateral from securities lending) in such affiliated money market funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$101,672.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $149,689 for accounting and fund
administrative services and reimbursed $1,541,341 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
AIM V.I. INTERNATIONAL GROWTH FUND
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
=========================================================================================================================
Equity Securities $587,730,718 $883,700,142 $-- $1,471,430,860
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
NOTE 4--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $2,958
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 5--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the custodian bank
can be compensated by earning the additional interest; or (ii) compensate by
paying the custodian bank at a rate agreed upon by the custodian bank and
Invesco Aim, not to exceed the contractually agreed upon rate.
NOTE 6--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
December 31, 2016 $87,932,439
_______________________________________________________________________________________________
===============================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $310,599,820 and
$185,313,529, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 78,390,773
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (161,346,489)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $ (82,955,716)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $1,554,386,576.
</Table>
AIM V.I. INTERNATIONAL GROWTH FUND
NOTE 8--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- -------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
--------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 1,843,122 $ 36,652,891 5,416,504 $ 152,657,919
- -------------------------------------------------------------------------------------------------------------------------
Series II 9,670,068 186,297,119 22,885,713 587,146,644
=========================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 647,214 11,889,329
- -------------------------------------------------------------------------------------------------------------------------
Series II -- -- 1,091,714 19,792,774
=========================================================================================================================
Reacquired:
Series I (3,072,191) (58,215,224) (6,729,062) (177,872,734)
- -------------------------------------------------------------------------------------------------------------------------
Series II (2,803,765) (52,498,884) (5,147,388) (126,780,234)
=========================================================================================================================
Net increase in share activity 5,637,234 $112,235,902 18,164,695 $ 466,833,698
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 58% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and/or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
NOTE 9--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
(LOSSES)
NET ASSET ON SECURITIES DIVIDENDS DISTRIBUTIONS
VALUE, NET (BOTH TOTAL FROM FROM NET FROM NET NET ASSET
BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END
OF PERIOD INCOME(a) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD
- ---------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $19.49 $0.27 $ 1.84 $ 2.11 $ -- $ -- $ -- $21.60
Year ended 12/31/08 33.63 0.54 (14.16) (13.62) (0.15) (0.37) (0.52) 19.49
Year ended 12/31/07 29.44 0.34 3.98 4.32 (0.13) -- (0.13) 33.63
Year ended 12/31/06 23.17 0.23 6.32 6.55 (0.28) -- (0.28) 29.44
Year ended 12/31/05 19.77 0.23 3.31 3.54 (0.14) -- (0.14) 23.17
Year ended 12/31/04 16.04 0.15 3.70 3.85 (0.12) -- (0.12) 19.77
- ---------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 19.23 0.24 1.82 2.06 -- -- -- 21.29
Year ended 12/31/08 33.24 0.45 (13.96) (13.51) (0.13) (0.37) (0.50) 19.23
Year ended 12/31/07 29.16 0.26 3.94 4.20 (0.12) -- (0.12) 33.24
Year ended 12/31/06 23.00 0.17 6.25 6.42 (0.26) -- (0.26) 29.16
Year ended 12/31/05 19.65 0.18 3.30 3.48 (0.13) -- (0.13) 23.00
Year ended 12/31/04 15.97 0.11 3.66 3.77 (0.09) -- (0.09) 19.65
_________________________________________________________________________________________________________________________________
=================================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME
TOTAL END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
RETURN(b) (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(c)
- ------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 10.83% $ 468,223 1.03%(d) 1.05%(d) 2.79%(d) 17%
Year ended 12/31/08 (40.38) 446,437 1.05 1.06 1.96 44
Year ended 12/31/07 14.68 792,779 1.06 1.07 1.06 20
Year ended 12/31/06 28.28 563,460 1.10 1.10 0.90 34
Year ended 12/31/05 17.93 444,608 1.11 1.11 1.11 36
Year ended 12/31/04 24.00 346,605 1.14 1.14 0.90 48
- ------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 10.71 1,024,390 1.28(d) 1.30(d) 2.54(d) 17
Year ended 12/31/08 (40.55) 793,365 1.30 1.31 1.71 44
Year ended 12/31/07 14.41 745,206 1.31 1.32 0.81 20
Year ended 12/31/06 27.92 163,657 1.35 1.35 0.65 34
Year ended 12/31/05 17.70 54,658 1.36 1.36 0.86 36
Year ended 12/31/04 23.63 21,497 1.39 1.39 0.65 48
__________________________________________________________________________________________________________________
==================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net
asset values may differ from the net asset value and returns for
shareholder transactions. Total returns are not annualized for periods
less than one year, if applicable and do not reflect charges assessed in
connection with a variable product, which if included would reduce total
returns.
(c) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(d) Ratios are annualized and based on average daily net assets (000's
omitted) of $427,764 and $841,184 for Series I and Series II shares,
respectively.
AIM V.I. INTERNATIONAL GROWTH FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,108.30 $5.38 $1,019.69 $5.16 1.03%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,107.10 6.69 1,018.45 6.41 1.28
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. INTERNATIONAL GROWTH FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of In addition to their meetings particular factor that was controlling.
AIM Variable Insurance Funds is required throughout the year, the Sub-Committees Each Trustee may have evaluated the
under the Investment Company Act of 1940 meet at designated contract renewal information provided differently from
to approve annually the renewal of the AIM meetings each year to conduct an in-depth another Trustee and attributed different
V.I. International Growth Fund (the Fund) review of the performance, fees, expenses weight to the various factors. The
investment advisory agreement with Invesco and other matters related to their Trustees recognized that the advisory
Aim Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract arrangements and resulting advisory fees
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive for the Fund and the other AIM Funds are
for Mutual Funds (the sub-advisory comparative performance and fee data the result of years of review and
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an negotiation between the Trustees and
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Invesco Aim, that the Trustees may focus
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and to a greater extent on certain aspects of
Limited, Invesco Australia Limited, supervision of the Senior Officer who also these arrangements in some years than in
Invesco Global Asset Management (N.A.), prepares a separate analysis of this others, and that the Trustees'
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each deliberations and conclusions in a
Institutional (N.A.), Inc., Invesco Senior Sub-Committee then makes recommendations particular year may be based in part on
Secured Management, Inc. and Invesco to the Investments Committee regarding the their deliberations and conclusions
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. regarding these same arrangements
Sub-Advisers). During contract renewal The Investments Committee considers each throughout the year and in prior years.
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes
Board as a whole, and the disinterested or its own recommendations regarding the fees The discussion below serves as a
"independent" Trustees voting separately, and expenses of the AIM Funds to the full summary of the Senior Officer's
approved the continuance of the Fund's Board. The Investments Committee also independent written evaluation with
investment advisory agreement and the considers each Sub-Committee's respect to the Fund's investment advisory
sub-advisory contracts for another year, recommendations in making its annual agreement as well as a discussion of the
effective July 1, 2009. In doing so, the recommendation to the Board whether to material factors and related conclusions
Board determined that the Fund's approve the continuance of each AIM Fund's that formed the basis for the Board's
investment advisory agreement and the investment advisory agreement and approval of the Fund's investment advisory
sub-advisory contracts are in the best sub-advisory contracts for another year. agreement and sub-advisory contracts.
interests of the Fund and its shareholders Unless otherwise stated, information set
and that the compensation to Invesco Aim The independent Trustees met separately forth below is as of June 17, 2009, and
and the Affiliated Sub-Advisers under the during their evaluation of the Fund's does not reflect any changes that may have
Fund's investment advisory agreement and investment advisory agreement and occurred since that date, including but
sub-advisory contracts is fair and sub-advisory contracts with independent not limited to changes to the Fund's
reasonable. legal counsel. The independent Trustees performance, advisory fees, expense
were also assisted in their annual limitations and/or fee waivers.
THE BOARD'S FUND EVALUATION PROCESS evaluation of the Fund's investment
advisory agreement by the Senior Officer. FACTORS AND CONCLUSIONS AND SUMMARY OF
The Board's Investments Committee has One responsibility of the Senior Officer INDEPENDENT WRITTEN FEE EVALUATION
established three Sub-Committees that are is to manage the process by which the AIM
responsible for overseeing the management Funds' proposed management fees are A. Nature, Extent and Quality of
of a number of the series portfolios of negotiated during the annual contract Services Provided by Invesco Aim
the AIM Funds. This Sub-Committee renewal process to ensure that they are
structure permits the Trustees to focus on negotiated in a manner that is at arms' The Board reviewed the advisory
the performance of the AIM Funds that have length and reasonable. Accordingly, the services provided to the Fund by Invesco
been assigned to them. The Sub-Committees Senior Officer must either supervise a Aim under the Fund's investment advisory
meet throughout the year to review the competitive bidding process or prepare an agreement, the performance of Invesco Aim
performance of their assigned funds, and independent written evaluation. The Senior in providing these services, and the
the Sub-Committees review monthly and Officer recommended that an independent credentials and experience of the officers
quarterly comparative performance written evaluation be provided and, at the and employees of Invesco Aim who provide
information and periodic asset flow data direction of the Board, prepared an these services. The Board's review of the
for their assigned funds. These materials independent written evaluation. qualifications of Invesco Aim to provide
are prepared under the direction and these services included the Board's
supervision of the independent Senior During the annual contract renewal consideration of Invesco Aim's portfolio
Officer, an officer of the AIM Funds who process, the Board considered the factors and product review process, various back
reports directly to the independent discussed below in evaluating the fairness office support functions provided by
Trustees. Over the course of each year, and reasonableness of the Fund's Invesco Aim and its affiliates, and
the Sub-Committees meet with portfolio investment advisory agreement and Invesco Aim's equity and fixed income
managers for their assigned funds and sub-advisory contracts. The Board trading operations. The Board concluded
other members of management and review considered all of the information provided that the nature, extent and quality of the
with these individuals the performance, to them, including information provided at advisory services provided to the Fund by
investment objective(s), policies, their meetings throughout the year as part Invesco Aim are appropriate and that
strategies and limitations of these funds. of their ongoing oversight of the Fund, Invesco Aim currently is providing
and did not identify any satisfactory advisory services in
accordance with the terms of the Fund's
investment advisory
AIM V.I. INTERNATIONAL GROWTH FUND continued
agreement. In addition, based on their C. Fund Performance some comparative data was at least one
ongoing meetings throughout the year with year old and did not reflect the market
the Fund's portfolio manager or managers, The Board considered fund performance downturn that occurred in the fourth
the Board concluded that these individuals as a relevant factor in considering quarter of 2008.
are competent and able to continue to whether to approve the investment advisory
carry out their responsibilities under the agreement. The Board did not view fund The Board also compared the Fund's
Fund's investment advisory agreement. performance as a relevant factor in effective fee rate (the advisory fee after
considering whether to approve the any advisory fee waivers and before any
In determining whether to continue the sub-advisory contracts for the Fund, as no expense limitations/waivers) to the
Fund's investment advisory agreement, the Affiliated Sub-Adviser currently manages advisory fee rates of other domestic
Board considered the prior relationship assets of the Fund. clients of Invesco Aim and its affiliates
between Invesco Aim and the Fund, as well with investment strategies comparable to
as the Board's knowledge of Invesco Aim's The Board compared the Fund's those of the Fund, including one mutual
operations, and concluded that it is performance during the past one, three and fund advised by Invesco Aim and six mutual
beneficial to maintain the current five calendar years to the performance of funds sub-advised by an Invesco Aim
relationship, in part, because of such all funds in the Lipper performance affiliate. The Board noted that the Fund's
knowledge. The Board also considered the universe that are not managed by Invesco rate was (i) below the effective fee rate
steps that Invesco Aim and its affiliates Aim or an Affiliated Sub-Adviser and for the mutual fund advised by Invesco
continue to take to improve the quality against the Lipper VA Underlying Funds - Aim; and (ii) above the sub-adviser
and efficiency of the services they International Growth Funds Index. The effective fee rates for the domestic
provide to the AIM Funds in the areas of Board noted that the Fund's performance mutual funds sub-advised by an Invesco Aim
investment performance, product line was in the first quintile of its affiliate.
diversification, distribution, fund performance universe for the one, three
operations, shareholder services and and five year periods (the first quintile Additionally, the Board compared the
compliance. The Board concluded that the being the best performing funds and the Fund's effective fee rate to the effective
quality and efficiency of the services fifth quintile being the worst performing fee rates paid by numerous separately
Invesco Aim and its affiliates provide to funds). The Board noted that the managed accounts/wrap accounts advised by
the AIM Funds in each of these areas performance was above the performance of an Invesco Aim affiliate. The Board noted
support the Board's approval of the the Index for the one, three and five year that the Fund's rate was above the rates
continuance of the Fund's investment periods. Although the independent written for all but three of the separately
advisory agreement. evaluation of the Fund's Senior Officer managed accounts/wrap accounts. The Board
only considered Fund performance through considered that management of the
B. Nature, Extent and Quality of the most recent calendar year, the Board separately managed accounts/wrap accounts
Services Provided by Affiliated also reviewed more recent Fund performance by the Invesco Aim affiliate involves
Sub-Advisers and this review did not change their different levels of services and different
conclusions. The Board noted that, in operational and regulatory requirements
The Board reviewed the services response to the Board's focus on fund than Invesco Aim's management of the Fund.
provided by the Affiliated Sub-Advisers performance, Invesco Aim has taken a The Board concluded that these differences
under the sub-advisory contracts and the number of actions intended to improve the are appropriately reflected in the fee
credentials and experience of the officers investment process for the funds. structure for the Fund.
and employees of the Affiliated
Sub-Advisers who provide these services. D. Advisory and Sub-Advisory Fees and The Board noted that Invesco Aim
The Board concluded that the nature, Fee Waivers contractually agreed to waive fees and/or
extent and quality of the services limit expenses of the Fund through at
provided by the Affiliated Sub-Advisers The Board compared the Fund's least April 30, 2010 in an amount
are appropriate. The Board noted that the contractual advisory fee rate to the necessary to limit total annual operating
Affiliated Sub-Advisers, which have contractual advisory fee rates of funds in expenses to a specified percentage of
offices and personnel that are the Fund's Lipper expense group that are average daily net assets for each class of
geographically dispersed in financial not managed by Invesco Aim or an the Fund. The Board noted that at the
centers around the world, can provide Affiliated Sub-Adviser, at a common asset current expense ratio for the Fund, this
research and other information and make level. The Board noted that the Fund's expense waiver does not have any impact.
recommendations on the markets and contractual advisory fee rate was below
economies of various countries and the median contractual advisory fee rate The Board also considered the services
securities of companies located in such of funds in its expense group. The Board provided by the Affiliated Sub-Advisers
countries or on various types of also reviewed the methodology used by pursuant to the sub-advisory contracts and
investments and investment techniques. The Lipper and noted that the contractual fee the services provided by Invesco Aim
Board concluded that the sub-advisory rates shown by Lipper in determining pursuant to the Fund's advisory agreement,
contracts benefit the Fund and its contractual fee rates, which includes as well as the allocation of fees between
shareholders by permitting Invesco Aim to using audited financial data from the most Invesco Aim and the Affiliated
utilize the additional resources and recent annual report of each fund in the Sub-Advisers pursuant to the sub-advisory
talent of the Affiliated Sub-Advisers in expense group that was publicly available contracts. The Board noted that the
managing the Fund. as of the end of the past calendar year. sub-advisory fees have no direct effect on
The Board noted that
AIM V.I. INTERNATIONAL GROWTH FUND continued
the Fund or its shareholders, as they Invesco Aim and its affiliates. The dollar arrangements are appropriate.
are paid by Invesco Aim to the Affiliated Board concluded that the Fund's fees are The Board also concluded that, based on
Sub-Advisers, and that Invesco Aim and the fair and reasonable, and that the level of their review and representations made by
Affiliated Sub-Advisers are affiliates. profits realized by Invesco Aim and its the Chief Compliance Officer of Invesco
affiliates from providing services to the Aim, these arrangements are consistent
After taking account of the Fund's Fund is not excessive in light of the with regulatory requirements.
contractual advisory fee rate, the nature, quality and extent of the services
contractual sub-advisory fee rate, the provided. The Board considered whether The Board considered the fact that the
comparative advisory fee information and Invesco Aim is financially sound and has Fund's uninvested cash and cash collateral
other relevant factors, the Board the resources necessary to perform its from any securities lending arrangements
concluded that the Fund's advisory and obligations under the Fund's investment may be invested in money market funds
sub-advisory fees are fair and reasonable. advisory agreement, and concluded that advised by Invesco Aim pursuant to
Invesco Aim has the financial resources procedures approved by the Board. The
E. Economies of Scale and Breakpoints necessary to fulfill these obligations. Board noted that Invesco Aim will receive
The Board also considered whether each advisory fees from these affiliated money
The Board considered the extent to Affiliated Sub-Adviser is financially market funds attributable to such
which there are economies of scale in the sound and has the resources necessary to investments, although Invesco Aim has
provision of advisory services to the perform its obligations under the contractually agreed to waive through at
Fund. The Board also considered whether sub-advisory contracts, and concluded that least June 30, 2010, the advisory fees
the Fund benefits from such economies of each Affiliated Sub-Adviser has the payable by the Fund in an amount equal to
scale through contractual breakpoints in financial resources necessary to fulfill 100% of the net advisory fee Invesco Aim
the Fund's advisory fee schedule. The these obligations. receives from the affiliated money market
Board noted that the Fund's contractual funds with respect to the Fund's
advisory fee schedule includes one G. Collateral Benefits to Invesco Aim investment in the affiliated money market
breakpoint and that the level of the and its Affiliates funds of uninvested cash, but not cash
Fund's advisory fees, as a percentage of collateral. The Board concluded that the
the Fund's net assets, has decreased as The Board considered various other Fund's investment of uninvested cash and
net assets increased because of the benefits received by Invesco Aim and its cash collateral from any securities
breakpoints. The Board concluded that the affiliates resulting from Invesco Aim's lending arrangements in the affiliated
Fund's advisory fees appropriately reflect relationship with the Fund, including the money market funds is in the best
economies of scale at current asset fees received by Invesco Aim and its interests of the Fund and its
levels. The Board also noted that the Fund affiliates for their provision of shareholders.
shares directly in economies of scale administrative, transfer agency and
through lower fees charged by third party distribution services to the Fund. The
service providers based on the combined Board considered the performance of
size of all of the AIM Funds and Invesco Aim and its affiliates in
affiliates. providing these services and the
organizational structure employed by
F. Profitability and Financial Invesco Aim and its affiliates to provide
Resources these services. The Board also considered
that these services are provided to the
The Board reviewed information from Fund pursuant to written contracts that
Invesco Aim concerning the costs of the are reviewed and approved on an annual
advisory and other services that Invesco basis by the Board. The Board concluded
Aim and its affiliates provide to the Fund that Invesco Aim and its affiliates are
and the profitability of Invesco Aim and providing these services in a satisfactory
its affiliates in providing these manner and in accordance with the terms of
services. The Board also reviewed their contracts, and are qualified to
information concerning the financial continue to provide these services to the
condition of Invesco Aim and its Fund.
affiliates. The Board reviewed with
Invesco Aim the methodology used to The Board considered the benefits
prepare the profitability information. The realized by Invesco Aim and the Affiliated
Board considered the overall profitability Sub-Advisers as a result of portfolio
of Invesco Ltd., the ultimate parent of brokerage transactions executed through
Invesco Aim and the Affiliated "soft dollar" arrangements. The Board
Sub-Advisers, and of Invesco Aim, as well noted that soft dollar arrangements shift
as the profitability of Invesco Aim in the payment obligation for research and
connection with managing the Fund. The execution services from Invesco Aim and
Board noted that Invesco Aim continues to the Affiliated Sub-Advisers to the funds
operate at a net profit, although the and therefore may reduce Invesco Aim's and
reduction of assets under management as a the Affiliated Sub-Advisers' expenses. The
result of market movements and the Board concluded that Invesco Aim's and the
increase in voluntary fee waivers for Affiliated Sub-Advisers' soft
affiliated money market funds have reduced
the profitability of
AIM V.I. INTERNATIONAL GROWTH FUND
[INVESCO AIM LOGO] AIM V.I. LARGE CAP GROWTH FUND
--SERVICE MARK-- Semiannual Report to Shareholders o June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund
files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the SEC
Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by
calling 202 942 8090 or 800 732 0330, or by electronic request at the following E-mail address: publicinfo@sec.gov. The SEC file
numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent portfolio holdings, as filed on Form N-Q, have also been
made available to insurance companies issuing variable annuity contracts and variable life insurance policies ("variable products")
that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, from our Client Services department at 800 410 4246 or on the Invesco Aim Web site,
invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site,
sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2009, is
available at our Web site. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting
Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. will be merged into
Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc. Additional information
will be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN
MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
SERIES I SHARES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer Inception (8/29/03) 0.52%
charges. If variable product issuer charges were included, returns would be lower. 5 Years -2.10
1 Year -27.54
Series I Shares 4.60%
Series II Shares 4.43 SERIES II SHARES
S&P 500 Index(Triangle) (Broad Market Index) 3.19 Inception (8/29/03) 0.30%
Russell 1000 Growth Index(Triangle) (Style-Specific Index) 11.53 5 Years -2.31
Lipper VUF Large-Cap Growth Funds Index(Triangle) (Peer Group Index) 12.21 1 Year -27.69
==========================================
(Triangle) Lipper Inc.
AS MENTIONED ABOVE, FOR THE MOST RECENT
The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index MONTH-END PERFORMANCE INCLUDING VARIABLE
covering all major areas of the U.S. economy. It is not the 500 largest companies, but PRODUCT CHARGES, PLEASE CONTACT YOUR
rather the most widely held 500 companies chosen with respect to market size, liquidity VARIABLE PRODUCT ISSUER OR FINANCIAL
and their industry. ADVISOR.
The RUSSELL 1000--REGISTERED TRADEMARK-- GROWTH INDEX measures the performance of HAD THE ADVISOR NOT WAIVED FEES AND/OR
those Russell 1000 companies with higher price-to-book ratios and higher forecasted REIMBURSED EXPENSES IN THE PAST,
growth values. The Russell 1000 Growth Index is a trademark/service mark of the Frank PERFORMANCE WOULD HAVE BEEN LOWER.
Russell Company. Russell--REGISTERED TRADEMARK-- is a trademark of the Frank Russell
Company. (1) Total annual operating expenses less
any contractual fee waivers and/or
The LIPPER VUF LARGE-CAP GROWTH FUNDS INDEX is an equally weighted representation of expense reimbursements by the advisor
the largest variable insurance underlying funds in the Lipper Large-Cap Growth Funds in effect through at least April 30,
category. These funds typically have an above-average price-to-earnings ratio, 2010. See current prospectus for more
price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P information.
500 Index.
The Fund is not managed to track the performance of any particular index, including
the indexes defined here, and consequently, the performance of the Fund may deviate
significantly from the performance of the indexes.
A direct investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends, and they do not reflect sales charges.
Performance of the peer group reflects fund expenses; performance of a market index
does not.
=======================================================================================
THE PERFORMANCE OF THE FUND'SSERIES I SHARES WAS 1.10% AND 1.35%,
AND SERIES II SHARE CLASSES WILL DIFFER RESPECTIVELY. THE EXPENSE RATIOS PRESENTED
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES. ABOVE MAY VARY FROM THE EXPENSE RATIOS
PRESENTED IN OTHER SECTIONS OF THIS REPORT
THE PERFORMANCE DATA QUOTED REPRESENT THAT ARE BASED ON EXPENSES INCURRED DURING
PAST PERFORMANCE AND CANNOT GUARANTEE THE PERIOD COVERED BY THIS REPORT.
COMPARABLE FUTURE RESULTS; CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE AIM V.I. LARGE CAP GROWTH FUND, A
CONTACT YOUR VARIABLE PRODUCT ISSUER OR SERIES PORTFOLIO OF AIM VARIABLE INSURANCE
FINANCIAL ADVISOR FOR THE MOST RECENT FUNDS, IS CURRENTLY OFFERED THROUGH
MONTH-END VARIABLE PRODUCT PERFORMANCE. INSURANCE COMPANIES ISSUING VARIABLE
PERFORMANCE FIGURES REFLECT FUND EXPENSES, PRODUCTS. YOU CANNOT PURCHASE SHARES OF
REINVESTED DISTRIBUTIONS AND CHANGES IN THE FUND DIRECTLY. PERFORMANCE FIGURES
NET ASSET VALUE. INVESTMENT RETURN AND GIVEN REPRESENT THE FUND AND ARE NOT
PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU INTENDED TO REFLECT ACTUAL VARIABLE
MAY HAVE A GAIN OR LOSS WHEN YOU SELL PRODUCT VALUES. THEY DO NOT REFLECT SALES
SHARES. CHARGES, EXPENSES AND FEES ASSESSED IN
CONNECTION WITH A VARIABLE PRODUCT. SALES
THE NET ANNUAL FUND OPERATING EXPENSE CHARGES, EXPENSES AND FEES, WHICH ARE
RATIO SET FORTH IN THE MOST RECENT FUND DETERMINED BY THE VARIABLE PRODUCT
PROSPECTUS AS OF THE DATE OF THIS REPORT ISSUERS, WILL VARY AND WILL LOWER THE
FOR SERIES I AND SERIES II SHARES WAS TOTAL RETURN.
1.01% AND 1.26%, RESPECTIVELY.(1) THE
TOTAL ANNUAL FUND OPERATING EXPENSE RATIO THE MOST RECENT MONTH-END PERFORMANCE
SET FORTH IN THE MOST RECENT FUND DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
PROSPECTUS AS OF THE DATE OF THIS REPORT PRODUCT CHARGES, IS AVAILABLE ON THE
FOR SERIES I AND SERIES II INVESCO AIM AUTOMATED INFORMATION LINE,
866 702 4402.
AIM V.I. LARGE CAP GROWTH FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-97.53%
AEROSPACE & DEFENSE-6.99%
Goodrich Corp. 13,247 $ 661,953
- ---------------------------------------------------------------------------
Lockheed Martin Corp. 37,636 3,035,343
- ---------------------------------------------------------------------------
United Technologies Corp. 12,172 632,457
===========================================================================
4,329,753
===========================================================================
APPAREL RETAIL-2.88%
Gap, Inc. (The) 36,152 592,893
- ---------------------------------------------------------------------------
Limited Brands, Inc. 50,846 608,627
- ---------------------------------------------------------------------------
Ross Stores, Inc. 15,072 581,779
===========================================================================
1,783,299
===========================================================================
APPLICATION SOFTWARE-2.46%
Adobe Systems Inc.(b) 36,224 1,025,139
- ---------------------------------------------------------------------------
Intuit Inc.(b) 17,614 496,010
===========================================================================
1,521,149
===========================================================================
ASSET MANAGEMENT & CUSTODY BANKS-1.01%
BlackRock, Inc. 3,584 628,705
===========================================================================
AUTOMOTIVE RETAIL-2.22%
AutoZone, Inc.(b) 9,081 1,372,230
===========================================================================
BIOTECHNOLOGY-5.71%
Amgen Inc.(b) 44,986 2,381,559
- ---------------------------------------------------------------------------
Gilead Sciences, Inc.(b) 24,591 1,151,842
===========================================================================
3,533,401
===========================================================================
COMMUNICATIONS EQUIPMENT-1.68%
Cisco Systems, Inc.(b) 55,739 1,038,975
===========================================================================
COMPUTER HARDWARE-10.31%
Apple Inc.(b) 12,384 1,763,853
- ---------------------------------------------------------------------------
Hewlett-Packard Co. 80,694 3,118,823
- ---------------------------------------------------------------------------
International Business Machines Corp. 14,364 1,499,889
===========================================================================
6,382,565
===========================================================================
COMPUTER STORAGE & PERIPHERALS-1.17%
Western Digital Corp.(b) 27,332 724,298
===========================================================================
CONSTRUCTION & ENGINEERING-3.59%
Fluor Corp. 24,751 1,269,479
- ---------------------------------------------------------------------------
URS Corp.(b) 19,229 952,220
===========================================================================
2,221,699
===========================================================================
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS-0.78%
Joy Global Inc. 13,479 481,470
===========================================================================
DATA PROCESSING & OUTSOURCED SERVICES-0.97%
MasterCard, Inc.-Class A 3,609 603,822
===========================================================================
DEPARTMENT STORES-1.94%
J.C.Penney Co., Inc. 22,351 641,697
- ---------------------------------------------------------------------------
Kohl's Corp.(b) 13,045 557,674
===========================================================================
1,199,371
===========================================================================
DIVERSIFIED METALS & MINING-1.99%
BHP Billiton Ltd.-ADR (Australia) 22,504 1,231,644
===========================================================================
EDUCATION SERVICES-1.64%
Apollo Group Inc.-Class A(b) 14,297 1,016,803
===========================================================================
FERTILIZERS & AGRICULTURAL CHEMICALS-1.74%
Syngenta AG (Switzerland) 4,651 1,079,615
===========================================================================
GENERAL MERCHANDISE STORES-0.97%
Target Corp. 15,305 604,088
===========================================================================
HEALTH CARE SERVICES-1.16%
Express Scripts, Inc.(b) 10,467 719,606
===========================================================================
HEAVY ELECTRICAL EQUIPMENT-1.19%
ABB Ltd. (Switzerland)(b) 46,884 736,892
===========================================================================
HOME IMPROVEMENT RETAIL-2.40%
Home Depot, Inc. (The) 25,787 609,347
- ---------------------------------------------------------------------------
Sherwin-Williams Co. (The) 16,324 877,415
===========================================================================
1,486,762
===========================================================================
HYPERMARKETS & SUPER CENTERS-1.39%
Wal-Mart Stores, Inc. 17,735 859,083
===========================================================================
INTEGRATED OIL & GAS-3.92%
Marathon Oil Corp. 18,790 566,142
- ---------------------------------------------------------------------------
Occidental Petroleum Corp. 28,333 1,864,595
===========================================================================
2,430,737
===========================================================================
INTERNET SOFTWARE & SERVICES-2.65%
Google Inc.-Class A(b) 2,279 960,803
- ---------------------------------------------------------------------------
NetEase.com Inc.-ADR (China)(b) 19,382 681,859
===========================================================================
1,642,662
===========================================================================
INVESTMENT BANKING & BROKERAGE-3.12%
Goldman Sachs Group, Inc. (The) 9,019 1,329,762
- ---------------------------------------------------------------------------
TD Ameritrade Holding Corp.(b) 34,530 605,656
===========================================================================
1,935,418
===========================================================================
IT CONSULTING & OTHER SERVICES-3.61%
Accenture Ltd.-Class A 66,780 2,234,459
===========================================================================
LIFE & HEALTH INSURANCE-1.03%
Unum Group 40,112 636,176
===========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. LARGE CAP GROWTH FUND
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------
MANAGED HEALTH CARE-2.61%
UnitedHealth Group Inc. 31,477 $ 786,295
- ---------------------------------------------------------------------------
WellPoint Inc.(b) 16,349 832,001
===========================================================================
1,618,296
===========================================================================
OIL & GAS DRILLING-1.97%
Diamond Offshore Drilling, Inc. 7,306 606,764
- ---------------------------------------------------------------------------
ENSCO International Inc. 17,575 612,840
===========================================================================
1,219,604
===========================================================================
OIL & GAS EQUIPMENT & SERVICES-1.10%
National-Oilwell Varco Inc.(b) 20,779 678,642
===========================================================================
PHARMACEUTICALS-2.71%
Abbott Laboratories 11,829 556,436
- ---------------------------------------------------------------------------
Johnson & Johnson 19,709 1,119,471
===========================================================================
1,675,907
===========================================================================
PROPERTY & CASUALTY INSURANCE-1.68%
Chubb Corp. (The) 26,171 1,043,700
===========================================================================
RAILROADS-1.90%
Norfolk Southern Corp. 14,113 531,637
- ---------------------------------------------------------------------------
Union Pacific Corp. 12,348 642,837
===========================================================================
1,174,474
===========================================================================
RESTAURANTS-2.08%
Darden Restaurants, Inc. 14,532 479,266
- ---------------------------------------------------------------------------
McDonald's Corp. 14,125 812,046
===========================================================================
1,291,312
===========================================================================
SEMICONDUCTORS-3.78%
Marvell Technology Group Ltd.(b) 58,061 675,830
- ---------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co. Ltd.-ADR
(Taiwan) 60,394 568,308
- ---------------------------------------------------------------------------
Xilinx, Inc. 53,494 1,094,487
===========================================================================
2,338,625
===========================================================================
SYSTEMS SOFTWARE-10.35%
BMC Software, Inc.(b) 40,859 1,380,626
- ---------------------------------------------------------------------------
Microsoft Corp. 85,535 2,033,167
- ---------------------------------------------------------------------------
Oracle Corp. 95,320 2,041,754
- ---------------------------------------------------------------------------
Symantec Corp.(b) 61,271 953,377
===========================================================================
6,408,924
===========================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.83%
America Movil S.A.B de C.V.-Series L-ADR (Mexico) 13,210 511,491
===========================================================================
Total Common Stocks & Other Equity Interests
(Cost $59,352,505) 60,395,657
===========================================================================
MONEY MARKET FUNDS-2.62%
Liquid Assets Portfolio-Institutional Class(c) 811,426 811,426
- ---------------------------------------------------------------------------
Premier Portfolio-Institutional Class(c) 811,426 811,426
===========================================================================
Total Money Market Funds (Cost $1,622,852) 1,622,852
===========================================================================
TOTAL INVESTMENTS-100.15% (Cost $60,975,357) 62,018,509
===========================================================================
OTHER ASSETS LESS LIABILITIES-(0.15)% (91,479)
===========================================================================
NET ASSETS-100.00% $61,927,030
___________________________________________________________________________
===========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
</Table>
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) Non-income producing security.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
PORTFOLIO COMPOSITION
By sector, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
Information Technology 37.0%
- -------------------------------------------------------------------------
Industrials 14.4
- -------------------------------------------------------------------------
Consumer Discretionary 14.1
- -------------------------------------------------------------------------
Health Care 12.2
- -------------------------------------------------------------------------
Energy 7.0
- -------------------------------------------------------------------------
Financials 6.9
- -------------------------------------------------------------------------
Materials 3.7
- -------------------------------------------------------------------------
Consumer Staples 1.4
- -------------------------------------------------------------------------
Telecommunication Services 0.8
- -------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities 2.5
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. LARGE CAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $59,352,505) $ 60,395,657
- --------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 1,622,852
================================================================================
Total investments, at value (Cost $60,975,357) 62,018,509
================================================================================
Receivables for:
Fund shares sold 124
- --------------------------------------------------------------------------------
Dividends 45,480
- --------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 19,559
================================================================================
Total assets 62,083,672
________________________________________________________________________________
================================================================================
LIABILITIES:
Payables for:
Fund shares reacquired 51,119
- --------------------------------------------------------------------------------
Accrued fees to affiliates 35,491
- --------------------------------------------------------------------------------
Accrued other operating expenses 39,871
- --------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 30,161
================================================================================
Total liabilities 156,642
================================================================================
Net assets applicable to shares outstanding $ 61,927,030
________________________________________________________________________________
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 79,591,076
- --------------------------------------------------------------------------------
Undistributed net investment income 320,147
- --------------------------------------------------------------------------------
Undistributed net realized gain (loss) (19,027,364)
- --------------------------------------------------------------------------------
Unrealized appreciation 1,043,171
================================================================================
$ 61,927,030
________________________________________________________________________________
================================================================================
NET ASSETS:
Series I $ 61,293,651
________________________________________________________________________________
================================================================================
Series II $ 633,379
________________________________________________________________________________
================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 5,990,110
________________________________________________________________________________
================================================================================
Series II 62,507
________________________________________________________________________________
================================================================================
Series I:
Net asset value per share $ 10.23
________________________________________________________________________________
================================================================================
Series II:
Net asset value per share $ 10.13
________________________________________________________________________________
================================================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding
taxes of $4,629) $ 437,205
- ------------------------------------------------------
Dividends from affiliated money market
funds 12,391
======================================================
Total investment income 449,596
======================================================
EXPENSES:
Advisory fees 212,217
- ------------------------------------------------------
Administrative services fees 98,355
- ------------------------------------------------------
Custodian fees 4,354
- ------------------------------------------------------
Distribution fees -- Series II 820
- ------------------------------------------------------
Transfer agent fees 5,044
- ------------------------------------------------------
Trustees' and officers' fees and
benefits 11,162
- ------------------------------------------------------
Professional services fees 20,021
- ------------------------------------------------------
Other 6,875
======================================================
Total expenses 358,848
======================================================
Less: Fees waived (51,856)
======================================================
Net expenses 306,992
======================================================
Net investment income 142,604
======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (3,910,478)
- ------------------------------------------------------
Foreign currencies 22,728
======================================================
(3,887,750)
======================================================
Change in net unrealized appreciation
of:
Investment securities 6,421,376
- ------------------------------------------------------
Foreign currencies 194
======================================================
6,421,570
======================================================
Net realized and unrealized gain 2,533,820
======================================================
Net increase in net assets resulting
from operations $ 2,676,424
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. LARGE CAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- ------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 142,604 $ 221,020
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) (3,887,750) (5,322,900)
- ------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 6,421,570 (39,639,682)
======================================================================================================
Net increase (decrease) in net assets resulting from operations 2,676,424 (44,741,562)
======================================================================================================
Distributions to shareholders from net investment income -- Series I -- (10,393)
======================================================================================================
Share transactions-net:
Series I (4,018,351) (22,100,762)
- ------------------------------------------------------------------------------------------------------
Series II (108,096) (100,213)
======================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (4,126,447) (22,200,975)
======================================================================================================
Net increase (decrease) in net assets (1,450,023) (66,952,930)
======================================================================================================
NET ASSETS:
Beginning of period 63,377,053 130,329,983
======================================================================================================
End of period (includes undistributed net investment income of
$320,147 and $177,543, respectively) $61,927,030 $ 63,377,053
______________________________________________________________________________________________________
======================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. LARGE CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Large Cap Growth Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
AIM V.I. LARGE CAP GROWTH FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
Reported net realized foreign currency gains or losses arise from (i)
sales of foreign currencies, (ii) currency gains or losses realized
between the trade and settlement dates on securities transactions, and
(iii) the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency gains and losses arise from changes in the fair values of
assets and liabilities, other than investments in securities at fiscal
period end, resulting from changes in exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
J. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed,
AIM V.I. LARGE CAP GROWTH FUND
realized gains (losses) are recorded. Realized and unrealized gains
(losses) on the contracts are included in the Statement of Operations. The
maximum risks associated with foreign currency contracts include failure
of the counterparty to meet the terms of the contract and the value of the
foreign currency changing unfavorably. These risks may be in excess of the
amounts reflected in the Statement of Assets and Liabilities.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS 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%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 1.01% and Series
II shares to 1.26% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, the only 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. These credits are used to pay certain expenses incurred by the
Fund. To the extent that the annualized expense ratio does not exceed the
expense limitation, the advisor will retain its ability to be reimbursed for
such fee waivers or reimbursements prior to the end of each fiscal year. To the
extent that the annualized expense ratio does not exceed the expense limitation,
the Advisor will retain its ability to be reimbursed for such fee waivers or
reimbursements prior to the end of each fiscal year.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash in such affiliated money market
funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$51,856.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $24,795 for accounting and fund
administrative services and reimbursed $73,560 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
AIM V.I. LARGE CAP GROWTH FUND
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- -------------------------------------------------------------------------
Equity Securities $62,018,509 $-- $-- $62,018,509
_________________________________________________________________________
=========================================================================
</Table>
NOTE 4--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $1,502
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 5--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the custodian bank
can be compensated by earning the additional interest; or (ii) compensate by
paying the custodian bank at a rate agreed upon by the custodian bank and
Invesco Aim, not to exceed the contractually agreed upon rate.
NOTE 6--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions. Under these limitation rules, the Fund is limited to utilizing
$11,925,246 of capital loss carryforward in the fiscal year ending December 31,
2009.
AIM V.I. LARGE CAP GROWTH FUND
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
December 31, 2009 $ 3,427,095
- -----------------------------------------------------------------------------------------------
December 31, 2010 3,544,700
- -----------------------------------------------------------------------------------------------
December 31, 2013 10,284
- -----------------------------------------------------------------------------------------------
December 31, 2014 1,757,332
- -----------------------------------------------------------------------------------------------
December 31, 2016 3,185,835
===============================================================================================
Total capital loss carryforward $11,925,246
_______________________________________________________________________________________________
===============================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $19,360,540 and
$22,491,828, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 5,241,337
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (5,177,403)
================================================================================================
Net unrealized appreciation of investment securities $ 63,934
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $61,954,575.
</Table>
NOTE 8--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- ------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 878,734 $ 8,226,823 671,040 $ 8,675,551
- ------------------------------------------------------------------------------------------------------------------------
Series II 99 878 6,894 71,952
========================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 1,089 10,393
========================================================================================================================
Reacquired:
Series I (1,294,446) (12,245,174) (2,408,114) (30,786,706)
- ------------------------------------------------------------------------------------------------------------------------
Series II (11,000) (108,974) (13,392) (172,165)
========================================================================================================================
Net increase (decrease) in share activity (426,613) $ (4,126,447) (1,742,483) $(22,200,975)
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 88% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and/or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
AIM V.I. LARGE CAP GROWTH FUND
NOTE 9--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
(LOSSES)
NET ASSET NET ON SECURITIES DIVIDENDS DISTRIBUTIONS
VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET
BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END
OF PERIOD (LOSS) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD
- ---------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $ 9.78 $ 0.02(c) $ 0.43 $ 0.45 $ -- $ -- $ -- $10.23
Year ended 12/31/08 15.85 0.03(c) (6.10) (6.07) (0.00) -- (0.00) 9.78
Year ended 12/31/07 13.71 0.02 2.13 2.15 (0.01) -- (0.01) 15.85
Year ended 12/31/06 12.71 0.02 1.00 1.02 (0.02) -- (0.02) 13.71
Year ended 12/31/05 11.86 (0.01)(c) 0.88 0.87 -- (0.02) (0.02) 12.71
Year ended 12/31/04 10.90 (0.04)(e) 1.03 0.99 -- (0.03) (0.03) 11.86
- ---------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 9.70 0.01(c) 0.42 0.43 -- -- -- 10.13
Year ended 12/31/08 15.75 0.00(c) (6.05) (6.05) -- -- -- 9.70
Year ended 12/31/07 13.66 (0.04) 2.13 2.09 -- -- -- 15.75
Year ended 12/31/06 12.67 (0.01) 1.00 0.99 -- -- -- 13.66
Year ended 12/31/05 11.84 (0.03)(c) 0.88 0.85 -- (0.02) (0.02) 12.67
Year ended 12/31/04 10.90 (0.06)(e) 1.03 0.97 -- (0.03) (0.03) 11.84
_________________________________________________________________________________________________________________________________
=================================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS)
TOTAL END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
RETURN(a) (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(b)
- -------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 4.60% $ 61,294 1.00%(d) 1.17%(d) 0.47%(d) 33%
Year ended 12/31/08 (38.29) 62,665 1.01 1.10 0.23 41
Year ended 12/31/07 15.64 129,071 1.01 1.08 0.11 58
Year ended 12/31/06 8.05 120,825 1.02 1.23 0.06 76
Year ended 12/31/05 7.30 4,352 1.13 7.30 (0.06) 99
Year ended 12/31/04 9.08 596 1.33 9.88 (0.35)(e) 104
- -------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 4.43 633 1.25(d) 1.42(d) 0.22(d) 33
Year ended 12/31/08 (38.41) 712 1.26 1.35 (0.02) 41
Year ended 12/31/07 15.30 1,259 1.26 1.33 (0.14) 58
Year ended 12/31/06 7.81 1,949 1.27 1.48 (0.19) 76
Year ended 12/31/05 7.15 636 1.33 7.55 (0.26) 99
Year ended 12/31/04 8.89 594 1.48 10.13 (0.50)(e) 104
___________________________________________________________________________________________________________________
===================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Total returns are not annualized for periods less than one
year, if applicable and do not reflect charges assessed in connection with
a variable product, which if included would reduce total returns.
(b) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(c) Calculated using average shares outstanding.
(d) Ratios are annualized and based on average daily net assets (000's omitted)
of $60,914 and $662 for Series I and Series II shares, respectively.
(e) Net investment income (loss) per share and the ratio of net investment
income (loss) to average net assets include a special cash dividend
received of $3.00 per share owned of Microsoft Corp. on December 2, 2004.
Net investment income (loss) per share and the ratio of net investment
income (loss) to average net assets excluding the special dividend are
$(0.06) and (0.51)% and $(0.08) and (0.66)% for Series I and Series II
shares, respectively.
AIM V.I. LARGE CAP GROWTH FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,046.00 $5.07 $1,019.84 $5.01 1.00%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,044.30 6.34 1,018.60 6.26 1.25
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. LARGE CAP GROWTH FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of In addition to their meetings was controlling. Each Trustee may have
AIM Variable Insurance Funds is required throughout the year, the Sub-Committees evaluated the information provided
under the Investment Company Act of 1940 meet at designated contract renewal differently from another Trustee and
to approve annually the renewal of the AIM meetings each year to conduct an in-depth attributed different weight to the various
V.I. Large Cap Growth Fund (the Fund) review of the performance, fees, expenses factors. The Trustees recognized that the
investment advisory agreement with Invesco and other matters related to their advisory arrangements and resulting
Aim Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract advisory fees for the Fund and the other
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive AIM Funds are the result of years of
for Mutual Funds (the sub-advisory comparative performance and fee data review and negotiation between the
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an Trustees and Invesco Aim, that the
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Trustees may focus to a greater extent on
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and certain aspects of these arrangements in
Limited, Invesco Australia Limited, supervision of the Senior Officer who also some years than in others, and that the
Invesco Global Asset Management (N.A.), prepares a separate analysis of this Trustees' deliberations and conclusions in
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each a particular year may be based in part on
Institutional (N.A.), Inc., Invesco Senior Sub-Committee then makes recommendations their deliberations and conclusions
Secured Management, Inc. and Invesco to the Investments Committee regarding the regarding these same arrangements
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. throughout the year and in prior years.
Sub-Advisers). During contract renewal The Investments Committee considers each
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes The discussion below serves as a
Board as a whole, and the disinterested or its own recommendations regarding the fees summary of the Senior Officer's
"independent" Trustees voting separately, and expenses of the AIM Funds to the full independent written evaluation with
approved the continuance of the Fund's Board. The Investments Committee also respect to the Fund's investment advisory
investment advisory agreement and the considers each Sub-Committee's agreement as well as a discussion of the
sub-advisory contracts for another year, recommendations in making its annual material factors and related conclusions
effective July 1, 2009. In doing so, the recommendation to the Board whether to that formed the basis for the Board's
Board determined that the Fund's approve the continuance of each AIM Fund's approval of the Fund's investment advisory
investment advisory agreement and the investment advisory agreement and agreement and sub-advisory contracts.
sub-advisory contracts are in the best sub-advisory contracts for another year. Unless otherwise stated, information set
interests of the Fund and its shareholders forth below is as of June 17, 2009, and
and that the compensation to Invesco Aim The independent Trustees met separately does not reflect any changes that may have
and the Affiliated Sub-Advisers under the during their evaluation of the Fund's occurred since that date, including but
Fund's investment advisory agreement and investment advisory agreement and not limited to changes to the Fund's
sub-advisory contracts is fair and sub-advisory contracts with independent performance, advisory fees, expense
reasonable. legal counsel. The independent Trustees limitations and/or fee waivers.
were also assisted in their annual
THE BOARD'S FUND EVALUATION PROCESS evaluation of the Fund's investment FACTORS AND CONCLUSIONS AND SUMMARY OF
advisory agreement by the Senior Officer. INDEPENDENT WRITTEN FEE EVALUATION
The Board's Investments Committee has One responsibility of the Senior Officer
established three Sub-Committees that are is to manage the process by which the AIM A. Nature, Extent and Quality of
responsible for overseeing the management Funds' proposed management fees are Services Provided by Invesco Aim
of a number of the series portfolios of negotiated during the annual contract
the AIM Funds. This Sub-Committee renewal process to ensure that they are The Board reviewed the advisory
structure permits the Trustees to focus on negotiated in a manner that is at arms' services provided to the Fund by Invesco
the performance of the AIM Funds that have length and reasonable. Accordingly, the Aim under the Fund's investment advisory
been assigned to them. The Sub-Committees Senior Officer must either supervise a agreement, the performance of Invesco Aim
meet throughout the year to review the competitive bidding process or prepare an in providing these services, and the
performance of their assigned funds, and independent written evaluation. The Senior credentials and experience of the officers
the Sub-Committees review monthly and Officer recommended that an independent and employees of Invesco Aim who provide
quarterly comparative performance written evaluation be provided and, at the these services. The Board's review of the
information and periodic asset flow data direction of the Board, prepared an qualifications of Invesco Aim to provide
for their assigned funds. These materials independent written evaluation. these services included the Board's
are prepared under the direction and consideration of Invesco Aim's portfolio
supervision of the independent Senior During the annual contract renewal and product review process, various back
Officer, an officer of the AIM Funds who process, the Board considered the factors office support functions provided by
reports directly to the independent discussed below in evaluating the fairness Invesco Aim and its affiliates, and
Trustees. Over the course of each year, and reasonableness of the Fund's Invesco Aim's equity and fixed income
the Sub-Committees meet with portfolio investment advisory agreement and trading operations. The Board concluded
managers for their assigned funds and sub-advisory contracts. The Board that the nature, extent and quality of the
other members of management and review considered all of the information provided advisory services provided to the Fund by
with these individuals the performance, to them, including information provided at Invesco Aim are appropriate and that
investment objective(s), policies, their meetings throughout the year as part Invesco Aim currently is providing
strategies and limitations of these funds. of their ongoing oversight of the Fund, satisfactory advisory services in
and did not identify any particular factor accordance with the terms of the Fund's
that investment advisory agreement. In
addition, based on their
AIM V.I. LARGE CAP GROWTH FUND continued
ongoing meetings throughout the year advisory agreement. The Board did not advisory fee rates of other domestic
with the Fund's portfolio manager or view fund performance as a relevant factor clients of Invesco Aim and its affiliates
managers, the Board concluded that these in considering whether to approve the with investment strategies comparable to
individuals are competent and able to sub-advisory contracts for the Fund, as no those of the Fund, including one mutual
continue to carry out their Affiliated Sub-Adviser currently manages fund advised by Invesco Aim and two mutual
responsibilities under the Fund's assets of the Fund. funds sub-advised by an Invesco Aim
investment advisory agreement. affiliate. The Board noted that the Fund's
The Board compared the Fund's rate was: (i) above the effective fee rate
In determining whether to continue the performance during the past one, three and for the mutual fund advised by Invesco
Fund's investment advisory agreement, the five calendar years to the performance of Aim; and (ii) above the sub-adviser
Board considered the prior relationship all funds in the Lipper performance effective fee rates for the domestic
between Invesco Aim and the Fund, as well universe that are not managed by Invesco mutual funds sub-advised by an Invesco Aim
as the Board's knowledge of Invesco Aim's Aim or an Affiliated Sub-Adviser and affiliate.
operations, and concluded that it is against the Lipper VA Underlying Funds -
beneficial to maintain the current Large Cap Growth Index. The Board noted Additionally, the Board compared the
relationship, in part, because of such that the Fund's performance was in the Fund's effective fee rate to the effective
knowledge. The Board also considered the first quintile of its performance universe fee rates paid by several separately
steps that Invesco Aim and its affiliates for the one, three and five year periods managed accounts/wrap accounts advised by
continue to take to improve the quality (the first quintile being the best Invesco Aim affiliates. The Board noted
and efficiency of the services they performing funds and the fifth quintile that the Fund's rate was above the rates
provide to the AIM Funds in the areas of being the worst performing funds). The for the separately managed accounts/wrap
investment performance, product line Board noted that the Fund's performance accounts. The Board considered that
diversification, distribution, fund was above the performance of the Index for management of the separately managed
operations, shareholder services and the one, three and five year periods. accounts/wrap accounts by the Invesco Aim
compliance. The Board concluded that the Although the independent written affiliates involves different levels of
quality and efficiency of the services evaluation of the Fund's Senior Officer services and different operational and
Invesco Aim and its affiliates provide to only considered Fund performance through regulatory requirements than Invesco Aim's
the AIM Funds in each of these areas the most recent calendar year, the Board management of the Fund. The Board
support the Board's approval of the also reviewed more recent Fund performance concluded that these differences are
continuance of the Fund's investment and this review did not change their appropriately reflected in the fee
advisory agreement. conclusions. The Board noted that, in structure for the Fund.
response to the Board's focus on fund
B. Nature, Extent and Quality of performance, Invesco Aim has taken a The Board noted that Invesco Aim has
Services Provided by Affiliated number of actions intended to improve the contractually agreed to waive fees and/or
Sub-Advisers investment process for the funds. limit expenses of the Fund through at
least April 30, 2010 in an amount
The Board reviewed the services D. Advisory and Sub-Advisory Fees and necessary to limit total annual operating
provided by the Affiliated Sub-Advisers Fee Waivers expenses to a specified percentage of
under the sub-advisory contracts and the average daily net assets for each class of
credentials and experience of the officers The Board compared the Fund's the Fund. The Board also considered the
and employees of the Affiliated contractual advisory fee rate to the effect this expense limitation would have
Sub-Advisers who provide these services. contractual advisory fee rates of funds in on the Fund's estimated total expenses.
The Board concluded that the nature, the Fund's Lipper expense group that are
extent and quality of the services not managed by Invesco Aim or an The Board also considered the services
provided by the Affiliated Sub-Advisers Affiliated Sub-Adviser, at a common asset provided by the Affiliated Sub-Advisers
are appropriate. The Board noted that the level. The Board noted that the Fund's pursuant to the sub-advisory contracts and
Affiliated Sub-Advisers, which have contractual advisory fee rate was below the services provided by Invesco Aim
offices and personnel that are the median contractual advisory fee rate pursuant to the Fund's advisory agreement,
geographically dispersed in financial of funds in its expense group. The Board as well as the allocation of fees between
centers around the world, can provide also reviewed the methodology used by Invesco Aim and the Affiliated
research and other information and make Lipper in determining contractual fee Sub-Advisers pursuant to the sub-advisory
recommendations on the markets and rates, which includes using audited contracts. The Board noted that the
economies of various countries and financial data from the most recent annual sub-advisory fees have no direct effect on
securities of companies located in such report of each fund in the expense group the Fund or its shareholders, as they are
countries or on various types of that was publicly available as of the end paid by Invesco Aim to the Affiliated
investments and investment techniques. The of the past calendar year. The Board noted Sub-Advisers, and that Invesco Aim and the
Board concluded that the sub-advisory that some comparative data was at least Affiliated Sub-Advisers are affiliates.
contracts benefit the Fund and its one year old and did not reflect the
shareholders by permitting Invesco Aim to market downturn that occurred in the After taking account of the Fund's
utilize the additional resources and fourth quarter of 2008. contractual advisory fee rate, the
talent of the Affiliated Sub-Advisers in contractual sub-advisory fee rate, the
managing the Fund. The Board also compared the Fund's comparative advisory fee information and
effective fee rate (the advisory fee after the expense limitation discussed above and
C. Fund Performance any advisory fee waivers and before any other relevant factors, the Board
expense limitations/waivers) to the concluded that the Fund's advisory and
The Board considered fund performance sub-advisory fees are fair and reasonable.
as a relevant factor in considering
whether to approve the investment
AIM V.I. LARGE CAP GROWTH FUND continued
E. Economies of Scale and Breakpoints Board also considered whether each investments, although Invesco Aim has
Affiliated Sub-Adviser is financially contractually agreed to waive through at
The Board considered the extent to sound and has the resources necessary to least June 30, 2010, the advisory fees
which there are economies of scale in the perform its obligations under the payable by the Fund in an amount equal to
provision of advisory services to the sub-advisory contracts, and concluded that 100% of the net advisory fee Invesco Aim
Fund. The Board also considered whether each Affiliated Sub-Adviser has the receives from the affiliated money market
the Fund benefits from such economies of financial resources necessary to fulfill funds with respect to the Fund's
scale through contractual breakpoints in these obligations. investment in the affiliated money market
the Fund's advisory fee schedule. The funds of uninvested cash, but not cash
Board noted that the Fund's contractual G. Collateral Benefits to Invesco Aim collateral. The Board concluded that the
advisory fee schedule includes seven and its Affiliates Fund's investment of uninvested cash and
breakpoints, but that due to the Fund's cash collateral from any securities
asset level at the end of the past The Board considered various other lending arrangements in the affiliated
calendar year, the Fund is not currently benefits received by Invesco Aim and its money market funds is in the best
benefiting from the breakpoints. The Board affiliates resulting from Invesco Aim's interests of the Fund and its
concluded that the Fund's advisory fees relationship with the Fund, including the shareholders.
would appropriately reflect economies of fees received by Invesco Aim and its
scale at higher asset levels. The Board affiliates for their provision of
also noted that the Fund shares directly administrative, transfer agency and
in economies of scale through lower fees distribution services to the Fund. The
charged by third party service providers Board considered the performance of
based on the combined size of all of the Invesco Aim and its affiliates in
AIM Funds and affiliates. providing these services and the
organizational structure employed by
F. Profitability and Financial Invesco Aim and its affiliates to provide
Resources these services. The Board also considered
that these services are provided to the
The Board reviewed information from Fund pursuant to written contracts that
Invesco Aim concerning the costs of the are reviewed and approved on an annual
advisory and other services that Invesco basis by the Board. The Board concluded
Aim and its affiliates provide to the Fund that Invesco Aim and its affiliates are
and the profitability of Invesco Aim and providing these services in a satisfactory
its affiliates in providing these manner and in accordance with the terms of
services. The Board also reviewed their contracts, and are qualified to
information concerning the financial continue to provide these services to the
condition of Invesco Aim and its Fund.
affiliates. The Board reviewed with
Invesco Aim the methodology used to The Board considered the benefits
prepare the profitability information. The realized by Invesco Aim and the Affiliated
Board considered the overall profitability Sub-Advisers as a result of portfolio
of Invesco Ltd., the ultimate parent of brokerage transactions executed through
Invesco Aim and the Affiliated "soft dollar" arrangements. The Board
Sub-Advisers, and of Invesco Aim, as well noted that soft dollar arrangements shift
as the profitability of Invesco Aim in the payment obligation for research and
connection with managing the Fund. The execution services from Invesco Aim and
Board noted that Invesco Aim continues to the Affiliated Sub-Advisers to the funds
operate at a net profit, although the and therefore may reduce Invesco Aim's and
reduction of assets under management as a the Affiliated Sub-Advisers' expenses. The
result of market movements and the Board concluded that Invesco Aim's and the
increase in voluntary fee waivers for Affiliated Sub-Advisers' soft dollar
affiliated money market funds have reduced arrangements are appropriate. The Board
the profitability of Invesco Aim and its also concluded that, based on their review
affiliates. The Board concluded that the and representations made by the Chief
Fund's fees are fair and reasonable, and Compliance Officer of Invesco Aim, these
that the level of profits realized by arrangements are consistent with
Invesco Aim and its affiliates from regulatory requirements.
providing services to the Fund is not
excessive in light of the nature, quality The Board considered the fact that the
and extent of the services provided. The Fund's uninvested cash and cash collateral
Board considered whether Invesco Aim is from any securities lending arrangements
financially sound and has the resources may be invested in money market funds
necessary to perform its obligations under advised by Invesco Aim pursuant to
the Fund's investment advisory agreement, procedures approved by the Board. The
and concluded that Invesco Aim has the Board noted that Invesco Aim will receive
financial resources necessary to fulfill advisory fees from these affiliated money
these obligations. The market funds attributable to such
AIM V.I. LARGE CAP GROWTH FUND
[INVESCO AIM LOGO] AIM V.I. LEISURE FUND
--SERVICE MARK-- Semiannual Report to Shareholders o June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund
files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the SEC
Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by
calling 202 942 8090 or 800 732 0330, or by electronic request at the following E-mail address: publicinfo@sec.gov. The SEC file
numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent portfolio holdings, as filed on Form N-Q, have also been
made available to insurance companies issuing variable annuity contracts and variable life insurance policies ("variable products")
that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, from our Client Services department at 800 410 4246 or on the Invesco Aim Web site,
invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site,
sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2009, is
available at our Web site. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting
Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. will be merged into
Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc. Additional information
will be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN
MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
SERIES I SHARES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer Inception (4/30/02) -1.03%
charges. If variable product issuer charges were included, returns would be lower. 5 Years -3.55
1 Year -27.17
Series I Shares 7.37%
Series II Shares 7.17 SERIES II SHARES
S&P 500 Index(Triangle) (Broad Market/Style-Specific Index) 3.19 Inception -1.28%
5 Years -3.79
(Triangle) Lipper Inc. 1 Year -27.43
==========================================
The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index
covering all major areas of the U.S. economy. It is not the 500 largest companies, but HAD THE ADVISOR NOT WAIVED FEES AND/OR
rather the most widely held 500 companies chosen with respect to market size, REIMBURSED EXPENSES, PERFORMANCE WOULD
liquidity, and their industry. HAVE BEEN LOWER.
The Fund is not managed to track the performance of any particular index, including (1) Total annual operating expenses less
the index defined here, and consequently, the performance of the Fund may deviate any contractual fee waivers and/or
significantly from the performance of the index. expense reimbursements by the advisor
in effect through at least April 30,
A direct investment cannot be made in an index. Unless otherwise indicated, index 2010. See current prospectus for more
results include reinvested dividends, and they do not reflect sales charges. information.
Performance of the peer group reflects fund expenses; performance of a market index
does not. (2) Total annual operating expenses less
======================================================================================= contractual advisory fee waivers by
the advisor in effect through at least
SERIES II SHARES' INCEPTION DATE IS TIVELY.(1, 2) THE TOTAL ANNUAL FUND June 30, 2010. See current prospectus
APRIL 30, 2004. RETURNS SINCE THAT DATE OPERATING EXPENSE RATIO SET FORTH IN THE for more information.
ARE HISTORICAL. ALL OTHER RETURNS ARE THE MOST RECENT FUND PROSPECTUS AS OF THE DATE
BLENDED RETURNS OF THE HISTORICAL OF THIS REPORT FOR SERIES I AND SERIES II
PERFORMANCE OF SERIES II SHARES SINCE SHARES WAS 1.45% AND 1.70%, RESPECTIVELY.
THEIR INCEPTION AND THE RESTATED THE EXPENSE RATIOS PRESENTED ABOVE MAY
HISTORICAL PERFORMANCE OF SERIES I SHARES VARY FROM THE EXPENSE RATIOS PRESENTED IN
(FOR PERIODS PRIOR TO INCEPTION OF SERIES OTHER SECTIONS OF THIS REPORT THAT ARE
II SHARES) ADJUSTED TO REFLECT THE RULE BASED ON EXPENSES INCURRED DURING THE
12B-1 FEES APPLICABLE TO THE SERIES II PERIOD COVERED BY THIS REPORT.
SHARES. THE INCEPTION DATE OF SERIES I
SHARES IS APRIL 30, 2002. AIM V.I. LEISURE FUND, A SERIES
PORTFOLIO OF AIM VARIABLE INSURANCE FUNDS,
THE PERFORMANCE OF THE FUND'S SERIES I IS CURRENTLY OFFERED THROUGH INSURANCE
AND SERIES II SHARE CLASSES WILL DIFFER COMPANIES ISSUING VARIABLE PRODUCTS. YOU
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES. CANNOT PURCHASE SHARES OF THE FUND
DIRECTLY. PERFORMANCE FIGURES GIVEN
THE PERFORMANCE DATA QUOTED REPRESENT REPRESENT THE FUND AND ARE NOT INTENDED TO
PAST PERFORMANCE AND CANNOT GUARANTEE REFLECT ACTUAL VARIABLE PRODUCT VALUES.
COMPARABLE FUTURE RESULTS; CURRENT THEY DO NOT REFLECT SALES CHARGES,
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE EXPENSES AND FEES ASSESSED IN CONNECTION
CONTACT YOUR VARIABLE PRODUCT ISSUER OR WITH A VARIABLE PRODUCT. SALES CHARGES,
FINANCIAL ADVISOR FOR THE MOST RECENT EXPENSES AND FEES, WHICH ARE DETERMINED BY
MONTH-END VARIABLE PRODUCT PERFORMANCE. THE VARIABLE PRODUCT ISSUERS, WILL VARY
PERFORMANCE FIGURES REFLECT FUND EXPENSES, AND WILL LOWER THE TOTAL RETURN.
REINVESTED DISTRIBUTIONS AND CHANGES IN
NET ASSET VALUE. INVESTMENT RETURN AND THE MOST RECENT MONTH-END PERFORMANCE
PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
MAY HAVE A GAIN OR LOSS WHEN YOU SELL PRODUCT CHARGES, IS AVAILABLE ON THE
SHARES. INVESCO AIM AUTOMATED INFORMATION LINE,
866 702 4402. AS MENTIONED ABOVE, FOR THE
THE NET ANNUAL FUND OPERATING EXPENSE MOST RECENT MONTH-END PERFORMANCE
RATIO SET FORTH IN THE MOST RECENT FUND INCLUDING VARIABLE PRODUCT CHARGES, PLEASE
PROSPECTUS AS OF THE DATE OF THIS REPORT CONTACT YOUR VARIABLE PRODUCT ISSUER OR
FOR SERIES I AND SERIES II SHARES WAS FINANCIAL ADVISOR.
1.02% AND 1.27%, RESPEC-
AIM V.I. LEISURE FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-95.32%
ADVERTISING-5.81%
Omnicom Group Inc. 21,819 $ 689,044
- -----------------------------------------------------------------------------
WPP PLC (United Kingdom) 51,854 344,823
=============================================================================
1,033,867
=============================================================================
APPAREL RETAIL-2.64%
Abercrombie & Fitch Co.-Class A(b) 9,851 250,117
- -----------------------------------------------------------------------------
Hot Topic, Inc.(c) 29,890 218,496
=============================================================================
468,613
=============================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-7.61%
Carter's, Inc.(c) 7,375 181,499
- -----------------------------------------------------------------------------
Coach, Inc. 14,298 384,330
- -----------------------------------------------------------------------------
Hanesbrands, Inc.(b)(c) 25,821 387,573
- -----------------------------------------------------------------------------
Polo Ralph Lauren Corp. 7,475 400,212
=============================================================================
1,353,614
=============================================================================
BREWERS-7.02%
Anheuser-Busch InBev N.V. (Belgium) 12,992 470,177
- -----------------------------------------------------------------------------
Anheuser-Busch InBev N.V.-Ctfs. (Belgium)(c) 3,040 13
- -----------------------------------------------------------------------------
Companhia de Bebidas das Americas-ADR (Brazil)(b) 6,933 367,795
- -----------------------------------------------------------------------------
Heineken N.V. (Netherlands) 11,048 410,332
=============================================================================
1,248,317
=============================================================================
CABLE & SATELLITE-10.62%
Cablevision Systems Corp.-Class A 20,171 391,519
- -----------------------------------------------------------------------------
Comcast Corp.-Class A(b) 52,510 760,870
- -----------------------------------------------------------------------------
Liberty Media Corp.-Entertainment-Series
A-Tracking Stock(c) 12,720 340,260
- -----------------------------------------------------------------------------
Scripps Networks Interactive, Inc.-Class A 14,263 396,939
=============================================================================
1,889,588
=============================================================================
CASINOS & GAMING-3.03%
International Game Technology 22,737 361,518
- -----------------------------------------------------------------------------
Penn National Gaming, Inc.(c) 6,080 176,989
=============================================================================
538,507
=============================================================================
COMPUTER & ELECTRONICS RETAIL-3.65%
Best Buy Co., Inc. 14,561 487,648
- -----------------------------------------------------------------------------
GameStop Corp.-Class A(c) 7,299 160,651
=============================================================================
648,299
=============================================================================
DEPARTMENT STORES-3.14%
Kohl's Corp.(c) 7,482 319,855
- -----------------------------------------------------------------------------
Nordstrom, Inc.(b) 12,022 239,118
=============================================================================
558,973
=============================================================================
DISTILLERS & VINTNERS-3.20%
Diageo PLC (United Kingdom) 39,646 569,249
=============================================================================
FOOTWEAR-1.69%
NIKE, Inc.-Class B 5,793 299,961
=============================================================================
GENERAL MERCHANDISE STORES-2.63%
Family Dollar Stores, Inc. 6,439 182,224
- -----------------------------------------------------------------------------
Target Corp. 7,236 285,605
=============================================================================
467,829
=============================================================================
HOME ENTERTAINMENT SOFTWARE-0.93%
Nintendo Co., Ltd. (Japan) 603 165,931
=============================================================================
HOME IMPROVEMENT RETAIL-2.03%
Home Depot, Inc. (The) 15,312 361,822
=============================================================================
HOTELS, RESORTS & CRUISE LINES-4.21%
Choice Hotels International, Inc. 10,555 280,869
- -----------------------------------------------------------------------------
Marriott International, Inc.-Class A(b) 16,205 357,635
- -----------------------------------------------------------------------------
Regal Hotels International Holdings Ltd. (Hong
Kong) 413,800 109,705
=============================================================================
748,209
=============================================================================
HYPERMARKETS & SUPER CENTERS-1.33%
Wal-Mart Stores, Inc. 4,884 236,581
=============================================================================
INTERNET SOFTWARE & SERVICES-3.17%
Google Inc.-Class A(c) 1,339 564,509
=============================================================================
MOVIES & ENTERTAINMENT-13.06%
News Corp.-Class A 49,734 453,077
- -----------------------------------------------------------------------------
Time Warner Inc. 16,792 422,990
- -----------------------------------------------------------------------------
Viacom Inc.-Class A(c) 7,241 173,639
- -----------------------------------------------------------------------------
Viacom Inc.-Class B(b)(c) 9,971 226,342
- -----------------------------------------------------------------------------
Walt Disney Co. (The) 44,878 1,047,004
=============================================================================
2,323,052
=============================================================================
RESTAURANTS-10.77%
Brinker International, Inc. 20,878 355,553
- -----------------------------------------------------------------------------
Darden Restaurants, Inc. 11,840 390,483
- -----------------------------------------------------------------------------
Jack in the Box Inc.(c) 14,002 314,345
- -----------------------------------------------------------------------------
McDonald's Corp. 9,435 542,418
- -----------------------------------------------------------------------------
Yum! Brands, Inc. 9,356 311,929
=============================================================================
1,914,728
=============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. LEISURE FUND
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------
SOFT DRINKS-6.03%
Coca-Cola Co. (The) 5,885 $ 282,421
- -----------------------------------------------------------------------------
Coca-Cola Femsa, S.A.B. de C.V.-ADR (Mexico) 4,835 193,980
- -----------------------------------------------------------------------------
PepsiCo, Inc. 10,843 595,932
=============================================================================
1,072,333
=============================================================================
SPECIALTY STORES-2.00%
PetSmart, Inc. 16,558 355,335
=============================================================================
TOBACCO-0.75%
British American Tobacco PLC (United Kingdom) 4,824 133,241
=============================================================================
Total Common Stocks & Other Equity Interests
(Cost $17,875,019) 16,952,558
=============================================================================
MONEY MARKET FUNDS-4.66%
Liquid Assets Portfolio-Institutional Class(d) 414,150 414,150
- -----------------------------------------------------------------------------
Premier Portfolio-Institutional Class(d) 414,150 414,150
=============================================================================
Total Money Market Funds (Cost $828,300) 828,300
=============================================================================
TOTAL INVESTMENTS (excluding investments purchased
with cash collateral from securities on
loan)-99.98% (Cost $18,703,319) 17,780,858
=============================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES ON
LOAN
MONEY MARKET FUNDS-9.85%
Liquid Assets Portfolio-Institutional Class (Cost
$1,752,115)(d)(e) 1,752,115 1,752,115
=============================================================================
TOTAL INVESTMENTS-109.83% (Cost $20,455,434) 19,532,973
=============================================================================
OTHER ASSETS LESS LIABILITIES-(9.83)% (1,747,961)
=============================================================================
NET ASSETS-100.00% $17,785,012
_____________________________________________________________________________
=============================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
Ctfs. - Certificates
</Table>
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) All or a portion of this security was out on loan at June 30, 2009.
(c) Non-income producing security.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
(e) The security has been segregated to satisfy the commitment to return the
cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 1J.
PORTFOLIO COMPOSITION
By sector, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
Consumer Discretionary 72.9%
- -------------------------------------------------------------------------
Consumer Staples 18.3
- -------------------------------------------------------------------------
Information Technology 4.1
- -------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities 4.7
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. LEISURE FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $17,875,019)* $16,952,558
- -------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 2,580,415
===============================================================================
Total investments, at value (Cost $20,455,434) 19,532,973
===============================================================================
Foreign currencies, at value (Cost $8,494) 8,476
- -------------------------------------------------------------------------------
Receivables for:
Investments sold 22,753
- -------------------------------------------------------------------------------
Fund shares sold 245
- -------------------------------------------------------------------------------
Dividends 24,844
- -------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 5,926
===============================================================================
Total assets 19,595,217
_______________________________________________________________________________
===============================================================================
LIABILITIES:
Payables for:
Fund shares reacquired 1,373
- -------------------------------------------------------------------------------
Collateral upon return of securities loaned 1,752,115
- -------------------------------------------------------------------------------
Accrued fees to affiliates 13,467
- -------------------------------------------------------------------------------
Accrued other operating expenses 34,292
- -------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 8,958
===============================================================================
Total liabilities 1,810,205
===============================================================================
Net assets applicable to shares outstanding $17,785,012
_______________________________________________________________________________
===============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $24,410,167
- -------------------------------------------------------------------------------
Undistributed net investment income 403,043
- -------------------------------------------------------------------------------
Undistributed net realized gain (loss) (6,105,539)
- -------------------------------------------------------------------------------
Unrealized appreciation (depreciation) (922,659)
===============================================================================
$17,785,012
_______________________________________________________________________________
===============================================================================
NET ASSETS:
Series I $17,778,289
_______________________________________________________________________________
===============================================================================
Series II $ 6,723
_______________________________________________________________________________
===============================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 3,299,194
_______________________________________________________________________________
===============================================================================
Series II 1,249
_______________________________________________________________________________
===============================================================================
Series I:
Net asset value per share $ 5.39
_______________________________________________________________________________
===============================================================================
Series II:
Net asset value per share $ 5.38
_______________________________________________________________________________
===============================================================================
</Table>
* At June 30, 2009, securities with an aggregate value of $1,702,755 were on
loan to brokers.
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding
taxes of $4,204) $ 148,766
- ------------------------------------------------------
Dividends from affiliated money market
funds (includes securities lending
income of $5,520) 8,696
======================================================
Total investment income 157,462
======================================================
EXPENSES:
Advisory fees 62,696
- ------------------------------------------------------
Administrative services fees 45,678
- ------------------------------------------------------
Custodian fees 7,662
- ------------------------------------------------------
Distribution fees -- Series II 7
- ------------------------------------------------------
Transfer agent fees 886
- ------------------------------------------------------
Trustees' and officers' fees and
benefits 10,355
- ------------------------------------------------------
Professional services fees 19,609
- ------------------------------------------------------
Other 6,202
======================================================
Total expenses 153,095
======================================================
Less: Fees waived and expenses
reimbursed (69,209)
======================================================
Net expenses 83,886
======================================================
Net investment income 73,576
======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (3,846,940)
- ------------------------------------------------------
Foreign currencies (12,860)
======================================================
(3,859,800)
======================================================
Change in net unrealized appreciation
of:
Investment securities 4,930,015
- ------------------------------------------------------
Foreign currencies 5,909
======================================================
4,935,924
======================================================
Net realized and unrealized gain 1,076,124
======================================================
Net increase in net assets resulting
from operations $ 1,149,700
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. LEISURE FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- ------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 73,576 $ 349,505
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) (3,859,800) (1,784,774)
- ------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 4,935,924 (14,045,503)
======================================================================================================
Net increase (decrease) in net assets resulting from operations 1,149,700 (15,480,772)
======================================================================================================
Distributions to shareholders from net investment income:
Series I -- (301,961)
- ------------------------------------------------------------------------------------------------------
Series II -- (66)
======================================================================================================
Total distributions from net investment income -- (302,027)
======================================================================================================
Distributions to shareholders from net realized gains:
Series I -- (4,987,772)
- ------------------------------------------------------------------------------------------------------
Series II -- (1,573)
======================================================================================================
Total distributions from net realized gains -- (4,989,345)
======================================================================================================
Share transactions-net:
Series I (1,373,719) (3,824,172)
- ------------------------------------------------------------------------------------------------------
Series II 538 2,197
======================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (1,373,181) (3,821,975)
======================================================================================================
Net increase (decrease) in net assets (223,481) (24,594,119)
======================================================================================================
NET ASSETS:
Beginning of period 18,008,493 42,602,612
======================================================================================================
End of period (includes undistributed net investment income of
$403,043 and $329,467, respectively) $17,785,012 $ 18,008,493
______________________________________________________________________________________________________
======================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. LEISURE FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Leisure Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is capital growth.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
AIM V.I. LEISURE FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. OTHER RISKS -- The Fund's investments are concentrated in a comparatively
narrow segment of the economy. Consequently, the Fund may tend to be more
volatile than other mutual funds, and the value of the Fund's investments
may tend to rise and fall more rapidly.
The leisure sector depends on consumer discretionary spending, which
generally falls during economic downturns.
J. SECURITIES LENDING -- The Fund may lend portfolio securities having a
market value up to one-third of the Fund's total assets. Such loans are
secured by collateral equal to no less than the market value of the loaned
securities determined daily by the securities lending provider. Such
collateral will be cash or debt securities issued or guaranteed by the
U.S. Government or any of its sponsored agencies. Cash collateral received
in connection with these loans is invested in short-term money market
instruments or affiliated money market funds and is shown as such on the
Schedule of Investments. It is the Fund's policy to obtain additional
collateral from or return excess collateral to the borrower by the end of
the next business day, following the valuation date of the securities
loaned. Therefore, the value of the collateral held may be temporarily
less than the value of the securities on loan. Lending securities entails
a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase
the collateral accordingly, and the borrower fails to return the
securities. Upon the failure of the borrower to return the securities,
collateral may be liquidated and the securities may be purchased on the
open market to replace the loaned securities. The Fund could experience
delays and costs in gaining access to the collateral. The Fund bears the
risk of any deficiency in the amount of the collateral available for
return to the borrower due to any loss on the collateral invested.
Dividends received on cash collateral investments for securities lending
transactions, which are net of compensation to counterparties, is included
in Dividends from affiliates on the Statement of Operations. The aggregate
value of securities out on loan is shown as a footnote on the Statement of
Assets and Liabilities, if any.
K. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated
AIM V.I. LEISURE FUND
into U.S. dollar amounts on the respective dates of such transactions. The
Fund does not separately account for the portion of the results of
operations resulting from changes in foreign exchange rates on investments
and the fluctuations arising from changes in market prices of securities
held. The combined results of changes in foreign exchange rates and the
fluctuation of market prices on investments (net of estimated foreign tax
withholding) are included with the net realized and unrealized gain or
loss from investments in the Statement of Operations. Reported net
realized foreign currency gains or losses arise from (i) sales of foreign
currencies, (ii) currency gains or losses realized between the trade and
settlement dates on securities transactions, and (iii) the difference
between the amounts of dividends, interest, and foreign withholding taxes
recorded on the Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign currency gains and
losses arise from changes in the fair values of assets and liabilities,
other than investments in securities at fiscal period end, resulting from
changes in exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
L. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed, realized gains (losses) are
recorded. Realized and unrealized gains (losses) on the contracts are
included in the Statement of Operations. The maximum risks associated with
foreign currency contracts include failure of the counterparty to meet the
terms of the contract and the value of the foreign currency changing
unfavorably. These risks may be in excess of the amounts reflected in the
Statement of Assets and Liabilities.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS 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%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 1.01% and Series
II shares to 1.26% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, the only 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. These credits are used to pay certain expenses incurred by the
Fund.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash (excluding investments of cash
collateral from securities lending) in such affiliated money market funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$62,696 and reimbursed Fund expenses of $6,513.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
AIM V.I. LEISURE FUND
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $24,795 for accounting and fund
administrative services and reimbursed $20,883 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- --------------------------------------------------------------------------------------------------------------------------
Equity Securities $17,329,514 $2,203,459 $-- $19,532,973
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
NOTE 4--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $1,443
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 5--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the custodian bank
can be compensated by earning the additional interest; or (ii) compensate by
paying the custodian bank at a rate agreed upon by the custodian bank and
Invesco Aim, not to exceed the contractually agreed upon rate.
NOTE 6--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
AIM V.I. LEISURE FUND
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- ---------------------------------------------------------------------------------
December 31, 2016 $850,432
_________________________________________________________________________________
=================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $4,700,654 and
$5,532,498, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 1,933,778
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (2,871,276)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $ (937,498)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $20,470,471.
</Table>
NOTE 8--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- ----------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
------------------------ -------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Sold:
Series I 9,616 $ 50,752 32,750 $ 235,861
- ----------------------------------------------------------------------------------------------------------------------
Series II 116 550 60 571
======================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 1,102,028 5,289,732
- ----------------------------------------------------------------------------------------------------------------------
Series II -- -- 342 1,639
======================================================================================================================
Reacquired:
Series I (298,451) (1,424,471) (909,436) (9,349,765)
- ----------------------------------------------------------------------------------------------------------------------
Series II (2) (12) (2) (13)
======================================================================================================================
Net increase (decrease) in share activity (288,721) $(1,373,181) 225,742 $(3,821,975)
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
(a) There is an entity that is a record owner of more than 5% of the
outstanding shares of the Fund that owns 99% of the outstanding shares of
the Fund. The Fund and the Fund's principal underwriter or advisor, are
parties to participation agreements with this entity whereby this entity
sells units of interest in separate accounts funding variable products that
are invested in the Fund. The Fund, Invesco Aim and/or Invesco Aim
affiliates may make payments to this entity, which are considered to be
related to the Fund, for providing services to the Fund, Invesco Aim and/or
Invesco Aim affiliates including but not limited to services such as,
securities brokerage, third party record keeping and account servicing and
administrative services. The Trust has no knowledge as to whether all or
any portion of the shares owned of record by this entity is also owned
beneficially.
AIM V.I. LEISURE FUND
NOTE 9--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
(LOSSES) ON
NET ASSET NET SECURITIES DIVIDENDS DISTRIBUTIONS
VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET
BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END
OF PERIOD (LOSS) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD
- --------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $ 5.02 $ 0.02(c) $ 0.35 $ 0.37 $ -- $ -- $ -- $ 5.39
Year ended 12/31/08 12.67 0.12(c) (5.67) (5.55) (0.12) (1.98) (2.10) 5.02
Year ended 12/31/07 13.82 0.09 (0.15) (0.06) (0.24) (0.85) (1.09) 12.67
Year ended 12/31/06 11.86 0.07 2.83 2.90 (0.16) (0.78) (0.94) 13.82
Year ended 12/31/05 12.38 0.04 (0.19) (0.15) (0.14) (0.23) (0.37) 11.86
Year ended 12/31/04 10.96 0.00 1.47 1.47 (0.04) (0.01) (0.05) 12.38
- --------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 5.02 0.02(c) 0.34 0.36 -- -- -- 5.38
Year ended 12/31/08 12.63 0.09(c) (5.64) (5.55) (0.08) (1.98) (2.06) 5.02
Year ended 12/31/07 13.78 0.05 (0.15) (0.10) (0.20) (0.85) (1.05) 12.63
Year ended 12/31/06 11.84 0.04 2.82 2.86 (0.14) (0.78) (0.92) 13.78
Year ended 12/31/05 12.37 0.02 (0.19) (0.17) (0.13) (0.23) (0.36) 11.84
Year ended 12/31/04(e) 11.09 (0.02) 1.35 1.33 (0.04) (0.01) (0.05) 12.37
________________________________________________________________________________________________________________________________
================================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS)
TOTAL END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
RETURN(a) (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(b)
- -------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 7.37% $17,778 1.00%(d) 1.83%(d) 0.88%(d) 29%
Year ended 12/31/08 (43.04) 18,003 1.01 1.44 1.15 7
Year ended 12/31/07 (0.79) 42,593 1.01 1.28 0.50 15
Year ended 12/31/06 24.61 52,820 1.01 1.26 0.54 14
Year ended 12/31/05 (1.19) 54,192 1.16 1.31 0.34 32
Year ended 12/31/04 13.40 55,967 1.29 1.34 0.00 15
- -------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 7.17 7 1.25(d) 2.08(d) 0.63(d) 29
Year ended 12/31/08 (43.17) 6 1.26 1.69 0.90 7
Year ended 12/31/07 (1.13) 9 1.26 1.53 0.25 15
Year ended 12/31/06 24.28 14 1.26 1.51 0.29 14
Year ended 12/31/05 (1.37) 11 1.36 1.56 0.14 32
Year ended 12/31/04(e) 11.98 11 1.45(f) 1.60(f) (0.16)(f) 15
___________________________________________________________________________________________________________________
===================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Total returns are not annualized for periods less than on
year and do not reflect charges assessed in connection with a variable
product, which if included would reduce total returns, if applicable.
(b) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(c) Calculated using average shares outstanding.
(d) Ratios are annualized and based on average daily net assets (000's omitted)
of $16,852 and $6 for Series I and Series II shares, respectively.
(e) Commencement date of April 30, 2004.
(f) Annualized.
AIM V.I. LEISURE FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,073.70 $5.14 $1,019.84 $5.01 1.00%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,071.70 6.42 1,018.60 6.26 1.25
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. LEISURE FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of In addition to their meetings particular factor that was controlling.
AIM Variable Insurance Funds is required throughout the year, the Sub-Committees Each Trustee may have evaluated the
under the Investment Company Act of 1940 meet at designated contract renewal information provided differently from
to approve annually the renewal of the AIM meetings each year to conduct an in-depth another Trustee and attributed different
V.I. Leisure Fund (the Fund) investment review of the performance, fees, expenses weight to the various factors. The
advisory agreement with Invesco Aim and other matters related to their Trustees recognized that the advisory
Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract arrangements and resulting advisory fees
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive for the Fund and the other AIM Funds are
for Mutual Funds (the sub-advisory comparative performance and fee data the result of years of review and
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an negotiation between the Trustees and
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Invesco Aim, that the Trustees may focus
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and to a greater extent on certain aspects of
Limited, Invesco Australia Limited, supervision of the Senior Officer who also these arrangements in some years than in
Invesco Global Asset Management (N.A.), prepares a separate analysis of this others, and that the Trustees'
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each deliberations and conclusions in a
Institutional (N.A.), Inc., Invesco Senior Sub-Committee then makes recommendations particular year may be based in part on
Secured Management, Inc. and Invesco to the Investments Committee regarding the their deliberations and conclusions
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. regarding these same arrangements
Sub-Advisers). During contract renewal The Investments Committee considers each throughout the year and in prior years.
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes
Board as a whole, and the disinterested or its own recommendations regarding the fees The discussion below serves as a
"independent" Trustees voting separately, and expenses of the AIM Funds to the full summary of the Senior Officer's
approved the continuance of the Fund's Board. The Investments Committee also independent written evaluation with
investment advisory agreement and the considers each Sub-Committee's respect to the Fund's investment advisory
sub-advisory contracts for another year, recommendations in making its annual agreement as well as a discussion of the
effective July 1, 2009. In doing so, the recommendation to the Board whether to material factors and related conclusions
Board determined that the Fund's approve the continuance of each AIM Fund's that formed the basis for the Board's
investment advisory agreement and the investment advisory agreement and approval of the Fund's investment advisory
sub-advisory contracts are in the best sub-advisory contracts for another year. agreement and sub-advisory contracts.
interests of the Fund and its shareholders Unless otherwise stated, information set
and that the compensation to Invesco Aim The independent Trustees met separately forth below is as of June 17, 2009, and
and the Affiliated Sub-Advisers under the during their evaluation of the Fund's does not reflect any changes that may have
Fund's investment advisory agreement and investment advisory agreement and occurred since that date, including but
sub-advisory contracts is fair and sub-advisory contracts with independent not limited to changes to the Fund's
reasonable. legal counsel. The independent Trustees performance, advisory fees, expense
were also assisted in their annual limitations and/or fee waivers.
THE BOARD'S FUND EVALUATION PROCESS evaluation of the Fund's investment
advisory agreement by the Senior Officer. FACTORS AND CONCLUSIONS AND SUMMARY OF
The Board's Investments Committee has One responsibility of the Senior Officer INDEPENDENT WRITTEN FEE EVALUATION
established three Sub-Committees that are is to manage the process by which the AIM
responsible for overseeing the management Funds' proposed management fees are A. Nature, Extent and Quality of
of a number of the series portfolios of negotiated during the annual contract Services Provided by Invesco Aim
the AIM Funds. This Sub-Committee renewal process to ensure that they are
structure permits the Trustees to focus on negotiated in a manner that is at arms' The Board reviewed the advisory services
the performance of the AIM Funds that have length and reasonable. Accordingly, the provided to the Fund by Invesco Aim under
been assigned to them. The Sub-Committees Senior Officer must either supervise a the Fund's investment advisory agreement,
meet throughout the year to review the competitive bidding process or prepare an the performance of Invesco Aim in
performance of their assigned funds, and independent written evaluation. The Senior providing these services, and the
the Sub-Committees review monthly and Officer recommended that an independent credentials and experience of the officers
quarterly comparative performance written evaluation be provided and, at the and employees of Invesco Aim who provide
information and periodic asset flow data direction of the Board, prepared an these services. The Board's review of the
for their assigned funds. These materials independent written evaluation. qualifications of Invesco Aim to provide
are prepared under the direction and these services included the Board's
supervision of the independent Senior During the annual contract renewal consideration of Invesco Aim's portfolio
Officer, an officer of the AIM Funds who process, the Board considered the factors and product review process, various back
reports directly to the independent discussed below in evaluating the fairness office support functions provided by
Trustees. Over the course of each year, and reasonableness of the Fund's Invesco Aim and its affiliates, and
the Sub-Committees meet with portfolio investment advisory agreement and Invesco Aim's equity and fixed income
managers for their assigned funds and sub-advisory contracts. The Board trading operations. The Board concluded
other members of management and review considered all of the information provided that the nature, extent and quality of the
with these individuals the performance, to them, including information provided at advisory services provided to the Fund by
investment objective(s), policies, their meetings throughout the year as part Invesco Aim are appropriate and that
strategies and limitations of these funds. of their ongoing oversight of the Fund, Invesco Aim currently is providing
and did not identify any satisfactory advisory services in
accordance with the terms of the Fund's
investment advisory
AIM V.I. LEISURE FUND continued
agreement. In addition, based on their whether to approve the investment advisory fee rates of other domestic
ongoing meetings throughout the year with advisory agreement. The Board did not view clients of Invesco Aim and its affiliates
the Fund's portfolio manager or managers, fund performance as a relevant factor in with investment strategies comparable to
the Board concluded that these individuals considering whether to approve the those of the Fund, including one mutual
are competent and able to continue to sub-advisory contracts for the Fund, as no fund advised by Invesco Aim. The Board
carry out their responsibilities under the Affiliated Sub-Adviser currently manages noted that the Fund's rate was the same as
Fund's investment advisory agreement. assets of the Fund. the effective fee rate for the other
mutual fund. The Board also noted that an
In determining whether to continue the The Board compared the Fund's Invesco Aim affiliate advises an off-shore
Fund's investment advisory agreement, the performance during the past one, three and fund with a comparable investment
Board considered the prior relationship five calendar years to the performance of strategy.
between Invesco Aim and the Fund, as well all funds in the Lipper performance
as the Board's knowledge of Invesco Aim's universe that are not managed by Invesco The Board noted that Invesco Aim
operations, and concluded that it is AIM or an Affiliated Sub-Adviser. The contractually agreed to waive fees and/or
beneficial to maintain the current Board noted that the Fund's performance limit expenses of the Fund through at
relationship, in part, because of such was in the fourth quintile of its Lipper least April 30, 2010 in an amount
knowledge. The Board also considered the performance universe for the one, three necessary to limit total annual operating
steps that Invesco Aim and its affiliates and five year periods (the first quintile expenses to a specified percentage of
continue to take to improve the quality being the best performing funds and the average daily net assets for each class of
and efficiency of the services they fifth quintile being the worst performing the Fund. The Board also considered the
provide to the AIM Funds in the areas of funds). Invesco Aim advised the Board that effect this fee waiver would have on the
investment performance, product line the Fund's rankings are positively or Fund's total estimated expenses.
diversification, distribution, fund negatively impacted by its Lipper
operations, shareholder services and classification with other specialty and The Board also considered the services
compliance. The Board concluded that the miscellaneous funds. Although the provided by the Affiliated Sub-Advisers
quality and efficiency of the services independent written evaluation of the pursuant to the sub-advisory contracts and
Invesco Aim and its affiliates provide to Fund's Senior Officer only considered Fund the services provided by Invesco Aim
the AIM Funds in each of these areas performance through the most recent pursuant to the Fund's advisory agreement,
support the Board's approval of the calendar year, the Board also reviewed as well as the allocation of fees between
continuance of the Fund's investment more recent Fund performance and this Invesco Aim and the Affiliated
advisory agreement. review did not change their conclusions. Sub-Advisers pursuant to the sub-advisory
The Board noted that, in response to the contracts. The Board noted that the
B. Nature, Extent and Quality of Board's focus on fund performance, Invesco sub-advisory fees have no direct effect on
Services Provided by Affiliated Aim has taken a number of actions intended the Fund or its shareholders, as they are
Sub-Advisers to improve the investment process for the paid by Invesco Aim to the Affiliated
funds. Sub-Advisers, and that Invesco Aim and the
The Board reviewed the services Affiliated Sub-Advisers are affiliates.
provided by the Affiliated Sub-Advisers D. Advisory and Sub-Advisory Fees and
under the sub-advisory contracts and the Fee Waivers After taking account of the Fund's
credentials and experience of the officers contractual advisory fee rate, the
and employees of the Affiliated The Board compared the Fund's contractual sub-advisory fee rate, the
Sub-Advisers who provide these services. contractual advisory fee rate to the comparative advisory fee information
The Board concluded that the nature, contractual advisory fee rates of funds in discussed above, the expense limitations
extent and quality of the services the Fund's Lipper expense group that are and other relevant factors, the Board
provided by the Affiliated Sub-Advisers not managed by Invesco Aim or an concluded that the Fund's advisory and
are appropriate. The Board noted that the Affiliated Sub-Adviser, at a common asset sub-advisory fees are fair and reasonable.
Affiliated Sub-Advisers, which have level. The Board noted that the Fund's
offices and personnel that are contractual advisory fee rate was at the E. Economies of Scale and Breakpoints
geographically dispersed in financial median contractual advisory fee rate of
centers around the world, can provide funds in its expense group. The Board also The Board considered the extent to
research and other information and make reviewed the methodology used by Lipper in which there are economies of scale in the
recommendations on the markets and determining contractual fee rates, which provision of advisory services to the
economies of various countries and includes using audited financial data from Fund. The Board also considered whether
securities of companies located in such the most recent annual report of each fund the Fund benefits from such economies of
countries or on various types of in the expense group that was publicly scale through contractual breakpoints in
investments and investment techniques. The available as of the end of the past the Fund's advisory fee schedule. The
Board concluded that the sub-advisory calendar year. The Board noted that some Board noted that the Fund's contractual
contracts benefit the Fund and its comparative data was at least one year old advisory fee schedule includes seven
shareholders by permitting Invesco Aim to and did not reflect the market downturn breakpoints, but that due to the Fund's
utilize the additional resources and that occurred in the fourth quarter of asset level at the end of the past
talent of the Affiliated Sub-Advisers in 2008. calendar year, the Fund is not currently
managing the Fund. benefiting from the breakpoints. The Board
The Board also compared the Fund's concluded that the Fund's advisory fees
C. Fund Performance effective fee rate (the advisory fee after appropriately reflect economies of scale
any advisory fee waivers and before any at current asset levels. The Board also
The Board considered fund performance expense limitations/waivers) to the noted that the Fund shares directly in
as a relevant factor in considering economies of scale through lower fees
AIM V.I. LEISURE FUND continued
charged by third party service its affiliates in providing these
providers based on the combined size of services and the organizational structure
all of the AIM Funds and affiliates. employed by Invesco Aim and its affiliates
to provide these services. The Board also
F. Profitability and Financial considered that these services are
Resources provided to the Fund pursuant to written
contracts that are reviewed and approved
The Board reviewed information from on an annual basis by the Board. The Board
Invesco Aim concerning the costs of the concluded that Invesco Aim and its
advisory and other services that Invesco affiliates are providing these services in
Aim and its affiliates provide to the Fund a satisfactory manner and in accordance
and the profitability of Invesco Aim and with the terms of their contracts, and are
its affiliates in providing these qualified to continue to provide these
services. The Board also reviewed services to the Fund.
information concerning the financial
condition of Invesco Aim and its The Board considered the benefits
affiliates. The Board reviewed with realized by Invesco Aim and the Affiliated
Invesco Aim the methodology used to Sub-Advisers as a result of portfolio
prepare the profitability information. The brokerage transactions executed through
Board considered the overall profitability "soft dollar" arrangements. The Board
of Invesco Ltd., the ultimate parent of noted that soft dollar arrangements shift
Invesco Aim and the Affiliated the payment obligation for research and
Sub-Advisers, and of Invesco Aim, as well execution services from Invesco Aim and
as the profitability of Invesco Aim in the Affiliated Sub-Advisers to the funds
connection with managing the Fund. The and therefore may reduce Invesco Aim's and
Board noted that Invesco Aim continues to the Affiliated Sub-Advisers' expenses. The
operate at a net profit, although the Board concluded that Invesco Aim's and the
reduction of assets under management as a Affiliated Sub-Advisers' soft dollar
result of market movements and the arrangements are appropriate. The Board
increase in voluntary fee waivers for also concluded that, based on their review
affiliated money market funds have reduced and representations made by the Chief
the profitability of Invesco Aim and its Compliance Officer of Invesco Aim, these
affiliates. The Board concluded that the arrangements are consistent with
Fund's fees are fair and reasonable, and regulatory requirements.
that the level of profits realized by
Invesco Aim and its affiliates from The Board considered the fact that the
providing services to the Fund is not Fund's uninvested cash and cash collateral
excessive in light of the nature, quality from any securities lending arrangements
and extent of the services provided. The may be invested in money market funds
Board considered whether Invesco Aim is advised by Invesco Aim pursuant to
financially sound and has the resources procedures approved by the Board. The
necessary to perform its obligations under Board noted that Invesco Aim will receive
the Fund's investment advisory agreement, advisory fees from these affiliated money
and concluded that Invesco Aim has the market funds attributable to such
financial resources necessary to fulfill investments, although Invesco Aim has
these obligations. The Board also contractually agreed to waive through at
considered whether each Affiliated least June 30, 2010, the advisory fees
Sub-Adviser is financially sound and has payable by the Fund in an amount equal to
the resources necessary to perform its 100% of the net advisory fee Invesco Aim
obligations under the sub-advisory receives from the affiliated money market
contracts, and concluded that each funds with respect to the Fund's
Affiliated Sub-Adviser has the financial investment in the affiliated money market
resources necessary to fulfill these funds of uninvested cash, but not cash
obligations. collateral. The Board concluded that the
Fund's investment of uninvested cash and
G. Collateral Benefits to Invesco Aim cash collateral from any securities
and its Affiliates lending arrangements in the affiliated
money market funds is in the best
The Board considered various other interests of the Fund and its
benefits received by Invesco Aim and its shareholders.
affiliates resulting from Invesco Aim's
relationship with the Fund, including the
fees received by Invesco Aim and its
affiliates for their provision of
administrative, transfer agency and
distribution services to the Fund. The
Board considered the performance of
Invesco Aim and
AIM V.I. LEISURE FUND
[INVESCO AIM LOGO] AIM V.I. MID CAP CORE EQUITY FUND
--SERVICE MARK-- Semiannual Report to Shareholders o June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund
files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the SEC
Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by
calling 202 942 8090 or 800 732 0330, or by electronic request at the following E-mail address: publicinfo@sec.gov.
The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent portfolio holdings, as filed on Form N-Q, have
also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies ("variable
products") that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, from our Client Services department at 800 410 4246 or on the Invesco Aim Web site,
invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site,
sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2009, is
available at our Web site. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting
Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. will be merged into
Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc. Additional information
will be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN
MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
SERIES I SHARES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer Inception (9/10/01) 4.30%
charges. If variable product issuer charges were included, returns would be lower. 5 Years 1.11
1 Year -19.11
Series I Shares 7.10%
Series II Shares 6.92 SERIES II SHARES
S&P 500 Index(triangle) (Broad Market Index) 3.19 Inception (9/10/01) 4.05%
Russell Midcap Index(triangle) (Style-Specific Index) 9.96 5 Years 0.85
Lipper VUF Mid-Cap Core Funds Index(triangle) (Peer Group Index) 5.56 1 Year -19.33
==========================================
(triangle) Lipper Inc.
IS AVAILABLE ON THE INVESCO AIM AUTOMATED
The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index INFORMATION LINE, 866 702 4402. AS
covering all major areas of the U.S. economy. It is not the 500 largest companies, but MENTIONED ABOVE, FOR THE MOST RECENT
rather the most widely held 500 companies chosen with respect to market size, liquidity MONTH-END PERFORMANCE INCLUDING VARIABLE
and their industry. PRODUCT CHARGES, PLEASE CONTACT YOUR
VARIABLE PRODUCT ISSUER OR FINANCIAL
The RUSSELL MIDCAP--REGISTERED TRADEMARK-- INDEX measures the performance of the 800 ADVISOR.
smallest companies in the Russell 1000(R) Index, which represent approximately 30% of
the total market capitalization of the Russell 1000 Index. The Russell Midcap Index and (1) Total annual operating expenses less
the Russell 1000 Index are trademarks/service marks of the Frank Russell Company. any contractual fee waivers and/or
Russell--REGISTERED TRADEMARK-- is a trademark of the Frank Russell Company. expense reimbursements by the advisor
in effect through at least April 30,
The LIPPER VUF MID-CAP CORE FUNDS INDEX is an equally weighted representation of the 2010. See current prospectus for more
largest variable insurance underlying funds in the Lipper Mid-Cap Core Funds category. information.
These funds 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. (2) Total annual operating expenses less
contractual advisory fee waivers by the
The Fund is not managed to track the performance of any particular index, including advisor in effect through at least June
the indexes defined here, and consequently, the performance of the Fund may deviate 30, 2010. See current prospectus for
significantly from the performance of the indexes. more information.
A direct investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends, and they do not reflect sales charges.
Performance of the peer group reflects fund expenses; performance of a market index
does not.
=======================================================================================
THE PERFORMANCE OF THE FUND'S SERIES I AND OF THIS REPORT FOR SERIES I AND SERIES II
SERIES II SHARE CLASSES WILL DIFFER SHARES WAS 1.07% AND 1.32%, RESPECTIVELY.
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES. THE EXPENSE RATIOS PRESENTED ABOVE MAY
VARY FROM THE EXPENSE RATIOS PRESENTED IN
THE PERFORMANCE DATA QUOTED REPRESENT OTHER SECTIONS OF THIS REPORT THAT ARE
PAST PERFORMANCE AND CANNOT GUARANTEE BASED ON EXPENSES INCURRED DURING THE
COMPARABLE FUTURE RESULTS; CURRENT PERIOD COVERED BY THIS REPORT.
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE
CONTACT YOUR VARIABLE PRODUCT ISSUER OR AIM V.I. MID CAP CORE EQUITY FUND, A
FINANCIAL ADVISOR FOR THE MOST RECENT SERIES PORTFOLIO OF AIM VARIABLE INSURANCE
MONTH-END VARIABLE PRODUCT PERFORMANCE. FUNDS, IS CURRENTLY OFFERED THROUGH
PERFORMANCE FIGURES REFLECT FUND EXPENSES, INSURANCE COMPANIES ISSUING VARIABLE
REINVESTED DISTRIBUTIONS AND CHANGES IN PRODUCTS. YOU CANNOT PURCHASE SHARES OF
NET ASSET VALUE. INVESTMENT RETURN AND THE FUND DIRECTLY. PERFORMANCE FIGURES
PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU GIVEN REPRESENT THE FUND AND ARE NOT
MAY HAVE A GAIN OR LOSS WHEN YOU SELL INTENDED TO REFLECT ACTUAL VARIABLE
SHARES. PRODUCT VALUES. THEY DO NOT REFLECT SALES
CHARGES, EXPENSES AND FEES ASSESSED IN
THE NET ANNUAL FUND OPERATING EXPENSE CONNECTION WITH A VARIABLE PRODUCT. SALES
RATIO SET FORTH IN THE MOST RECENT FUND CHARGES, EXPENSES AND FEES, WHICH ARE
PROSPECTUS AS OF THE DATE OF THIS REPORT DETERMINED BY THE VARIABLE PRODUCT
FOR SERIES I AND SERIES II SHARES WAS ISSUERS, WILL VARY AND WILL LOWER THE
1.04% AND 1.29%, RESPECTIVELY.(1,2) THE TOTAL RETURN.
TOTAL ANNUAL FUND OPERATING EXPENSE RATIO
SET FORTH IN THE MOST RECENT FUND THE MOST RECENT MONTH-END PERFORMANCE
PROSPECTUS AS OF THE DATE DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
PRODUCT CHARGES,
AIM V.I. MID CAP CORE EQUITY FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-83.34%
AEROSPACE & DEFENSE-3.67%
Goodrich Corp. 99,269 $ 4,960,472
- -------------------------------------------------------------------------------
ITT Corp. 95,296 4,240,672
- -------------------------------------------------------------------------------
Precision Castparts Corp. 85,171 6,220,038
===============================================================================
15,421,182
===============================================================================
APPLICATION SOFTWARE-0.91%
Adobe Systems Inc.(b) 135,184 3,825,707
===============================================================================
ASSET MANAGEMENT & CUSTODY BANKS-1.51%
Legg Mason, Inc. 260,218 6,344,115
===============================================================================
COMMUNICATIONS EQUIPMENT-3.99%
Juniper Networks, Inc.(b)(c) 174,155 4,110,058
- -------------------------------------------------------------------------------
Motorola, Inc.(b) 1,018,685 6,753,882
- -------------------------------------------------------------------------------
Polycom, Inc.(b)(c) 291,861 5,916,022
===============================================================================
16,779,962
===============================================================================
COMPUTER STORAGE & PERIPHERALS-1.07%
NetApp, Inc.(b) 226,924 4,474,941
===============================================================================
CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS-0.41%
Joy Global Inc.(c) 48,043 1,716,096
===============================================================================
DISTRIBUTORS-1.13%
Genuine Parts Co.(c) 140,852 4,726,993
===============================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-0.27%
Rockwell Automation, Inc.(c) 35,544 1,141,673
===============================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.28%
Agilent Technologies, Inc.(b) 264,993 5,382,008
===============================================================================
ELECTRONIC MANUFACTURING SERVICES-1.05%
Molex Inc.(c) 284,944 4,430,879
===============================================================================
ENVIRONMENTAL & FACILITIES SERVICES-1.91%
Republic Services, Inc. 328,392 8,016,049
===============================================================================
FOOD RETAIL-1.81%
Safeway Inc. 374,178 7,622,006
===============================================================================
GAS UTILITIES-1.23%
UGI Corp. 203,218 5,180,027
===============================================================================
HEALTH CARE EQUIPMENT-6.15%
Boston Scientific Corp.(b) 323,055 3,275,778
- -------------------------------------------------------------------------------
Hospira, Inc.(b) 161,258 6,211,658
- -------------------------------------------------------------------------------
Teleflex Inc. 88,504 3,967,634
- -------------------------------------------------------------------------------
Varian Medical Systems, Inc.(b)(c) 172,412 6,058,558
- -------------------------------------------------------------------------------
Zimmer Holdings, Inc.(b) 148,688 6,334,109
===============================================================================
25,847,737
===============================================================================
HEALTH CARE FACILITIES-0.56%
Rhoen-Klinikum AG (Germany) 106,642 2,357,242
===============================================================================
HEALTH CARE SERVICES-1.95%
Laboratory Corp. of America Holdings(b) 46,941 3,182,131
- -------------------------------------------------------------------------------
Quest Diagnostics Inc.(c) 88,554 4,997,102
===============================================================================
8,179,233
===============================================================================
HEALTH CARE SUPPLIES-0.13%
Immucor, Inc.(b) 39,217 539,626
===============================================================================
HOUSEHOLD PRODUCTS-1.11%
Energizer Holdings, Inc.(b)(c) 89,585 4,679,920
===============================================================================
INDUSTRIAL CONGLOMERATES-2.14%
Tyco International Ltd. (Switzerland) 346,190 8,994,016
===============================================================================
INDUSTRIAL GASES-1.11%
Air Products and Chemicals, Inc. 72,481 4,681,548
===============================================================================
INDUSTRIAL MACHINERY-4.63%
Atlas Copco A.B.-Class A (Sweden)(c) 508,252 5,085,186
- -------------------------------------------------------------------------------
Danaher Corp. 87,436 5,398,299
- -------------------------------------------------------------------------------
Pall Corp. 155,169 4,121,289
- -------------------------------------------------------------------------------
Parker Hannifin Corp.(c) 112,860 4,848,465
===============================================================================
19,453,239
===============================================================================
INSURANCE BROKERS-0.78%
Marsh & McLennan Cos., Inc. 162,731 3,275,775
===============================================================================
IT CONSULTING & OTHER SERVICES-1.70%
Amdocs Ltd.(b) 332,620 7,134,699
===============================================================================
LIFE SCIENCES TOOLS & SERVICES-5.55%
Pharmaceutical Product Development, Inc. 246,650 5,727,213
- -------------------------------------------------------------------------------
Techne Corp.(c) 69,433 4,430,520
- -------------------------------------------------------------------------------
Thermo Fisher Scientific, Inc.(b) 185,631 7,568,176
- -------------------------------------------------------------------------------
Waters Corp.(b)(c) 108,990 5,609,715
===============================================================================
23,335,624
===============================================================================
MULTI-SECTOR HOLDINGS-0.29%
PICO Holdings, Inc.(b)(c) 42,430 1,217,741
===============================================================================
OFFICE ELECTRONICS-1.33%
Xerox Corp. 860,352 5,575,081
===============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. MID CAP CORE EQUITY FUND
<Table>
<Caption>
SHARES VALUE
- -------------------------------------------------------------------------------
OFFICE SERVICES & SUPPLIES-0.77%
Pitney Bowes Inc.(c) 146,684 $ 3,216,780
===============================================================================
OIL & GAS DRILLING-0.77%
Helmerich & Payne, Inc.(c) 104,889 3,237,923
===============================================================================
OIL & GAS EQUIPMENT & SERVICES-2.26%
BJ Services Co.(c) 466,629 6,360,153
- -------------------------------------------------------------------------------
Dresser-Rand Group, Inc.(b) 120,020 3,132,522
===============================================================================
9,492,675
===============================================================================
OIL & GAS EXPLORATION & PRODUCTION-3.79%
Chesapeake Energy Corp.(c) 105,051 2,083,161
- -------------------------------------------------------------------------------
Newfield Exploration Co.(b) 200,996 6,566,539
- -------------------------------------------------------------------------------
Penn West Energy Trust (Canada) 169,198 2,153,891
- -------------------------------------------------------------------------------
Pioneer Natural Resources Co.(c) 72,237 1,842,044
- -------------------------------------------------------------------------------
Southwestern Energy Co.(b) 83,839 3,257,145
===============================================================================
15,902,780
===============================================================================
OIL & GAS STORAGE & TRANSPORTATION-1.45%
Williams Cos., Inc. (The) 390,048 6,088,649
===============================================================================
PACKAGED FOODS & MEATS-3.51%
Cadbury PLC (United Kingdom) 1,087,997 9,292,385
- -------------------------------------------------------------------------------
Del Monte Foods Co. 211,974 1,988,316
- -------------------------------------------------------------------------------
Sara Lee Corp. 356,712 3,481,509
===============================================================================
14,762,210
===============================================================================
PERSONAL PRODUCTS-0.90%
Avon Products, Inc. 146,317 3,772,052
===============================================================================
PHARMACEUTICALS-2.29%
Allergan, Inc. 134,619 6,405,172
- -------------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR (Israel) 64,888 3,201,574
===============================================================================
9,606,746
===============================================================================
PROPERTY & CASUALTY INSURANCE-3.43%
Axis Capital Holdings Ltd. 243,666 6,379,176
- -------------------------------------------------------------------------------
Progressive Corp. (The)(b) 530,129 8,010,249
===============================================================================
14,389,425
===============================================================================
REGIONAL BANKS-0.79%
PNC Financial Services Group, Inc. 85,433 3,315,655
===============================================================================
SEMICONDUCTORS-3.51%
Linear Technology Corp.(c) 294,187 6,869,266
- -------------------------------------------------------------------------------
Microchip Technology Inc.(c) 105,803 2,385,858
- -------------------------------------------------------------------------------
Xilinx, Inc. 269,321 5,510,308
===============================================================================
14,765,432
===============================================================================
SPECIALIZED FINANCE-2.19%
Moody's Corp.(c) 349,372 9,205,952
===============================================================================
SPECIALTY CHEMICALS-4.21%
International Flavors & Fragrances Inc.(c) 208,299 6,815,544
- -------------------------------------------------------------------------------
Sigma-Aldrich Corp.(c) 219,036 10,855,424
===============================================================================
17,670,968
===============================================================================
SYSTEMS SOFTWARE-2.98%
Symantec Corp.(b) 805,474 12,533,175
===============================================================================
THRIFTS & MORTGAGE FINANCE-2.82%
People's United Financial Inc.(c) 788,372 11,857,115
===============================================================================
Total Common Stocks & Other Equity Interests
(Cost $368,344,431) 350,150,656
===============================================================================
PREFERRED STOCKS-2.30%
HOUSEHOLD PRODUCTS-2.30%
Henkel AG & Co. KGaA (Germany)-Pfd. (Cost
$12,485,398)(c) 310,093 9,685,265
===============================================================================
MONEY MARKET FUNDS-14.57%
Liquid Assets Portfolio-Institutional Class(d) 30,603,949 30,603,949
- -------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(d) 30,603,949 30,603,949
===============================================================================
Total Money Market Funds (Cost $61,207,898) 61,207,898
===============================================================================
TOTAL INVESTMENTS (excluding investments purchased
with cash collateral from securities on
loan)-100.21% (Cost $442,037,727) 421,043,819
===============================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES ON
LOAN
MONEY MARKET FUNDS-17.87%
Liquid Assets Portfolio-Institutional Class (Cost
$75,076,593)(d)(e) 75,076,593 75,076,593
===============================================================================
TOTAL INVESTMENTS-118.08% (Cost $517,114,320) 496,120,412
===============================================================================
OTHER ASSETS LESS LIABILITIES-(18.08)% (75,980,117)
===============================================================================
NET ASSETS-100.00% $420,140,295
_______________________________________________________________________________
===============================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
Pfd. - Preferred
</Table>
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) Non-income producing security.
(c) All or a portion of this security was out on loan at June 30, 2009.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
(e) The security has been segregated to satisfy the commitment to return the
cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 1I.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. MID CAP CORE EQUITY FUND
PORTFOLIO COMPOSITION
By sector, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
Information Technology 17.8%
- -------------------------------------------------------------------------
Health Care 16.6
- -------------------------------------------------------------------------
Industrials 13.8
- -------------------------------------------------------------------------
Financials 11.8
- -------------------------------------------------------------------------
Consumer Staples 9.7
- -------------------------------------------------------------------------
Energy 8.3
- -------------------------------------------------------------------------
Materials 5.3
- -------------------------------------------------------------------------
Utilities 1.2
- -------------------------------------------------------------------------
Consumer Discretionary 1.1
- -------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities 14.4
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. MID CAP CORE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $380,829,829)* $359,835,921
- --------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 136,284,491
================================================================================
Total investments, at value (Cost $517,114,320) 496,120,412
================================================================================
Receivables for:
Investments sold 2,126,584
- --------------------------------------------------------------------------------
Fund shares sold 120,153
- --------------------------------------------------------------------------------
Dividends 572,278
- --------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 13,498
================================================================================
Total assets 498,952,925
________________________________________________________________________________
================================================================================
LIABILITIES:
Payables for:
Investments purchased 2,178,339
- --------------------------------------------------------------------------------
Fund shares reacquired 1,167,970
- --------------------------------------------------------------------------------
Foreign currency contracts outstanding 3,228
- --------------------------------------------------------------------------------
Collateral upon return of securities loaned 75,076,593
- --------------------------------------------------------------------------------
Accrued fees to affiliates 283,794
- --------------------------------------------------------------------------------
Accrued other operating expenses 44,251
- --------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 58,455
================================================================================
Total liabilities 78,812,630
================================================================================
Net assets applicable to shares outstanding $420,140,295
________________________________________________________________________________
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $496,046,482
- --------------------------------------------------------------------------------
Undistributed net investment income 7,619,139
- --------------------------------------------------------------------------------
Undistributed net realized gain (loss) (62,528,764)
- --------------------------------------------------------------------------------
Unrealized appreciation (depreciation) (20,996,562)
================================================================================
$420,140,295
________________________________________________________________________________
================================================================================
NET ASSETS:
Series I $367,923,304
________________________________________________________________________________
================================================================================
Series II $ 52,216,991
________________________________________________________________________________
================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 39,991,215
________________________________________________________________________________
================================================================================
Series II 5,730,515
________________________________________________________________________________
================================================================================
Series I:
Net asset value per share $ 9.20
________________________________________________________________________________
================================================================================
Series II:
Net asset value per share $ 9.11
________________________________________________________________________________
================================================================================
</Table>
* At June 30, 2009, securities with an aggregate value of $72,706,358 were on
loan to brokers.
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding
taxes of $103,148) $ 3,713,158
- ------------------------------------------------------
Dividends from affiliated money market
funds (includes securities lending
income of $185,175) 374,901
======================================================
Total investment income 4,088,059
======================================================
EXPENSES:
Advisory fees 1,388,735
- ------------------------------------------------------
Administrative services fees 523,053
- ------------------------------------------------------
Custodian fees 10,961
- ------------------------------------------------------
Distribution fees -- Series II 57,541
- ------------------------------------------------------
Transfer agent fees 11,993
- ------------------------------------------------------
Trustees' and officers' fees and
benefits 17,003
- ------------------------------------------------------
Other 26,385
======================================================
Total expenses 2,035,671
======================================================
Less: Fees waived (30,273)
======================================================
Net expenses 2,005,398
======================================================
Net investment income 2,082,661
======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (54,462,698)
- ------------------------------------------------------
Foreign currencies 106,766
- ------------------------------------------------------
Foreign currency contracts (672,878)
======================================================
(55,028,810)
======================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 79,124,869
- ------------------------------------------------------
Foreign currencies (1,808)
- ------------------------------------------------------
Foreign currency contracts 286,851
======================================================
79,409,912
======================================================
Net realized and unrealized gain 24,381,102
======================================================
Net increase in net assets resulting
from operations $ 26,463,763
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. MID CAP CORE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- --------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 2,082,661 $ 5,619,494
- --------------------------------------------------------------------------------------------------------
Net realized gain (loss) (55,028,810) (7,003,370)
- --------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 79,409,912 (172,441,157)
========================================================================================================
Net increase (decrease) in net assets resulting from operations 26,463,763 (173,825,033)
========================================================================================================
Distributions to shareholders from net investment income:
Series I -- (7,372,511)
- --------------------------------------------------------------------------------------------------------
Series II -- (829,282)
========================================================================================================
Total distributions from net investment income -- (8,201,793)
========================================================================================================
Distributions to shareholders from net realized gains:
Series I -- (53,615,148)
- --------------------------------------------------------------------------------------------------------
Series II -- (7,340,647)
========================================================================================================
Total distributions from net realized gains -- (60,955,795)
========================================================================================================
Share transactions-net:
Series I (8,332,892) (19,282,609)
- --------------------------------------------------------------------------------------------------------
Series II 732,110 (1,143,742)
========================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (7,600,782) (20,426,351)
========================================================================================================
Net increase (decrease) in net assets 18,862,981 (263,408,972)
========================================================================================================
NET ASSETS:
Beginning of period 401,277,314 664,686,286
========================================================================================================
End of period (includes undistributed net investment income of
$7,619,139 and $5,536,478, respectively) $420,140,295 $ 401,277,314
________________________________________________________________________________________________________
========================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. MID CAP CORE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Mid Cap Core Equity Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
AIM V.I. MID CAP CORE EQUITY FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. SECURITIES LENDING -- The Fund may lend portfolio securities having a
market value up to one-third of the Fund's total assets. Such loans are
secured by collateral equal to no less than the market value of the loaned
securities determined daily by the securities lending provider. Such
collateral will be cash or debt securities issued or guaranteed by the
U.S. Government or any of its sponsored agencies. Cash collateral received
in connection with these loans is invested in short-term money market
instruments or affiliated money market funds and is shown as such on the
Schedule of Investments. It is the Fund's policy to obtain additional
collateral from or return excess collateral to the borrower by the end of
the next business day, following the valuation date of the securities
loaned. Therefore, the value of the collateral held may be temporarily
less than the value of the securities on loan. Lending securities entails
a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase
the collateral accordingly, and the borrower fails to return the
securities. Upon the failure of the borrower to return the securities,
collateral may be liquidated and the securities may be purchased on the
open market to replace the loaned securities. The Fund could experience
delays and costs in gaining access to the collateral. The Fund bears the
risk of any deficiency in the amount of the collateral available for
return to the borrower due to any loss on the collateral invested.
Dividends received on cash collateral investments for securities lending
transactions, which are net of compensation to counterparties, is included
in Dividends from affiliates on the Statement of Operations. The aggregate
value of securities out on loan is shown as a footnote on the Statement of
Assets and Liabilities, if any.
J. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are
AIM V.I. MID CAP CORE EQUITY FUND
included with the net realized and unrealized gain or loss from
investments in the Statement of Operations. Reported net realized foreign
currency gains or losses arise from (i) sales of foreign currencies, (ii)
currency gains or losses realized between the trade and settlement dates
on securities transactions, and (iii) the difference between the amounts
of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign currency gains and losses arise
from changes in the fair values of assets and liabilities, other than
investments in securities at fiscal period end, resulting from changes in
exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
K. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed, realized gains (losses) are
recorded. Realized and unrealized gains (losses) on the contracts are
included in the Statement of Operations. The maximum risks associated with
foreign currency contracts include failure of the counterparty to meet the
terms of the contract and the value of the foreign currency changing
unfavorably. These risks may be in excess of the amounts reflected in the
Statement of Assets and Liabilities.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
First $500 million 0.725%
- -------------------------------------------------------------------
Next $500 million 0.70%
- -------------------------------------------------------------------
Next $500 million 0.675%
- -------------------------------------------------------------------
Over $1.5 billion 0.65%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 1.30% and Series
II shares to 1.45% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, 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. These credits are used to pay certain expenses incurred by the Fund. To
the extent that the annualized expense ratio does not exceed the expense
limitation, the Advisor will retain its ability to be reimbursed for such fee
waivers or reimbursements prior to the end of each fiscal year. The Advisor did
not waive fees and/or reimburse expenses during the period under this expense
limitation.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash (excluding investments of cash
collateral from securities lending) in such affiliated money market funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$30,273.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $49,015 for accounting and fund
administrative services and reimbursed $474,037 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
AIM V.I. MID CAP CORE EQUITY FUND
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- ----------------------------------------------------------------------------------------------------------------------
Equity Securities $474,785,520 $21,334,892 $-- $496,120,412
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
NOTE 4--DERIVATIVE INVESTMENTS
Effective with the beginning of the Fund's fiscal year, the Fund has adopted the
provisions of FASB Statement No. 161, Disclosures about Derivative Instruments
and Hedging Activities. The standard is intended to improve financial reporting
about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an
entity's financial position and financial performance. The adoption of this
provision has no impact on the results of operations reported in the financial
statements.
VALUE OF DERIVATIVE INSTRUMENTS AT PERIOD-END
The Table below summarizes the value of the Fund's derivative instruments,
detailed by primary risk exposure, held as of June 30, 2009:
<Table>
<Caption>
VALUE
----------------------
RISK EXPOSURE/DERIVATIVE TYPE ASSETS LIABILITIES
- ----------------------------------------------------------------------------------------------------
Currency risk(a)
Foreign currency contracts $-- $(3,228)
____________________________________________________________________________________________________
====================================================================================================
</Table>
(a) Value is disclosed on the Statement of Assets and Liabilities under Foreign
currency contracts outstanding.
EFFECT OF DERIVATIVE INSTRUMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009
The table below summarizes the gains (losses) on derivative instruments,
detailed by primary risk exposure, recognized in earnings during the period:
<Table>
<Caption>
LOCATION OF GAIN (LOSS) ON
STATEMENT OF OPERATIONS
---------------------------
FOREIGN CURRENCY CONTRACTS*
- -----------------------------------------------------------------------------------------------------
Realized Gain (Loss) - Currency risk $(672,878)
- -----------------------------------------------------------------------------------------------------
Change in Unrealized Appreciation - Currency risk $ 286,851
=====================================================================================================
Total $(386,027)
_____________________________________________________________________________________________________
=====================================================================================================
</Table>
* The average value outstanding of foreign currency contracts during the period
was $4,674,779.
AIM V.I. MID CAP CORE EQUITY FUND
FOREIGN CURRENCY CONTRACTS AT PERIOD-END
<Table>
<Caption>
OPEN FOREIGN CURRENCY CONTRACTS
- -----------------------------------------------------------------------------------------------------------------
CONTRACT TO UNREALIZED
SETTLEMENT ---------------------------------------- APPRECIATION
DATE DELIVER RECEIVE VALUE (DEPRECIATION)
- -----------------------------------------------------------------------------------------------------------------
9/04/09 GBP 2,925,000 USD 4,807,648 $4,810,876 $ (3,228)
=================================================================================================================
Total open foreign
currency contracts $ (3,228)
=================================================================================================================
</Table>
<Table>
Currency Abbreviations:
GBP - British Pound Sterling
USD - U.S. Dollar
</Table>
NOTE 5--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $1,922
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 6--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the custodian bank
can be compensated by earning the additional interest; or (ii) compensate by
paying the custodian bank at a rate agreed upon by the custodian bank and
Invesco Aim, not to exceed the contractually agreed upon rate.
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
The Fund did not have a capital loss carryforward as of December 31, 2008.
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $77,424,342 and
$98,936,183, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 28,866,121
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (52,364,369)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $(23,498,248)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $519,618,660.
</Table>
AIM V.I. MID CAP CORE EQUITY FUND
NOTE 9--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- -------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
--------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 2,237,729 $ 18,342,257 1,980,935 $ 25,879,573
- -------------------------------------------------------------------------------------------------------------------------
Series II 1,224,556 10,400,019 2,495,197 33,372,144
=========================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 7,277,763 60,987,657
- -------------------------------------------------------------------------------------------------------------------------
Series II -- -- 983,144 8,169,929
=========================================================================================================================
Reacquired:
Series I (3,329,920) (26,675,149) (8,365,253) (106,149,839)
- -------------------------------------------------------------------------------------------------------------------------
Series II (1,188,204) (9,667,909) (3,256,102) (42,685,815)
=========================================================================================================================
Net increase (decrease) in share activity (1,055,839) $ (7,600,782) 1,115,684 $ (20,426,351)
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 74% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and/or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
AIM V.I. MID CAP CORE EQUITY FUND
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
(LOSSES)
NET ASSET NET ON SECURITIES DIVIDENDS DISTRIBUTIONS
VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET
BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END
OF PERIOD (LOSS) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD
- ---------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $ 8.59 $ 0.05(c) $ 0.56 $ 0.61 $ -- $ -- $ -- $ 9.20
Year ended 12/31/08 14.57 0.14(c) (4.33) (4.19) (0.22) (1.57) (1.79) 8.59
Year ended 12/31/07 13.52 0.19 1.11 1.30 (0.04) (0.21) (0.25) 14.57
Year ended 12/31/06 13.61 0.14 1.39 1.53 (0.14) (1.48) (1.62) 13.52
Year ended 12/31/05 13.11 0.06 0.94 1.00 (0.07) (0.43) (0.50) 13.61
Year ended 12/31/04 12.06 0.03 1.63 1.66 (0.02) (0.59) (0.61) 13.11
- ---------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 8.52 0.04(c) 0.55 0.59 -- -- -- 9.11
Year ended 12/31/08 14.45 0.10(c) (4.28) (4.18) (0.18) (1.57) (1.75) 8.52
Year ended 12/31/07 13.42 0.13 1.12 1.25 (0.01) (0.21) (0.22) 14.45
Year ended 12/31/06 13.52 0.10 1.38 1.48 (0.10) (1.48) (1.58) 13.42
Year ended 12/31/05 13.04 0.03 0.92 0.95 (0.04) (0.43) (0.47) 13.52
Year ended 12/31/04 12.01 (0.00) 1.62 1.62 (0.00) (0.59) (0.59) 13.04
_________________________________________________________________________________________________________________________________
=================================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS)
TOTAL END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
RETURN(a) (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(b)
- -------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 7.10% $367,923 1.01%(d) 1.03%(d) 1.12%(d) 23%
Year ended 12/31/08 (28.52) 352,788 1.01 1.04 1.05 62
Year ended 12/31/07 9.55 585,608 1.00 1.01 1.23 62
Year ended 12/31/06 11.24 581,154 1.04 1.04 0.93 83
Year ended 12/31/05 7.62 584,860 1.03 1.03 0.50 70
Year ended 12/31/04 13.82 496,606 1.04 1.04 0.25 55
- -------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 6.92 52,217 1.26(d) 1.28(d) 0.87(d) 23
Year ended 12/31/08 (28.68) 48,489 1.26 1.29 0.80 62
Year ended 12/31/07 9.29 79,079 1.25 1.26 0.98 62
Year ended 12/31/06 10.98 56,766 1.29 1.29 0.68 83
Year ended 12/31/05 7.27 50,380 1.28 1.28 0.25 70
Year ended 12/31/04 13.57 33,495 1.29 1.29 (0.00) 55
___________________________________________________________________________________________________________________
===================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net
asset values may differ from the net asset value and returns for
shareholder transactions. Total returns are not annualized for periods
less than one year, if applicable and do not reflect charges assessed in
connection with a variable product, which if included would reduce total
returns.
(b) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(c) Calculated using average shares outstanding.
(d) Ratios are annualized and based on average daily net assets (000's
omitted) of $339,860 and $46,414 for Series I and Series II shares,
respectively.
AIM V.I. MID CAP CORE EQUITY FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,071.00 $5.19 $1,019.79 $5.06 1.01%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,069.20 6.46 1,018.55 6.31 1.26
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. MID CAP CORE EQUITY FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM In addition to their meetings particular factor that was controlling.
Variable Insurance Funds is required under throughout the year, the Sub-Committees Each Trustee may have evaluated the
the Investment Company Act of 1940 to meet at designated contract renewal information provided differently from
approve annually the renewal of the AIM meetings each year to conduct an in-depth another Trustee and attributed different
V.I. Mid Cap Core Equity Fund (the Fund) review of the performance, fees, expenses, weight to the various factors. The
investment advisory agreement with Invesco and other matters related to their Trustees recognized that the advisory
Aim Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract arrangements and resulting advisory fees
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive for the Fund and the other AIM Funds are
for Mutual Funds (the sub-advisory comparative performance and fee data the result of years of review and
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an negotiation between the Trustees and
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Invesco Aim, that the Trustees may focus
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and to a greater extent on certain aspects of
Limited, Invesco Australia Limited, supervision of the Senior Officer who also these arrangements in some years than in
Invesco Global Asset Management (N.A.), prepares a separate analysis of this others, and that the Trustees'
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each deliberations and conclusions in a
Institutional (N.A.), Inc., Invesco Senior Sub-Committee then makes recommendations particular year may be based in part on
Secured Management, Inc. and Invesco to the Investments Committee regarding the their deliberations and conclusions
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. regarding these same arrangements
Sub-Advisers). During contract renewal The Investments Committee considers each throughout the year and in prior years.
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes
Board as a whole, and the disinterested or its own recommendations regarding the fees The discussion below serves as a
"independent" Trustees voting separately, and expenses of the AIM Funds to the full summary of the Senior Officer's
approved the continuance of the Fund's Board. The Investments Committee also independent written evaluation with
investment advisory agreement and the considers each Sub-Committee's respect to the Fund's investment advisory
sub-advisory contracts for another year, recommendations in making its annual agreement as well as a discussion of the
effective July 1, 2009. In doing so, the recommendation to the Board whether to material factors and related conclusions
Board determined that the Fund's approve the continuance of each AIM Fund's that formed the basis for the Board's
investment advisory agreement and the investment advisory agreement and approval of the Fund's investment advisory
sub-advisory contracts are in the best sub-advisory contracts for another agreement and sub-advisory contracts.
interests of the Fund and its shareholders year. Unless otherwise stated, information set
and that the compensation to Invesco Aim forth below is as of June 17, 2009, and
and the Affiliated Sub-Advisers under the The independent Trustees met separately does not reflect any changes that may have
Fund's investment advisory agreement and during their evaluation of the Fund's occurred since that date, including but
sub-advisory contracts is fair and investment advisory agreement and not limited to changes to the Fund's
reasonable. sub-advisory contracts with independent performance, advisory fees, expense
legal counsel. The independent Trustees limitations and/or fee waivers.
THE BOARD'S FUND EVALUATION PROCESS were also assisted in their annual
The Board's Investments Committee has evaluation of the Fund's investment FACTORS AND CONCLUSIONS AND SUMMARY OF
established three Sub-Committees that are advisory agreement by the Senior Officer. INDEPENDENT WRITTEN FEE EVALUATION
responsible for overseeing the management One responsibility of the Senior Officer
of a number of the series portfolios of is to manage the process by which the AIM A. Nature, Extent and Quality of
the AIM Funds. This Sub-Committee Funds' proposed management fees are Services Provided by Invesco Aim
structure permits the Trustees to focus on negotiated during the annual contract
the performance of the AIM Funds that have renewal process to ensure that they are The Board reviewed the advisory services
been assigned to them. The Sub-Committees negotiated in a manner that is at arms' provided to the Fund by Invesco Aim under
meet throughout the year to review the length and reasonable. Accordingly, the the Fund's investment advisory agreement,
performance of their assigned funds, and Senior Officer must either supervise a the performance of Invesco Aim in
the Sub-Committees review monthly and competitive bidding process or prepare an providing these services, and the
quarterly comparative performance independent written evaluation. The Senior credentials and experience of the officers
information and periodic asset flow data Officer recommended that an independent and employees of Invesco Aim who provide
for their assigned funds. These materials written evaluation be provided and, at the these services. The Board's review of the
are prepared under the direction and direction of the Board, prepared an qualifications of Invesco Aim to provide
supervision of the independent Senior independent written evaluation. these services included the Board's
Officer, an officer of the AIM Funds who consideration of Invesco Aim's portfolio
reports directly to the independent During the annual contract renewal and product review process, various back
Trustees. Over the course of each year, process, the Board considered the factors office support functions provided by
the Sub-Committees meet with portfolio discussed below in evaluating the fairness Invesco Aim and its affiliates, and
managers for their assigned funds and and reasonableness of the Fund's Invesco Aim's equity and fixed income
other members of management and review investment advisory agreement and trading operations. The Board concluded
with these individuals the performance, sub-advisory contracts. The Board that the nature, extent and quality of the
investment objective(s), policies, considered all of the information provided advisory services provided to the Fund by
strategies and limitations of these funds. to them, including information provided at Invesco Aim are appropriate and that
their meetings throughout the year as part Invesco Aim currently is providing
of their ongoing oversight of the Fund, satisfactory advisory services in
and did not identify any accordance with the terms of the Fund's
investment advisory
AIM V.I. MID CAP CORE EQUITY FUND continued
agreement. In addition, based on their C. Fund Performance market downturn that occurred in the
ongoing meetings throughout the year with fourth quarter of 2008.
the Fund's portfolio manager or managers, The Board considered fund performance as a
the Board concluded that these individuals relevant factor in considering whether to The Board also compared the Fund's
are competent and able to continue to approve the investment advisory agreement. effective fee rate (the advisory fee after
carry out their responsibilities under the The Board did not view fund performance as any advisory fee waivers and before any
Fund's investment advisory agreement. a relevant factor in considering whether expense limitations/waivers) to the
to approve the sub-advisory contracts for advisory fee rates of other domestic
In determining whether to continue the the Fund, as no Affiliated Sub-Adviser clients of Invesco Aim and its affiliates
Fund's investment advisory agreement, the currently manages assets of the Fund. with investment strategies comparable to
Board considered the prior relationship those of the Fund, including one mutual
between Invesco Aim and the Fund, as well The Board compared the Fund's fund advised by Invesco Aim. The Board
as the Board's knowledge of Invesco Aim's performance during the past one, three and noted that the Fund's rate was above the
operations, and concluded that it is five calendar years to the performance of effective fee rate for the other mutual.
beneficial to maintain the current all funds in the Lipper performance
relationship, in part, because of such universe that are not managed by Invesco Additionally, the Board compared the
knowledge. The Board also considered the Aim or an Affiliated Sub-Adviser, and Fund's effective fee rate to the effective
steps that Invesco Aim and its affiliates against the Lipper VA Underlying Funds - fee rates paid by numerous separately
continue to take to improve the quality Mid-Cap Core Index. The Board noted that managed accounts/wrap accounts advised by
and efficiency of the services they the Fund's performance was in the first an Invesco Aim affiliate. The Board noted
provide to the AIM Funds in the areas of quintile of its performance universe for that the Fund's rate was above the rates
investment performance, product line the one, three and five year periods (the for all but three of the separately
diversification, distribution, fund first quintile being the best performing managed accounts/wrap accounts. The Board
operations, shareholder services and funds and the fifth quintile being the considered that management of the
compliance. The Board concluded that the worst performing funds). The Board noted separately managed accounts/wrap accounts
quality and efficiency of the services that the Fund's performance was above the by the Invesco Aim affiliate involves
Invesco Aim and its affiliates provide to performance of the Index for the one, different levels of services and different
the AIM Funds in each of these areas three and five year periods. Although the operational and regulatory requirements
support the Board's approval of the independent written evaluation of the than Invesco Aim's management of the Fund.
continuance of the Fund's investment Fund's Senior Officer only considered Fund The Board concluded that these differences
advisory agreement. performance through the most recent are appropriately reflected in the fee
calendar year, the Board also reviewed structure for the Fund.
B. Nature, Extent and Quality of more recent Fund performance and this
Services Provided by Affiliated review did not change their conclusions. The Board noted that Invesco Aim has
Sub-Advisers The Board noted that, in response to the contractually agreed to waive fees and/or
Board's focus on fund performance, Invesco limit expenses of the Fund through at
The Board reviewed the services provided Aim has taken a number of actions intended least April 30, 2010 in an amount
by the Affiliated Sub-Advisers under the to improve the investment process for the necessary to limit total annual operating
sub-advisory contracts and the credentials funds. expenses to a specified percentage of
and experience of the officers and average daily net assets for each class of
employees of the Affiliated Sub-Advisers D. Advisory and Sub-Advisory Fees and the Fund. The Board noted that at the
who provide these services. The Board Fee Waivers current expense ratio for the Fund, this
concluded that the nature, extent and expense waiver does not have any impact.
quality of the services provided by the The Board compared the Fund's contractual
Affiliated Sub-Advisers are appropriate. advisory fee rate to the contractual The Board also considered the services
The Board noted that the Affiliated advisory fee rates of funds in the Fund's provided by the Affiliated Sub-Advisers
Sub-Advisers, which have offices and Lipper expense group that are not managed pursuant to the sub-advisory contracts and
personnel that are geographically by Invesco Aim or an Affiliated the services provided by Invesco Aim
dispersed in financial centers around the Sub-Adviser, at a common asset level. The pursuant to the Fund's advisory agreement,
world, can provide research and other Board noted that the Fund's contractual as well as the allocation of fees between
information and make recommendations on advisory fee rate was below the median Invesco Aim and the Affiliated
the markets and economies of various contractual advisory fee rate of funds in Sub-Advisers pursuant to the sub-advisory
countries and securities of companies its expense group. The Board also reviewed contracts. The Board noted that the
located in such countries or on various the methodology used by Lipper in sub-advisory fees have no direct effect on
types of investments and investment determining contractual fee rates, which the Fund or its shareholders, as they are
techniques. The Board concluded that the includes using audited financial data from paid by Invesco Aim to the Affiliated
sub-advisory contracts benefit the Fund the most recent annual report of each fund Sub-Advisers, and that Invesco Aim and the
and its shareholders by permitting Invesco in the expense group that was publicly Affiliated Sub-Advisers are affiliates.
Aim to utilize the additional resources available as of the end of the past
and talent of the Affiliated Sub-Advisers calendar year. The Board noted that some After taking account of the Fund's
in managing the Fund. comparative data was at least one year old contractual advisory fee rate, the
and did not reflect the contractual sub-advisory fee rate, the
comparative advisory fee information
discussed above,
AIM V.I. MID CAP CORE EQUITY FUND continued
the expense limitations and other relevant obligations under the Fund's investment procedures approved by the Board. The
factors, the Board concluded that the advisory agreement, and concluded that Board noted that Invesco Aim will receive
Fund's advisory and sub-advisory fees are Invesco Aim has the financial resources advisory fees from these affiliated money
fair and reasonable. necessary to fulfill these obligations. market funds attributable to such
The Board also considered whether each investments, although Invesco Aim has
E. Economies of Scale and Breakpoints Affiliated Sub-Adviser is financially contractually agreed to waive through at
sound and has the resources necessary to least June 30, 2010, the advisory fees
The Board considered the extent to which perform its obligations under the payable by the Fund in an amount equal to
there are economies of scale in the sub-advisory contracts, and concluded that 100% of the net advisory fee Invesco Aim
provision of advisory services to the each Affiliated Sub-Adviser has the receives from the affiliated money market
Fund. The Board also considered whether financial resources necessary to fulfill funds with respect to the Fund's
the Fund benefits from such economies of these obligations. investment in the affiliated money market
scale through contractual breakpoints in funds of uninvested cash, but not cash
the Fund's advisory fee schedule. The G. Collateral Benefits to Invesco Aim collateral. The Board concluded that the
Board noted that the Fund's contractual and its Affiliates Fund's investment of uninvested cash and
advisory fee schedule includes three cash collateral from any securities
breakpoints, but that due to the Fund's The Board considered various other lending arrangements in the affiliated
asset level at the end of the past benefits received by Invesco Aim and its money market funds is in the best
calendar year, the Fund is not currently affiliates resulting from Invesco Aim's interests of the Fund and its
benefiting from the breakpoints. Based on relationship with the Fund, including the shareholders.
this information, the Board concluded that fees received by Invesco Aim and its
the Fund's advisory fees would reflect affiliates for their provision of
economies of scale at higher asset levels. administrative, transfer agency and
The Board also noted that the Fund shares distribution services to the Fund. The
directly in economies of scale through Board considered the performance of
lower fees charged by third party service Invesco Aim and its affiliates in
providers based on the combined size of providing these services and the
all of the AIM Funds and affiliates. organizational structure employed by
Invesco Aim and its affiliates to provide
F. Profitability and Financial these services. The Board also considered
Resources that these services are provided to the
Fund pursuant to written contracts that
The Board reviewed information from are reviewed and approved on an annual
Invesco Aim concerning the costs of the basis by the Board. The Board concluded
advisory and other services that Invesco that Invesco Aim and its affiliates are
Aim and its affiliates provide to the Fund providing these services in a satisfactory
and the profitability of Invesco Aim and manner and in accordance with the terms of
its affiliates in providing these their contracts, and are qualified to
services. The Board also reviewed continue to provide these services to the
information concerning the financial Fund.
condition of Invesco Aim and its
affiliates. The Board reviewed with The Board considered the benefits
Invesco Aim the methodology used to realized by Invesco Aim and the Affiliated
prepare the profitability information. The Sub-Advisers as a result of portfolio
Board considered the overall profitability brokerage transactions executed through
of Invesco Ltd., the ultimate parent of "soft dollar" arrangements. The Board
Invesco Aim and the Affiliated noted that soft dollar arrangements shift
Sub-Advisers, and of Invesco Aim, as well the payment obligation for research and
as the profitability of Invesco Aim in execution services from Invesco Aim and
connection with managing the Fund. The the Affiliated Sub-Advisers to the funds
Board noted that Invesco Aim continues to and therefore may reduce Invesco Aim's and
operate at a net profit, although the the Affiliated Sub-Advisers' expenses. The
reduction of assets under management as a Board concluded that Invesco Aim's and the
result of market movements and the Affiliated Sub-Advisers' soft dollar
increase in voluntary fee waivers for arrangements are appropriate. The Board
affiliated money market funds have reduced also concluded that, based on their review
the profitability of Invesco Aim and its and representations made by the Chief
affiliates. The Board concluded that the Compliance Officer of Invesco Aim, these
Fund's fees are fair and reasonable, and arrangements are consistent with
that the level of profits realized by regulatory requirements.
Invesco Aim and its affiliates from
providing services to the Fund is not The Board considered the fact that the
excessive in light of the nature, quality Fund's uninvested cash and cash collateral
and extent of the services provided. The from any securities lending arrangements
Board considered whether Invesco Aim is may be invested in money market funds
financially sound and has the resources advised by Invesco Aim pursuant to
necessary to perform its
AIM V.I. MID CAP CORE EQUITY FUND
[INVESCO AIM LOGO] AIM V.I. MONEY MARKET FUND
- SERVICE MARK - Semiannual Report to Shareholders - June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal
year, at the quarter-ends. For the second and fourth quarters, the lists appear
in the Fund's semiannual and annual reports to shareholders. For the first and
third quarters, the Fund files the lists with the Securities and Exchange
Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the
SEC Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied
at the SEC Public Reference Room in Washington, D.C. You can obtain information
on the operation of the Public Reference Room, including information about
duplicating fee charges, by calling 202 942 8090 or 800 732 0330, or by
electronic request at the following E-mail address: publicinfo@sec.gov. The
SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund's most
recent portfolio holdings, as filed on Form N-Q, have also been made available
to insurance companies issuing variable annuity contracts and variable life
insurance policies ("variable products") that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, from our Client Services department at 800 410 4246 or on the
Invesco Aim Web site, invescoaim.com. On the home page, scroll down and click on
Proxy Policy. The information is also available on the SEC Web site, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio
securities during the 12 months ended June 30, 2009, is available at our Web
site. Go to invescoaim.com, access the About Us tab, click on Required Notices
and then click on Proxy Voting Activity. Next, select the Fund from the
drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009,
Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco
Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc.
will be merged into Invesco Institutional (N.A.), Inc., and the consolidated
adviser firm will be renamed Invesco Advisers, Inc. Additional information will
be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND
PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN MORE COMPLETE
INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH
CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
PERFORMANCE SUMMARY
As of June 30, 2009, the seven-day SEC yield on the Fund's Series I shares was
0.05% and the seven-day SEC yield on the Fund's Series II shares was 0.05%. Had
fees not been waived, seven-day SEC yields for the Fund's Series I and Series II
shares would have been 0.00% and -1.95%, respectively.
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY AND IS NOT A DEPOSIT OR
OTHER OBLIGATION OF, OR GUARANTEED BY, A DEPOSITORY INSTITUTION. 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.
THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT GUARANTEE
COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE
SEE YOUR VARIABLE PRODUCT ISSUER OR FINANCIAL ADVISOR FOR THE MOST RECENT
MONTH-END VARIABLE PRODUCT PERFORMANCE. PERFORMANCE FIGURES REFLECT FUND
EXPENSES, REINVESTED DISTRIBUTIONS AND CHANGES IN NET ASSET VALUE. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS
WHEN YOU SELL SHARES.
AIM V.I. MONEY MARKET FUND, A SERIES PORTFOLIO OF AIM VARIABLE INSURANCE
FUNDS, IS CURRENTLY OFFERED THROUGH INSURANCE COMPANIES ISSUING VARIABLE
PRODUCTS. YOU CANNOT PURCHASE SHARES OF THE FUND DIRECTLY. PERFORMANCE FIGURES
GIVEN REPRESENT THE FUND AND ARE NOT INTENDED TO REFLECT ACTUAL VARIABLE PRODUCT
VALUES. THEY DO NOT REFLECT SALES CHARGES, EXPENSES AND FEES ASSESSED IN
CONNECTION WITH A VARIABLE PRODUCT. SALES CHARGES, EXPENSES AND FEES, WHICH ARE
DETERMINED BY THE VARIABLE PRODUCT ISSUERS, WILL VARY AND WILL LOWER THE TOTAL
RETURN.
THE MOST RECENT MONTH-END PERFORMANCE DATA AT THE FUND LEVEL, EXCLUDING
VARIABLE PRODUCT CHARGES, IS AVAILABLE ON THE INVESCO AIM AUTOMATED INFORMATION
LINE, 866 702 4402. AS MENTIONED ABOVE, FOR THE MOST RECENT MONTH-END
PERFORMANCE INCLUDING VARIABLE PRODUCT CHARGES, PLEASE CONTACT YOUR VARIABLE
PRODUCT ISSUER OR FINANCIAL ADVISOR.
AIM V.I. MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
June 30, 2009
(Unaudited)
<Table>
<Caption>
PRINCIPAL
INTEREST MATURITY AMOUNT
RATE DATE (000) VALUE
- -----------------------------------------------------------------------------------------------------
COMMERCIAL PAPER-71.18%(a)
=====================================================================================================
ASSET-BACKED SECURITIES-CONSUMER RECEIVABLES-14.95%
Old Line Funding, LLC(b) 0.30% 07/09/09 $2,000 $ 1,999,867
- -----------------------------------------------------------------------------------------------------
Ranger Funding Co., LLC(b) 0.32% 07/22/09 1,029 1,028,808
- -----------------------------------------------------------------------------------------------------
Sheffield Receivables Corp.(b) 0.30% 08/10/09 2,000 1,999,333
- -----------------------------------------------------------------------------------------------------
Thunder Bay Funding, LLC(b) 0.65% 07/06/09 1,500 1,499,865
=====================================================================================================
6,527,873
=====================================================================================================
ASSET-BACKED SECURITIES-FULLY SUPPORTED BANK-4.58%
Concord Minutemen Capital Co., LLC-Series A,
(Multi CEP's-Liberty Hampshire Co., LLC;
agent)(b) 0.85% 07/01/09 2,000 2,000,000
=====================================================================================================
ASSET-BACKED SECURITIES-MULTI-PURPOSE-13.90%
Gemini Securitization Corp., LLC(b) 0.50% 08/05/09 1,072 1,071,479
- -----------------------------------------------------------------------------------------------------
Gemini Securitization Corp., LLC(b) 0.50% 08/11/09 1,000 999,430
- -----------------------------------------------------------------------------------------------------
Mont Blanc Capital Corp.(b)(c) 0.35% 07/10/09 2,000 1,999,825
- -----------------------------------------------------------------------------------------------------
Regency Markets No. 1, LLC(b)(c) 0.37% 08/10/09 2,000 1,999,178
=====================================================================================================
6,069,912
=====================================================================================================
ASSET-BACKED SECURITIES-SECURITIES-13.73%
Cancara Asset Securitisation Ltd./LLC(b)(c) 0.70% 07/21/09 2,000 1,999,222
- -----------------------------------------------------------------------------------------------------
Newport Funding Corp.(b) 0.62% 07/16/09 2,000 1,999,484
- -----------------------------------------------------------------------------------------------------
Tempo Finance Ltd./Corp.(b)(c) 1.25% 07/01/09 2,000 2,000,000
=====================================================================================================
5,998,706
=====================================================================================================
DIVERSIFIED BANKS-19.44%
ABN-AMRO North America Finance Inc.(c) 0.50% 07/24/09 2,000 1,999,361
- -----------------------------------------------------------------------------------------------------
Banco Bilbao Vizcaya Argentaria, S.A.(c) 1.21% 10/14/09 1,000 996,471
- -----------------------------------------------------------------------------------------------------
Banco Bilbao Vizcaya Argentaria, S.A.(c) 1.02% 11/13/09 1,000 996,175
- -----------------------------------------------------------------------------------------------------
BNP Paribas Finance Inc.(c) 0.18% 07/07/09 2,000 1,999,940
- -----------------------------------------------------------------------------------------------------
Calyon North America Inc.(c) 0.62% 07/14/09 1,500 1,499,664
- -----------------------------------------------------------------------------------------------------
Societe Generale North America, Inc.(c) 0.50% 07/20/09 1,000 999,736
=====================================================================================================
8,491,347
=====================================================================================================
REGIONAL BANKS-4.58%
Westpac Banking Corp.(b)(c) 0.62% 08/06/09 2,000 1,998,760
=====================================================================================================
Total Commercial Paper (Cost $31,086,598) 31,086,598
=====================================================================================================
CERTIFICATES OF DEPOSIT-16.29%
Lloyds TSB Bank PLC 0.61% 07/15/09 2,115 2,115,090
- -----------------------------------------------------------------------------------------------------
Royal Bank of Canada(d) 0.82% 12/16/09 2,000 2,000,000
- -----------------------------------------------------------------------------------------------------
Societe Generale 0.88% 08/20/09 1,000 1,000,000
- -----------------------------------------------------------------------------------------------------
Toronto-Dominion Bank 1.90% 10/02/09 1,000 1,000,025
- -----------------------------------------------------------------------------------------------------
Toronto-Dominion Bank 1.40% 12/11/09 1,000 1,000,000
=====================================================================================================
Total Certificates of Deposit (Cost $7,115,115) 7,115,115
=====================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. MONEY MARKET FUND
<Table>
<Caption>
PRINCIPAL
INTEREST MATURITY AMOUNT
RATE DATE (000) VALUE
- -----------------------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES-4.18%(d)(e)
LETTER OF CREDIT ENHANCED-4.18%(F)
Benjamin Rose Institute (The) (Kethley House);
Series 2005, Taxable Notes (LOC-JPMorgan Chase
Bank, N.A.) (Cost $1,828,000) 1.56% 12/01/28 $1,828 $ 1,828,000
=====================================================================================================
TOTAL INVESTMENTS (excluding Repurchase
Agreements)-91.65% (Cost $40,029,713) 40,029,713
=====================================================================================================
</Table>
<Table>
<Caption>
REPURCHASE
AMOUNT
REPURCHASE AGREEMENTS-8.15%(g)
Wachovia Bank, N.A., Joint agreement dated
06/30/09 aggregate maturing value $500,001,806
(collateralized by U.S. Government sponsored
agency obligations valued at $510,001,056; 0%-
8.43%, 09/30/09-08/06/38), (Cost $3,559,601) 0.13% 07/01/09 $3,559,614 $ 3,559,601
==================================================================================================
TOTAL INVESTMENTS(h)(i)--99.80% (Cost $43,589,314) 43,589,314
==================================================================================================
OTHER ASSETS LESS LIABILITIES-0.20% 86,539
==================================================================================================
NET ASSETS-100.00% $43,675,853
__________________________________________________________________________________________________
==================================================================================================
</Table>
Investment Abbreviations:
<Table>
CEP - Credit Enhancement Provider
LOC - Letter of Credit
</Table>
Notes to Schedule of Investments:
(a) Security may be traded on a discount basis. The interest rate shown
represents the discount rate at the time of purchase by the Fund.
(b) Security purchased or received in a transaction exempt from registration
under the Securities Act of 1933, as amended. The security may be resold
pursuant to an exemption from registration under the 1933 Act, typically
to qualified institutional buyers. The aggregate value of these securities
at June 30, 2009 was $22,595,251, which represented 51.73% of the Fund's
Net Assets.
(c) The security is credit guaranteed, enhanced or has credit risk by a
foreign entity. The foreign credit exposure to countries other than the
United States of America (as a percentage of net assets) is summarized as
follows: United Kingdom: 13.7%; France: 10.3%; Netherlands: 9.2%; other
countries less than 5% each: 9.1%.
(d) Interest or dividend rate is redetermined periodically. Rate shown is the
rate in effect on June 30, 2009.
(e) Demand security payable upon demand by the Fund at specified time
intervals no greater than thirteen months. Interest rate is redetermined
periodically. Rate shown is the rate in effect on June 30, 2009.
(f) Principal and interest payments are fully enhanced by a letter of credit
from the bank listed or a predecessor bank, branch or subsidiary.
(g) Principal amount equals value at period end. See Note 1I.
(h) Also represents cost for federal income tax purposes.
(i) Entities may either issue, guarantee, back or otherwise enhance the credit
quality of a security. The entities are not primarily responsible for the
issuer's obligation but may be called upon to satisfy issuers obligations.
No concentration of any single entity was greater than 5%.
PORTFOLIO COMPOSITION*
Number of days to Maturity
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
1-7 29.6%
- -------------------------------------------------------------------------
8-30 35.8
- -------------------------------------------------------------------------
31-90 25.4
- -------------------------------------------------------------------------
91-180 9.2
_________________________________________________________________________
=========================================================================
</Table>
* The number of days to maturity of each holding is determined in accordance
with the provisions of Rule 2a-7 of the Investment Company Act of 1940.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, excluding repurchase
agreements, at value and cost $40,029,713
- ------------------------------------------------------
Repurchase agreements, at value and cost 3,559,601
======================================================
Total investments, at value and
cost 43,589,314
======================================================
Receivables for:
Fund shares sold 120,899
- ------------------------------------------------------
Interest 20,804
- ------------------------------------------------------
Investment for trustee deferred
compensation and retirement plans 28,947
- ------------------------------------------------------
Other assets 4,466
======================================================
Total assets 43,764,430
______________________________________________________
======================================================
LIABILITIES:
Payables for:
Fund shares reacquired 3,990
- ------------------------------------------------------
Accrued fees to affiliates 17,850
- ------------------------------------------------------
Accrued other operating expenses 29,490
- ------------------------------------------------------
Trustee deferred compensation and
retirement plans 37,247
======================================================
Total liabilities 88,577
======================================================
Net assets applicable to shares
outstanding $43,675,853
______________________________________________________
======================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $43,668,716
- ------------------------------------------------------
Undistributed net investment income 7,137
======================================================
$43,675,853
______________________________________________________
======================================================
NET ASSETS:
Series I $41,688,974
______________________________________________________
======================================================
Series II $ 1,986,879
______________________________________________________
======================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Series I 41,687,835
______________________________________________________
======================================================
Series II 1,986,592
______________________________________________________
======================================================
Series I:
Net asset value per share $ 1.00
______________________________________________________
======================================================
Series II:
Net asset value per share $ 1.00
______________________________________________________
======================================================
</Table>
STATEMENT OF OPERATIONS
For the year ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Interest $239,874
====================================================
EXPENSES:
Advisory fees 95,522
- ----------------------------------------------------
Administrative services fees 67,792
- ----------------------------------------------------
Custodian fees 3,316
- ----------------------------------------------------
Distribution fees -- Series II 2,539
- ----------------------------------------------------
Transfer agent fees 2,252
- ----------------------------------------------------
Trustees' and officers' fees and benefits 10,483
- ----------------------------------------------------
Professional services fees 14,700
- ----------------------------------------------------
Other 15,219
====================================================
Total expenses 211,823
====================================================
Less: Fees waived (13,021)
====================================================
Net expenses 198,802
====================================================
Net investment income 41,072
====================================================
Net increase in net assets resulting from
operations $ 41,072
____________________________________________________
====================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- -------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 41,072 $ 1,028,001
=======================================================================================================
Distributions to shareholders from net investment income:
Series I (40,246) (986,413)
- -------------------------------------------------------------------------------------------------------
Series II (826) (41,588)
=======================================================================================================
Total distributions from net investment income (41,072) (1,028,001)
=======================================================================================================
Share transactions-net:
Series I (7,315,365) 2,512,068
- -------------------------------------------------------------------------------------------------------
Series II (278,686) (249,612)
=======================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (7,594,051) 2,262,456
=======================================================================================================
Net increase (decrease) in net assets (7,594,051) 2,262,456
=======================================================================================================
NET ASSETS:
Beginning of period 51,269,904 49,007,448
=======================================================================================================
End of period (includes undistributed net investment income of $7,137
and $7,137, respectively) $43,675,853 $51,269,904
_______________________________________________________________________________________________________
=======================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Money Market Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
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 currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- The Fund's securities are recorded on the basis of
amortized cost which approximates value as permitted by Rule 2a-7 under
the 1940 Act. This method values a security at its cost on the date of
purchase and, thereafter, assumes a constant amortization to maturity of
any premiums or accretion of any discounts.
Because of the inherent uncertainties of valuation, the values reflected
in the financial statements may materially differ from the value received
upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income, adjusted for amortization of premiums and accretion
of discounts on investments, is recorded on the accrual basis from
settlement date. Paydown gains and losses on mortgage and asset-backed
securities are recorded as adjustments to interest income.
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized gain (loss) from
investment securities reported in the Statement of Operations and the
Statement of Changes in Net Assets and the realized net gains (losses) on
securities per share in the Financial Highlights. Transaction costs are
included in the calculation of the Fund's net asset value and,
accordingly, they reduce the Fund's total returns. These transaction costs
are not considered operating expenses and are not reflected in net
investment income reported in the Statement of Operations and Statement of
Changes in Net Assets, or the net investment income per share and ratios
of expenses and net investment income reported in the Financial
Highlights, nor are they limited by any expense limitation arrangements
between the Fund and the advisor.
The Fund allocates realized and unrealized capital gains and losses to a
class based on the relative net assets of each class. The Fund allocates
income to a class based on the relative value of the settled shares of
each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income are declared daily and paid
monthly to separate accounts of participating insurance companies.
Distributions from net realized gain, if any, are generally paid annually
and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are
AIM V.I. MONEY MARKET FUND
monitored through the date of the report of independent registered public
accounting firm for audited periods and 45 days from the period end date
for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. REPURCHASE AGREEMENTS -- The Fund may enter into repurchase agreements.
Collateral on repurchase agreements, including the Fund's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Fund upon entering into the repurchase agreement. Eligible securities for
collateral are securities consistent with the Fund's investment objectives
and may consist of U.S. Government Securities, U.S. Government Sponsored
Agency Securities and/or, Investment Grade Debt Securities. Collateral
consisting of U.S. Government Securities and U.S. Government Sponsored
Agency Securities is marked to market daily to ensure its market value is
at least 102% of the sales price of the repurchase agreement. Collateral
consisting of Investment Grade Debt Securities is marked to market daily
to ensure its market value is at least 105% of the sales price of the
repurchase agreement. The investments in some repurchase agreements,
pursuant to procedures approved by the Board of Trustees, are through
participation with other mutual funds, private accounts and certain non-
registered investment companies managed by the investment advisor or its
affiliates ("Joint repurchase agreements"). The repurchase amount of the
repurchase agreement is equal to the value at period-end. 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 collateral and loss of income.
J. TREASURY GUARANTEE PROGRAM -- The Board of Trustees approved the
participation of the Funds in the U.S. Department of Treasury's (the
"Treasury Department") Temporary Guarantee Program for Money Market Funds
(the "Program") as extended except as noted below. Under the Program, the
Treasury Department will guarantee shareholders in the Fund that they will
receive $1 for each Fund share held by them as of the close of business on
September 19, 2008, in the event that such Fund (in which they were
invested as of September 19, 2008) liquidates and the per share value at
the time of liquidation is less than $0.995. On April 7, 2009, the Funds'
Board approved the Fund to participate in the final extension of the
Program through September 18, 2009.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
First $250 million 0.40%
- -------------------------------------------------------------------
Over $250 million 0.35%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 1.30% and Series
II shares to 1.45% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers reflected above: (i)
interest; (ii) taxes; (iii) extraordinary items, including payments to
participate in the United States Treasury Temporary Guarantee Program (the
"Program"); (iv) expenses related to a merger or reorganization, as approved by
the Fund's Board of Trustees; and (v) expenses that the Fund has incurred but
did not actually pay because of an expense offset arrangement. Currently, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, the only 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. These credits are used to pay certain expenses incurred by the
Fund. The Advisor did not waive fees and/or reimburse expenses during the period
under this expense limitation.
Invesco Aim and/or Invesco Aim Distributors, Inc., ("IADI") voluntarily waived
fees and/or reimbursed expenses in order to increase the Fund's yield. Voluntary
fee waivers and/or reimbursements may be modified at any time upon consultation
with the Board of Trustees without further notice to investors.
For the six months ended June 30, 2009, Invesco Aim voluntarily waived
advisory fees of $11,450 and reimbursed class level expenses of $1,571 for
Series II shares.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
AIM V.I. MONEY MARKET FUND
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $24,795 for accounting and fund
administrative services and reimbursed $42,997 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- -----------------------------------------------------------------------------------------------------------------------
Short-term Investments $-- $43,589,314 $-- $43,589,314
_______________________________________________________________________________________________________________________
=======================================================================================================================
</Table>
NOTE 4--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $1,489
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 5--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The Bank of New York Mellon, the custodian bank. To compensate
the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave
funds as a compensating balance in the account so the custodian bank can be
compensated by earning the additional interest; or (ii) compensate by paying the
custodian bank at a rate agreed upon by the custodian bank and Invesco Aim, not
to exceed the contractually agreed upon rate.
NOTE 6--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
AIM V.I. MONEY MARKET FUND
The Fund did not have a capital loss carryforward as of December 31, 2008.
NOTE 7--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- -------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 10,151,058 $ 10,151,058 34,854,533 $ 34,854,533
- -------------------------------------------------------------------------------------------------------------------------
Series II 51,965 51,965 277,951 277,951
=========================================================================================================================
Issued as reinvestment of dividends:
Series I 40,283 40,283 986,376 986,376
- -------------------------------------------------------------------------------------------------------------------------
Series II 826 826 41,587 41,587
=========================================================================================================================
Reacquired:
Series I (17,506,706) (17,506,706) (33,328,841) (33,328,841)
- -------------------------------------------------------------------------------------------------------------------------
Series II (331,477) (331,477) (569,150) (569,150)
=========================================================================================================================
Net increase (decrease) in share activity (7,594,051) $ (7,594,051) 2,262,456 $ 2,262,456
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 86% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and/or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
NOTE 8--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
RATIO OF
NET ASSET DIVIDENDS RATIO OF NET INVESTMENT
VALUE, NET FROM NET NET ASSET NET ASSETS, EXPENSES INCOME TO
BEGINNING INVESTMENT INVESTMENT VALUE, END TOTAL END OF PERIOD TO AVERAGE AVERAGE
OF PERIOD INCOME INCOME OF PERIOD RETURN(a) (000S OMITTED) NET ASSETS NET ASSETS
- --------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $1.00 $0.00(b) $(0.00) $1.00 0.09% $41,689 0.83%(c)(d) 0.17%(c)
Year ended 12/31/08 1.00 0.02(b) (0.02) 1.00 2.04 49,004 0.86 2.02
Year ended 12/31/07 1.00 0.04 (0.04) 1.00 4.54 46,492 0.86 4.45
Year ended 12/31/06 1.00 0.04 (0.04) 1.00 4.27 43,568 0.90 4.20
Year ended 12/31/05 1.00 0.02 (0.02) 1.00 2.51 44,923 0.82 2.46
Year ended 12/31/04 1.00 0.01 (0.01) 1.00 0.69 54,008 0.75 0.67
- --------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 1.00 0.00(b) (0.00) 1.00 0.04 1,987 0.93(c)(d) 0.07(c)
Year ended 12/31/08 1.00 0.02(b) (0.02) 1.00 1.78 2,266 1.11 1.77
Year ended 12/31/07 1.00 0.04 (0.04) 1.00 4.28 2,515 1.11 4.20
Year ended 12/31/06 1.00 0.04 (0.04) 1.00 4.01 2,341 1.15 3.95
Year ended 12/31/05 1.00 0.02 (0.02) 1.00 2.26 3,080 1.07 2.21
Year ended 12/31/04 1.00 0.00 (0.00) 1.00 0.44 6,076 1.00 0.42
________________________________________________________________________________________________________________________________
================================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America. Total returns are not annualized
for periods less than one year and do not reflect charges assessed in
connection with a variable product, which if included would reduce total
returns, if applicable.
(b) Calculated using average shares outstanding.
(c) Ratios are annualized and based on average daily net assets (000's omitted)
of $46,108 and $2,048 for Series I and Series II shares, respectively.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
0.88% and 1.13% for Series I and Series II shares, respectively.
AIM V.I. MONEY MARKET FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,000.90 $4.12 $1,020.68 $4.16 0.83%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,000.40 4.61 1,020.18 4.66 0.93
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. MONEY MARKET FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM Variable Insurance Funds required under
the Investment Company Act of 1940 to approve annually the renewal of the AIM
V.I. Money Market Fund (the Fund) investment advisory agreement with Invesco Aim
Advisors, Inc. (Invesco Aim) and the Master Intergroup Sub-Advisory Contract for
Mutual Funds (the sub-advisory contracts) with Invesco Asset Management
Deutschland GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively,
the Affiliated Sub-Advisers). During contract renewal meetings held on June
16-17, 2009, the Board as a whole, and the disinterested or "independent"
Trustees voting separately, approved the continuance of the Fund's investment
advisory agreement and the sub-advisory contracts for another year, effective
July 1, 2009. In doing so, the Board determined that the Fund's investment
advisory agreement and the sub-advisory contracts are in the best interests of
the Fund and its shareholders and that the compensation to Invesco Aim and the
Affiliated Sub-Advisers under the Fund's investment advisory agreement and
sub-advisory contracts is fair and reasonable.
THE BOARD'S FUND EVALUATION PROCESS
The Board's Investments Committee has established three Sub-Committees that are
responsible for overseeing the management of a number of the series portfolios
of the AIM Funds. This SubCommittee structure permits the Trustees to focus on
the performance of the AIM Funds that have been assigned to them. The
Sub-Committees meet throughout the year to review the performance of their
assigned funds, and the Sub-Committees review monthly and quarterly comparative
performance information and periodic asset flow data for their assigned funds.
These materials are prepared under the direction and supervision of the
independent Senior Officer, an officer of the AIM Funds who reports directly to
the independent Trustees. Over the course of each year, the Sub-Committees meet
with portfolio managers for their assigned funds and other members of management
and review with these individuals the performance, investment objective(s),
policies, strategies and limitations of these funds.
In addition to their meetings throughout the year, the Sub-Committees meet
at designated contract renewal meetings each year to conduct an in-depth review
of the performance, fees, expenses, and other matters related to their assigned
funds. During the contract renewal process, the Trustees receive comparative
performance and fee data regarding the AIM Funds prepared by an independent
company, Lipper, Inc. (Lipper), under the direction and supervision of the
Senior Officer who also prepares a separate analysis of this information for the
Trustees. Each Sub-Committee then makes recommendations to the Investments
Committee regarding the fees and expenses of their assigned funds. The
Investments Committee considers each Sub-Committee's recommendations and makes
its own recommendations regarding the fees and expenses of the AIM Funds to the
full Board. The Investments Committee also considers each SubCommittee's
recommendations in making its annual recommendation to the Board whether to
approve the continuance of each AIM Fund's investment advisory agreement and
sub-advisory contracts for another year.
The independent Trustees met separately during their evaluation of the
Fund's investment advisory agreement and sub-advisory contracts with independent
legal counsel. The independent Trustees were also assisted in their annual
evaluation of the Fund's investment advisory agreement by the Senior Officer.
One responsibility of the Senior Officer is to manage the process by which the
AIM Funds' proposed management fees are negotiated during the annual contract
renewal process to ensure that they are negotiated in a manner that is at arms'
length and reasonable. Accordingly, the Senior Officer must either supervise a
competitive bidding process or prepare an independent written evaluation. The
Senior Officer recommended that an independent written evaluation be provided
and, at the direction of the Board, prepared an independent written evaluation.
During the annual contract renewal process, the Board considered the
factors discussed below in evaluating the fairness and reasonableness of the
Fund's investment advisory agreement and sub-advisory contracts. The Board
considered all of the information provided to them, including information
provided at their meetings throughout the year as part of their ongoing
oversight of the Fund, and did not identify any particular factor that was
controlling. Each Trustee may have evaluated the information provided
differently from another Trustee and attributed different weight to the various
factors. The Trustees recognized that the advisory arrangements and resulting
advisory fees for the Fund and the other AIM Funds are the result of years of
review and negotiation between the Trustees and Invesco Aim, that the Trustees
may focus to a greater extent on certain aspects of these arrangements in some
years than in others, and that the Trustees' deliberations and conclusions in a
particular year may be based in part on their deliberations and conclusions
regarding these same arrangements throughout the year and in prior years.
The discussion below serves as a summary of the Senior Officer's
independent written evaluation with respect to the Fund's investment advisory
agreement as well as a discussion of the material factors and related
conclusions that formed the basis for the Board's approval of the Fund's
investment advisory agreement and sub-advisory contracts. Unless otherwise
stated, information set forth below is as of June 17, 2009, and does not reflect
any changes that may have occurred since that date, including but not limited to
changes to the Fund's performance, advisory fees, expense limitations and/or fee
waivers.
FACTORS AND CONCLUSIONS AND SUMMARY OF INDEPENDENT WRITTEN FEE EVALUATION
A. Nature, Extent and Quality of Services Provided by Invesco Aim
The Board reviewed the advisory services provided to the Fund by Invesco Aim
under the Fund's investment advisory agreement, the performance of Invesco Aim
in providing these services, and the credentials and experience of the officers
and employees of Invesco Aim who provide these services. The Board's review of
the qualifications of Invesco Aim to provide these services included the Board's
consideration of Invesco Aim's portfolio and product review process, various
back office support functions provided by Invesco Aim and its affiliates, and
Invesco Aim's equity and fixed income trading operations. The Board concluded
that the nature, extent and quality of the advisory services provided to the
Fund by Invesco Aim are appropriate and that Invesco Aim currently is providing
satisfactory advisory services in accordance with the terms of the Fund's
investment advisory agreement. In addition, based on their
AIM V.I. MONEY MARKET FUND continued
ongoing meetings throughout the year with the Fund's portfolio manager or
managers, the Board concluded that these individuals are competent and able to
continue to carry out their responsibilities under the Fund's investment
advisory agreement.
In determining whether to continue the Fund's investment advisory
agreement, the Board considered the prior relationship between Invesco Aim and
the Fund, as well as the Board's knowledge of Invesco Aim's operations, and
concluded that it is beneficial to maintain the current relationship, in part,
because of such knowledge. The Board also considered the steps that Invesco Aim
and its affiliates continue to take to improve the quality and efficiency of the
services they provide to the AIM Funds in the areas of investment performance,
product line diversification, distribution, fund operations, shareholder
services and compliance. The Board concluded that the quality and efficiency of
the services Invesco Aim and its affiliates provide to the AIM Funds in each of
these areas support the Board's approval of the continuance of the Fund's
investment advisory agreement.
B. Nature, Extent and Quality of Services Provided by Affiliated
Sub-Advisers
The Board reviewed the services provided by the Affiliated Sub-Advisers under
the sub-advisory contracts and the credentials and experience of the officers
and employees of the Affiliated Sub-Advisers who provide these services. The
Board concluded that the nature, extent and quality of the services provided by
the Affiliated Sub-Advisers are appropriate. The Board noted that the Affiliated
Sub-Advisers, which have offices and personnel that are geographically dispersed
in financial centers around the world, can provide research and other
information and make recommendations on the markets and economies of various
countries and securities of companies located in such countries or on various
types of investments and investment techniques. The Board noted that investment
decisions for the Fund are made by Invesco Institutional (N.A.), Inc. (Invesco
Institutional). The Board concluded that the sub-advisory contracts benefit the
Fund and its shareholders by permitting Invesco Aim to utilize the additional
resources and talent of the Affiliated Sub-Advisers in managing the Fund.
C. Fund Performance
The Board considered fund performance as a relevant factor in considering
whether to approve the investment advisory agreement as well as the sub-advisory
contracts for the Fund, as Invesco Institutional currently manages assets of the
Fund.
The Board compared the Fund's performance during the past one, three and
five calendar years to the performance of all funds in the Lipper performance
universe that are not managed by Invesco Aim or an Affiliated Sub-Adviser and
against the Lipper VA Underlying Funds - Money Market Index. The Board noted
that the Fund's performance was in the fourth quintile of its performance
universe for the one year period, and the fifth quintile for the three and five
year periods (the first quintile being the best performing funds and the fifth
quintile being the worst performing funds). The Board noted that the Fund's
performance was below the performance of the Index for the one, three and five
year periods. Invesco Aim advised the Board that the Fund has historically been
priced consistent with its role as a conduit to and from other Invesco Aim
products, which impacts performance. Although the independent written evaluation
of the Fund's Senior Officer only considered Fund performance through the most
recent calendar year, the Board also reviewed more recent Fund performance and
this review did not change their conclusions. The Board noted that, in response
to the Board's focus on fund performance, Invesco Aim has taken a number of
actions intended to improve the investment process for the funds.
D. Advisory and Sub-Advisory Fees and Fee Waivers
The Board compared the Fund's actual advisory fee rate to the actual advisory
fee rates of funds in the Fund's Lipper expense group that are not managed by
Invesco Aim or an Affiliated Sub-Adviser. The Board noted that the Fund's actual
advisory fee rate was at the median actual advisory fee rate of funds in its
expense group. The Board also reviewed the methodology used by Lipper in
determining actual advisory fee rates, which includes using audited financial
data from the most recent annual report of each fund in the expense group that
was publicly available as of the end of the past calendar year. The Board noted
that some comparative data was at least one year old and that other data did not
reflect the market downturn that occurred in the fourth quarter of 2008.
The Board also compared the Fund's effective fee rate (the advisory fee
after any advisory fee waivers and before any expense limitations/waivers) to
the advisory fee rates of other domestic clients of Invesco Aim and its
affiliates with investment strategies comparable to those of the Fund, including
two mutual funds sub-advised by Invesco Institutional. The Board noted that the
Fund's rate was above the effective rate for the mutual fund advised by Invesco
Aim and above the sub-adviser effective fee rate of the fund sub-advised by
Invesco Institutional. The Board also noted that Invesco Institutional
sub-advises a foreign fund with comparable investment strategies.
The Board noted that Invesco Aim has contractually agreed to waive fees
and/or limit expenses of the Fund through at least April 30, 2010 in an amount
necessary to limit total annual operating expenses to a specified percentage of
average daily net assets for each class of the Fund. The Board noted that at the
current expense ratio for the Fund, this expense waiver does not have any
impact.
The Board also considered the services provided by the Affiliated
Sub-Advisers pursuant to the sub-advisory contracts and the services provided by
Invesco Aim pursuant to the Fund's advisory agreement, as well as the allocation
of fees between Invesco Aim and the Affiliated Sub-Advisers pursuant to the
sub-advisory contracts. The Board noted that the sub-advisory fees have no
direct effect on the Fund or its shareholders, as they are paid by Invesco Aim
to the Affiliated Sub-Advisers, and that Invesco Aim and the Affiliated
Sub-Advisers are affiliates.
After taking account of the Fund's contractual advisory fee rate, the
contractual sub-advisory fee rate, the comparative advisory fee information
discussed above and other relevant factors, the Board concluded that the Fund's
advisory and sub-advisory fees are fair and reasonable.
AIM V.I. MONEY MARKET FUND continued
E. Economies of Scale and Breakpoints
The Board considered the extent to which there are economies of scale in the
provision of advisory services to the Fund. The Board also considered whether
the Fund benefits from such economies of scale through contractual breakpoints
in the Fund's advisory fee schedule. The Board noted that the Fund's contractual
advisory fee schedule includes one breakpoint but that, due to the Fund's asset
level at the end of the past calendar year, the Fund is not currently benefiting
from the breakpoint. Based on this information, the Board concluded that the
Fund's advisory fees would reflect economies of scale at higher asset levels.
The Board also noted that the Fund shares directly in economies of scale through
lower fees charged by third party service providers based on the combined size
of all of the AIM Funds and affiliates.
F. Profitability and Financial Resources
The Board reviewed information from Invesco Aim concerning the costs of the
advisory and other services that Invesco Aim and its affiliates provide to the
Fund and the profitability of Invesco Aim and its affiliates in providing these
services. The Board also reviewed information concerning the financial condition
of Invesco Aim and its affiliates. The Board reviewed with Invesco Aim the
methodology used to prepare the profitability information. The Board considered
the overall profitability of Invesco Ltd., the ultimate parent of Invesco Aim
and the Affiliated Sub-Advisers, and of Invesco Aim, as well as the
profitability of Invesco Aim in connection with managing the Fund. The Board
noted that Invesco Aim continues to operate at a net profit, although the
reduction of assets under management as a result of market movements and the
increase in voluntary fee waivers for affiliated money market funds have reduced
the profitability of Invesco Aim and its affiliates. The Board concluded that
the Fund's fees are fair and reasonable, and that the level of profits realized
by Invesco Aim and its affiliates from providing services to the Fund is not
excessive in light of the nature, quality and extent of the services provided.
The Board considered whether Invesco Aim is financially sound and has the
resources necessary to perform its obligations under the Fund's investment
advisory agreement, and concluded that Invesco Aim has the financial resources
necessary to fulfill these obligations. The Board also considered whether each
Affiliated Sub-Adviser is financially sound and has the resources necessary to
perform its obligations under the sub-advisory contracts, and concluded that
each Affiliated Sub-Adviser has the financial resources necessary to fulfill
these obligations.
G. Collateral Benefits to Invesco Aim and its Affiliates
The Board considered various other benefits received by Invesco Aim and its
affiliates resulting from Invesco Aim's relationship with the Fund, including
the fees received by Invesco Aim and its affiliates for their provision of
administrative, transfer agency and distribution services to the Fund. The Board
considered the performance of Invesco Aim and its affiliates in providing these
services and the organizational structure employed by Invesco Aim and its
affiliates to provide these services. The Board also considered that these
services are provided to the Fund pursuant to written contracts that are
reviewed and approved on an annual basis by the Board. The Board concluded that
Invesco Aim and its affiliates are providing these services in a satisfactory
manner and in accordance with the terms of their contracts, and are qualified to
continue to provide these services to the Fund.
The Board considered the benefits realized by Invesco Aim and the
Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed
through "soft dollar" arrangements. The Board noted that soft dollar
arrangements shift the payment obligation for research and execution services
from Invesco Aim and the Affiliated Sub-Advisers to the funds and therefore may
reduce Invesco Aim's and the Affiliated Sub-Advisers' expenses. The Board
concluded that Invesco Aim's and the Affiliated Sub-Advisers' soft dollar
arrangements are appropriate. The Board also concluded that, based on their
review and representations made by the Chief Compliance Officer of Invesco Aim,
these arrangements are consistent with regulatory requirements.
The Board considered the fact that the Fund's uninvested cash and cash
collateral from any securities lending arrangements may be invested in money
market funds advised by Invesco Aim pursuant to procedures approved by the
Board. The Board noted that Invesco Aim will receive advisory fees from these
affiliated money market funds attributable to such investments, although Invesco
Aim has contractually agreed to waive through at least June 30, 2010, the
advisory fees payable by the Fund in an amount equal to 100% of the net advisory
fees Invesco Aim receives from the affiliated money market funds with respect to
the Fund's investment in the affiliated money market funds of uninvested cash,
but not cash collateral. The Board concluded that the Fund's investment of
uninvested cash and cash collateral from any securities lending arrangements in
the affiliated money market funds is in the best interests of the Fund and its
shareholders.
AIM V.I. MONEY MARKET FUND
[INVESCO AIM LOGO] AIM V.I. POWERSHARES ETF ALLOCATION FUND
--SERVICE MARK-- Semiannual Report to Shareholders o June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund
files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the SEC
Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by
calling 202 942 8090 or 800 732 0330, or by electronic request at the following E-mail address: publicinfo@sec.gov. The SEC file
numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent portfolio holdings, as filed on Form N-Q, have also been
made available to insurance companies issuing variable annuity contracts and variable life insurance policies ("variable products")
that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, from our Client Services department at 800 410 4246 or on the Invesco Aim Web site,
invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site,
sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2009, is
available at our Web site. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting
Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. will be merged into
Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc. Additional information
will be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN
MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY CUMULATIVE TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
SERIES I SHARES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer Inception (10/24/08) 21.02%
charges. If variable product issuer charges were included, returns would be lower.
SERIES II SHARES
Series I Shares 7.31% Inception (10/24/08) 20.70%
Series II Shares 7.23 ==========================================
MSCI World Index(Triangle) (Broad Market Index) 6.35
Custom V.I. PowerShares ETF Allocation Fund Index(Square) (Style-Specific Index) 5.43 WILL VARY AND WILL LOWER THE TOTAL RETURN.
Lipper VUF Global Core Funds Index(Triangle) (Peer Group Index) 8.50
THE MOST RECENT MONTH-END PERFORMANCE
(Triangle) Lipper Inc.; (Square) Invesco Aim, Lipper Inc. DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
PRODUCT CHARGES, IS AVAILABLE ON THE
The MSCI WORLD INDEX--SERVICE MARK-- is a free float-adjusted market capitalization INVESCO AIM AUTOMATED INFORMATION LINE,
index that is designed to measure global developed market equity performance. 866 702 4402. AS MENTIONED ABOVE, FOR THE
MOST RECENT MONTH-END PERFORMANCE
The CUSTOM V.I. POWERSHARES ETF ALLOCATION FUND INDEX, created by Invesco Aim to INCLUDING VARIABLE PRODUCT CHARGES, PLEASE
serve as a benchmark for AIM V.I. PowerShares ETF Allocation Fund, is composed of the CONTACT YOUR VARIABLE PRODUCT ISSUER OR
following indexes: MSCI World (54%) and Barclays Capital U.S. Universal (46%). The MSCI FINANCIAL ADVISOR.
World Index is a free float-adjusted market capitalization index that is designed to
measure global developed market equity performance. The Barclays Capital U.S. Universal HAD THE ADVISOR NOT WAIVED FEES AND/OR
Index is composed of the following Barclays Capital indexes: U.S. Aggregate Index, U.S. REIMBURSED EXPENSES, PERFORMANCE WOULD
High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of HAVE BEEN LOWER.
CMBS.
(1) Total annual operating expenses less
The LIPPER VUF GLOBAL CORE FUNDS INDEX is an equally weighted representation of the any contractual fee waivers and/or
largest variable insurance underlying funds in the Lipper Global Core Funds category. expense reimbursements by the advisor
These funds typically invest at least 75% of their equity assets in companies both in effect through at least April 30,
inside and outside of the U.S. Core funds typically have an average price-to-cash flow 2010. See current prospectus for more
ratio, price-to-book ratio, and three year sales-per-share growth value compared to the information.
S&P/Citigroup World BMI.
The Fund is not managed to track the performance of any particular index, including
the indexes defined here, and consequently, the performance of the Fund may deviate
significantly from the performance of the indexes.
A direct investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends, and they do not reflect sales charges.
Performance of the peer group reflects fund expenses; performance of a market index
does not.
=======================================================================================
THE PERFORMANCE OF THE FUND'S SERIES I AND ING EXPENSE RATIO SET FORTH IN THE MOST
SERIES II SHARE CLASSES WILL DIFFER RECENT FUND PROSPECTUS AS OF THE DATE OF
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES. THIS REPORT FOR SERIES I AND SERIES II
SHARES WAS 2.12% AND 2.37%, RESPECTIVELY.
THE PERFORMANCE DATA QUOTED REPRESENT THE EXPENSE RATIOS PRESENTED ABOVE MAY
PAST PERFORMANCE AND CANNOT GUARANTEE VARY FROM THE EXPENSE RATIOS PRESENTED IN
COMPARABLE FUTURE RESULTS; CURRENT OTHER SECTIONS OF THIS REPORT THAT ARE
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE BASED ON EXPENSES INCURRED DURING THE
CONTACT YOUR VARIABLE PRODUCT ISSUER OR PERIOD COVERED BY THIS REPORT.
FINANCIAL ADVISOR FOR THE MOST RECENT
MONTH-END VARIABLE PRODUCT PERFORMANCE. AIM V.I. POWERSHARES ETF ALLOCATION
PERFORMANCE FIGURES REFLECT FUND EXPENSES, FUND, A SERIES PORTFOLIO OF AIM VARIABLE
REINVESTED DISTRIBUTIONS AND CHANGES IN INSURANCE FUNDS, IS CURRENTLY OFFERED
NET ASSET VALUE. INVESTMENT RETURN AND THROUGH INSURANCE COMPANIES ISSUING
PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU VARIABLE PRODUCTS. YOU CANNOT PURCHASE
MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES OF THE FUND DIRECTLY. PERFORMANCE
SHARES. FIGURES GIVEN REPRESENT THE FUND AND ARE
NOT INTENDED TO REFLECT ACTUAL VARIABLE
THE NET ANNUAL FUND OPERATING EXPENSE PRODUCT VALUES. THEY DO NOT REFLECT SALES
RATIO SET FORTH IN THE MOST RECENT FUND CHARGES, EXPENSES AND FEES ASSESSED IN
PROSPECTUS AS OF THE DATE OF THIS REPORT CONNECTION WITH A VARIABLE PRODUCT. SALES
FOR SERIES I AND SERIES II SHARES WAS CHARGES, EXPENSES AND FEES, WHICH ARE
0.74% AND 0.99%, RESPECTIVELY.(1) THE DETERMINED BY THE VARIABLE PRODUCT
TOTAL ANNUAL FUND OPERAT- ISSUERS,
AIM V.I. POWERSHARES ETF ALLOCATION FUND
SCHEDULE OF INVESTMENTS
June 30, 2009
(Unaudited)
AIM V.I. POWERSHARES ETF ALLOCATION FUND
SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-102.21%(a)
<Table>
<Caption>
CHANGE IN
% OF UNREALIZED
NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE
ASSETS 12/31/08 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 06/30/09 06/30/09
- ----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC EQUITY ETFS-18.40%
PowerShares FTSE RAFI US
1000 Portfolio 10.63% $ 47,754 $ 1,368,393 $ (5,629) $132,948 $ 132 $ 10,256 41,450 $ 1,543,598
- ----------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI US
1500 Small Mid
Portfolio 7.77% 35,505 1,000,236 (31,329) 121,463 2,670 2,996 30,175 1,128,545
==================================================================================================================================
Total Domestic Equity
ETFs 83,259 2,368,629 (36,958) 254,411 2,802 13,252 71,625 2,672,143
==================================================================================================================================
FIXED-INCOME ETFS-40.74%
PowerShares 1-30
Laddered Treasury
Portfolio 22.14% 170,466 3,606,960 (460,055) (80,744) (21,221) 21,969 117,910 3,215,406
- ----------------------------------------------------------------------------------------------------------------------------------
PowerShares Emerging
Markets Sovereign Debt
Portfolio 12.07% 45,024 1,713,249 (78,390) 78,877 (6,106) 18,763 74,265 1,752,654
- ----------------------------------------------------------------------------------------------------------------------------------
PowerShares High Yield
Corporate Bond
Portfolio 6.53% 30,217 902,595 (17,429) 36,499 (2,729) 13,625 57,420 949,153
==================================================================================================================================
Total Fixed-Income
ETFs 245,707 6,222,804 (555,874) 34,632 (30,056) 54,357 249,595 5,917,213
==================================================================================================================================
FOREIGN EQUITY ETFS-38.25%
iShares MSCI Japan Index
Fund(b) 4.50% 24,307 584,832 (6,236) 51,159 (752) 3,255 69,280 653,310
- ----------------------------------------------------------------------------------------------------------------------------------
iShares S&P/TOPIX 150
Index Fund(b) 3.93% 15,725 530,159 (5,205) 31,604 (463) 3,237 14,060 571,820
- ----------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI
Asia Pacific ex-Japan
Portfolio 7.26% 35,015 888,033 (1,900) 133,456 (438) 7,704 29,880 1,054,166
- ----------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI
Developed Markets ex-
US Small-Mid Portfolio 8.48% 39,480 1,007,039 (5,720) 190,623 131 5,119 70,455 1,231,553
- ----------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI
Emerging Markets
Portfolio 6.07% 30,802 818,848 (79,045) 108,852 2,865 1,176 50,825 882,322
- ----------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI
Europe Portfolio 8.01% 39,434 1,026,747 (34,040) 131,496 (210) 16,918 40,865 1,163,427
==================================================================================================================================
Total Foreign Equity
ETFs 184,763 4,855,658 (132,146) 647,190 1,133 37,409 275,365 5,556,598
==================================================================================================================================
MONEY MARKET FUNDS-4.82%
Liquid Assets
Portfolio-Institu-
tional Class 2.41% 16,377 4,587,314 (4,253,816) -- -- 707 349,875 349,875
- ----------------------------------------------------------------------------------------------------------------------------------
Premier
Portfolio-Institu-
tional Class 2.41% 16,377 4,587,314 (4,253,816) -- -- 623 349,875 349,875
==================================================================================================================================
Total Money Market
Funds 32,754 9,174,628 (8,507,632) -- -- 1,330 699,750 699,750
==================================================================================================================================
TOTAL INVESTMENTS IN
AFFILIATED ISSUERS
(Cost $13,866,385) 102.21% $546,483 $22,621,719 $(9,232,610) $936,233 $(26,121) $106,348 $14,845,704
==================================================================================================================================
OTHER ASSETS LESS
LIABILITIES (2.21)% (320,958)
==================================================================================================================================
NET ASSETS 100.00% $14,524,746
__________________________________________________________________________________________________________________________________
==================================================================================================================================
</Table>
Investment Abbreviations:
<Table>
ETF - Exchange-Traded Fund
</Table>
Notes to Schedule of Investments:
(a) Unless otherwise indicated, each exchange-traded fund or mutual fund and
the Fund are affiliated by either having the same investment advisor or an
investment advisor under common control with the Fund's investment
advisor.
(b) Non-affiliate of the Fund or its investment advisor.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. POWERSHARES ETF ALLOCATION FUND
PORTFOLIO COMPOSITION
<Table>
<Caption>
TARGET % OF TOTAL NET
ALLOCATION ASSETS AS OF
ASSETS CLASS RANGE 06/30/09
- -----------------------------------------------------------------------------------------------
Asia ex-Japan Equity 0-14% 7.26%
- -----------------------------------------------------------------------------------------------
Domestic Equity Large Cap 0-20 10.63
- -----------------------------------------------------------------------------------------------
Domestic Equity Small-Mid Cap 0-14 7.77
- -----------------------------------------------------------------------------------------------
Emerging Markets Equity Small-Mid Cap 0-12 6.07
- -----------------------------------------------------------------------------------------------
Emerging Markets Fixed-Income 0-20 12.07
- -----------------------------------------------------------------------------------------------
European Equity 0-16 8.01
- -----------------------------------------------------------------------------------------------
Foreign Equity Small-Mid Cap 0-16 8.48
- -----------------------------------------------------------------------------------------------
High Yield Fixed-Income 0-12 6.53
- -----------------------------------------------------------------------------------------------
Investment Grade Fixed-Income 15-45 22.14
- -----------------------------------------------------------------------------------------------
Japanese Equity 0-16 8.43
- -----------------------------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities n/a 2.61
_______________________________________________________________________________________________
===============================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. POWERSHARES ETF ALLOCATION FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments -- non affiliates at value (Cost $1,138,457) $ 1,225,130
- -------------------------------------------------------------------------------
Investments -- affiliates, at value (Cost $12,727,928) 13,620,574
===============================================================================
Total investments (Cost $13,866,385) 14,845,704
===============================================================================
Receivables for:
Fund shares sold 85,416
- -------------------------------------------------------------------------------
Dividends from affiliates 397
- -------------------------------------------------------------------------------
Fund expenses absorbed 30,699
- -------------------------------------------------------------------------------
Investment for trustee deferred compensation 778
===============================================================================
Total assets 14,962,994
_______________________________________________________________________________
===============================================================================
LIABILITIES:
Payables for:
Investments purchased -- non affiliates 34,237
- -------------------------------------------------------------------------------
Investments purchased -- affiliates 363,496
- -------------------------------------------------------------------------------
Fund shares reacquired 16
- -------------------------------------------------------------------------------
Accrued fees to affiliates 6,708
- -------------------------------------------------------------------------------
Accrued other operating expenses 33,013
- -------------------------------------------------------------------------------
Trustee deferred compensation 778
===============================================================================
Total liabilities 438,248
===============================================================================
Net assets applicable to shares outstanding $14,524,746
_______________________________________________________________________________
===============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $13,471,671
- -------------------------------------------------------------------------------
Undistributed net investment income 99,380
- -------------------------------------------------------------------------------
Undistributed net realized gain (loss) (25,624)
- -------------------------------------------------------------------------------
Unrealized appreciation 979,319
===============================================================================
$14,524,746
_______________________________________________________________________________
===============================================================================
NET ASSETS:
Series I $ 157,062
_______________________________________________________________________________
===============================================================================
Series II $14,367,684
_______________________________________________________________________________
===============================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 13,205
_______________________________________________________________________________
===============================================================================
Series II 1,211,393
_______________________________________________________________________________
===============================================================================
Series I:
Net asset value per share $ 11.89
_______________________________________________________________________________
===============================================================================
Series II:
Net asset value per share $ 11.86
_______________________________________________________________________________
===============================================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends -- non affiliates $ 6,492
- -----------------------------------------------------
Dividends -- affiliates 99,856
=====================================================
Total investment income 106,348
=====================================================
EXPENSES:
Advisory fees 17,251
- -----------------------------------------------------
Administrative services fees 26,306
- -----------------------------------------------------
Custodian fees 2,116
- -----------------------------------------------------
Distribution fees -- Series II 6,265
- -----------------------------------------------------
Transfer agent fees 140
- -----------------------------------------------------
Trustees' and officers' fees and
benefits 9,839
- -----------------------------------------------------
Reports to shareholders 8,510
- -----------------------------------------------------
Professional services fees 29,846
- -----------------------------------------------------
Other 501
=====================================================
Total expenses 100,774
=====================================================
Less: Fees waived and expenses
reimbursed (90,053)
=====================================================
Net expenses 10,721
=====================================================
Net investment income 95,627
=====================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities -- non
affiliates (1,215)
- -----------------------------------------------------
Investment securities -- affiliates (24,906)
=====================================================
(26,121)
=====================================================
Change in net unrealized appreciation
of:
Investment securities -- non
affiliates 82,762
- -----------------------------------------------------
Investment securities -- affiliates 853,471
=====================================================
936,233
=====================================================
Net realized and unrealized gain 910,112
=====================================================
Net increase in net assets resulting
from operations $1,005,739
_____________________________________________________
=====================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. POWERSHARES ETF ALLOCATION FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the period October 24, 2008
(commencement date) through December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- ------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 95,627 $ 3,633
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) (26,121) 497
- ------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation 936,233 43,086
======================================================================================================
Net increase in net assets resulting from operations 1,005,739 47,216
======================================================================================================
Distributions to shareholders from net investment income:
Series I -- (2,420)
- ------------------------------------------------------------------------------------------------------
Series II -- (5,746)
======================================================================================================
Total distributions from net investment income -- (8,166)
======================================================================================================
Share transactions-net:
Series I 5,742 127,430
- ------------------------------------------------------------------------------------------------------
Series II 12,976,098 370,687
======================================================================================================
Net increase in net assets resulting from share transactions 12,981,840 498,117
======================================================================================================
Net increase in net assets 13,987,579 537,167
======================================================================================================
NET ASSETS:
Beginning of period 537,167 --
======================================================================================================
End of period (includes undistributed net investment income of $99,380
and $3,753, respectively) $14,524,746 $537,167
______________________________________________________________________________________________________
======================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. POWERSHARES ETF ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. PowerShares ETF Allocation Fund (the "Fund") is a series portfolio of
AIM Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory
trust registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is to provide total return consistent with a
moderate level of risk relative to the broad stock market. The Fund primarily
invests in exchange-traded funds ("underlying funds") advised by Invesco
PowerShares Capital Management LLC ("Invesco PowerShares"). The Fund may also
invest in affiliated mutual funds advised by Invesco Aim Advisors (the "Advisor"
or "Invesco Aim"); in unaffiliated mutual funds and exchange-traded funds and in
other securities. Invesco Aim and Invesco PowerShares (collectively the
"Advisors") are affiliates of each other as they are indirect wholly owned
subsidiaries of Invesco Ltd. ("Invesco"). Invesco Aim may change the Fund's
asset class allocations, the underlying funds or the target weightings in the
underlying funds without shareholder approval. The underlying funds may engage
in a number of investment techniques and practices, which involve certain risks.
Each underlying fund's accounting policies are outlined in the underlying fund's
financial statements and the affiliated underlying funds are available upon
request.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
A security listed or traded on an exchange (except convertible bonds) is
valued at its 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, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Swap agreements are fair valued using an evaluated quote provided by an
independent pricing service. Evaluated quotes provided by the pricing
service are valued based on a model which may include end of day net
present values, spreads, ratings, industry, and company performance.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
AIM V.I. POWERSHARES ETF ALLOCATION FUND
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Distributions from income from underlying funds, if any, are
recorded as dividend income on ex-dividend date. Distributions from net
realized capital gains from underlying funds, if any, are recorded as
realized gains on the ex-dividend date. Interest income is recorded on the
accrual basis from settlement date.
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
D. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
E. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
F. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
G. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with the
Advisor. Under the terms of the investment advisory agreement, the Fund pays an
advisory fee to the Advisor based on the annual rate of the Fund's average daily
net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
First $250 million 0.67%
- -------------------------------------------------------------------
Next $250 million 0.655%
- -------------------------------------------------------------------
Next $500 million 0.64%
- -------------------------------------------------------------------
Next $1.5 billion 0.625%
- -------------------------------------------------------------------
Next $2.5 billion 0.61%
- -------------------------------------------------------------------
Next $2.5 billion 0.595%
- -------------------------------------------------------------------
Next $2.5 billion 0.58%
- -------------------------------------------------------------------
Over $10 billion 0.565%
___________________________________________________________________
===================================================================
</Table>
AIM V.I. POWERSHARES ETF ALLOCATION FUND
Under the terms of a master sub-advisory agreement between the Advisor and
each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management
Limited, 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 Ltd. (collectively, the "Affiliated Sub-Advisors") the Advisor, not the
Fund, may pay 40% of the fees paid to the Advisor to any such Affiliated Sub-
Advisor(s) that provide discretionary investment management services to the Fund
based on the percentage of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 0.18% and Series
II shares to 0.43% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco described more
fully below, 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. These
credits are used to pay certain expenses incurred by the Fund. To the extent
that the annualized expense ratio does not exceed the expense limitation, the
Advisor will retain its ability to be reimbursed for such fee waivers or
reimbursements prior to the end of each fiscal year.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash in such affiliated money market
funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$17,251 and reimbursed Fund expenses of $72,802.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $24,795 for accounting and fund
administrative services and reimbursed $1,511 for services provided by insurance
companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
AIM V.I. POWERSHARES ETF ALLOCATION FUND
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- -------------------------------------------------------------------------------------------------------------------
Equity Securities $14,845,704 $-- $-- $14,845,704
___________________________________________________________________________________________________________________
===================================================================================================================
</Table>
NOTE 4--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $1,422
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 5--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the custodian bank
can be compensated by earning the additional interest; or (ii) compensate by
paying the custodian bank at a rate agreed upon by the custodian bank and
Invesco Aim, not to exceed the contractually agreed upon rate.
NOTE 6--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
The Fund did not have a capital loss carryforward as of December 31, 2008.
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $13,447,091 and $724,978,
respectively. Cost of investments on a tax basis includes the adjustments for
financial reporting purposes as of the most recently completed Federal income
tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- -----------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $1,046,590
- -----------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (67,337)
===============================================================================================
Net unrealized appreciation of investment securities $ 979,253
_______________________________________________________________________________________________
===============================================================================================
Cost of investments for tax purposes is $13,866,451.
</Table>
AIM V.I. POWERSHARES ETF ALLOCATION FUND
NOTE 8--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- ------------------------------------------------------------------------------------------------------------------
OCTOBER 24, 2008
(COMMENCEMENT
SIX MONTHS ENDED DATE) TO
JUNE 30, 2009(a) DECEMBER 31, 2008
------------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------
Sold:
Series I 481 $ 5,742 12,501 $125,010
- ------------------------------------------------------------------------------------------------------------------
Series II 1,187,286 13,090,257 35,270 365,022
==================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 223 2,420
- ------------------------------------------------------------------------------------------------------------------
Series II -- -- 530 5,746
==================================================================================================================
Reacquired:
Series I -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Series II (11,686) (114,159) (7) (81)
==================================================================================================================
Net increase in share activity 1,176,081 $12,981,840 48,517 $498,117
__________________________________________________________________________________________________________________
==================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 95% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
NOTE 9--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
NET ASSET ON SECURITIES DIVIDENDS
VALUE, NET (BOTH TOTAL FROM FROM NET NET ASSET
BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT VALUE, END TOTAL
OF PERIOD INCOME(a) UNREALIZED) OPERATIONS INCOME OF PERIOD RETURN(b)
- --------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $11.09 $0.21 $0.59 $0.80 $ -- $11.89 7.21%
Year ended 12/31/08(d) 10.00 0.11 1.17 1.28 (0.19) 11.09 12.88
- --------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 11.07 0.20 0.59 0.79 -- 11.86 7.14
Year ended 12/31/08(d) 10.00 0.11 1.15 1.26 (0.19) 11.07 12.66
______________________________________________________________________________________________________________
==============================================================================================================
<Caption>
RATIO OF
RATIO OF EXPENSES
EXPENSES TO AVERAGE NET
TO AVERAGE ASSETS WITHOUT RATIO OF NET
NET ASSETS FEE WAIVERS INVESTMENT
NET ASSETS, WITH FEE WAIVERS AND/OR INCOME
END OF PERIOD AND/OR EXPENSES EXPENSES TO AVERAGE PORTFOLIO
(000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(c)
- --------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $ 157 0.17%(e) 3.67%(e) 3.96%(e) 14%
Year ended 12/31/08(d) 141 0.17(f) 79.26(f) 5.72(f) 6
- --------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 14,368 0.42(e) 3.92(e) 3.71(e) 14
Year ended 12/31/08(d) 396 0.42(f) 79.51(f) 5.47(f) 6
________________________________________________________________________________________________________
========================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Total returns are not annualized for periods less than one
year, if applicable and do not reflect charges assessed in connection with
a variable product, which if included would reduce total returns.
(c) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(d) Commencement date of October 24, 2008.
(e) Ratios are annualized and based on average daily net assets (000's omitted)
of $138 and $5,054 for Series I and Series II shares, respectively.
(f) Annualized.
AIM V.I. POWERSHARES ETF ALLOCATION FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,073.10 $0.87 $1,023.95 $0.85 0.17%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,072.30 2.16 1,022.71 2.11 0.42
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. POWERSHARES ETF ALLOCATION FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM In addition to their meetings was controlling. Each Trustee may have
Variable Insurance Funds is required under throughout the year, the Sub-Committees evaluated the information provided
the Investment Company Act of 1940 to meet at designated contract renewal differently from another Trustee and
approve the AIM V.I. PowerShares ETF meetings each year to conduct an in-depth attributed different weight to the various
Allocation Fund (the Fund) investment review of the performance, fees, expenses factors. The Trustees recognized that the
advisory agreement with Invesco Aim and other matters related to their advisory arrangements and resulting
Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract advisory fees for the Fund and the other
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive AIM Funds are the result of years of
for Mutual Funds (the sub-advisory comparative performance and fee data review and negotiation between the
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an Trustees and Invesco Aim, that the
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Trustees may focus to a greater extent on
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and certain aspects of these arrangements in
Limited, Invesco Australia Limited, supervision of the Senior Officer who also some years than in others, and that the
Invesco Global Asset Management (N.A.), prepares a separate analysis of this Trustees' deliberations and conclusions in
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each a particular year may be based in part on
Institutional (N.A.), Inc., Invesco Senior Sub-Committee then makes recommendations their deliberations and conclusions
Secured Management, Inc. and Invesco to the Investments Committee regarding the regarding these same arrangements
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. throughout the year and in prior years.
Sub-Advisers). During contract renewal The Investments Committee considers each
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes The discussion below serves as a
Board as a whole, and the disinterested or its own recommendations regarding the fees summary of the Senior Officer's
"independent" Trustees voting separately, and expenses of the AIM Funds to the full independent written evaluation with
approved the continuance of the Fund's Board. The Investments Committee also respect to the Fund's investment advisory
investment advisory agreement and the considers each Sub-Committee's agreement as well as a discussion of the
sub-advisory contracts for another year, recommendations in making its annual material factors and related conclusions
effective July 1, 2009. In doing so, the recommendation to the Board whether to that formed the basis for the Board's
Board determined that the Fund's approve the continuance of each AIM Fund's approval of the Fund's investment advisory
investment advisory agreement and the investment advisory agreement and agreement and sub-advisory contracts.
sub-advisory contracts are in the best sub-advisory contracts for another year. Unless otherwise stated, information set
interests of the Fund and its shareholders forth below is as of June 17, 2009, and
and that the compensation to Invesco Aim The independent Trustees met separately does not reflect any changes that may have
and the Affiliated Sub-Advisers under the during their evaluation of the Fund's occurred since that date, including but
Fund's investment advisory agreement and investment advisory agreement and not limited to changes to the Fund's
sub-advisory contracts is fair and sub-advisory contracts with independent performance, advisory fees, expense
reasonable. legal counsel. The independent Trustees limitations and/or fee waivers.
were also assisted in their annual
THE BOARD'S FUND EVALUATION PROCESS evaluation of the Fund's investment FACTORS AND CONCLUSIONS AND SUMMARY OF
advisory agreement by the Senior Officer. INDEPENDENT WRITTEN FEE EVALUATION
The Board's Investments Committee has One responsibility of the Senior Officer
established three Sub-Committees that are is to manage the process by which the AIM A. Nature, Extent and Quality of
responsible for overseeing the management Funds' proposed management fees are Services Provided by Invesco Aim
of a number of the series portfolios of negotiated during the annual contract
the AIM Funds. This Sub-Committee renewal process to ensure that they are The Board reviewed the advisory services
structure permits the Trustees to focus on negotiated in a manner that is at arms' provided to the Fund by Invesco Aim under
the performance of the AIM Funds that have length and reasonable. Accordingly, the the Fund's investment advisory agreement,
been assigned to them. The Sub-Committees Senior Officer must either supervise a the performance of Invesco Aim in
meet throughout the year to review the competitive bidding process or prepare an providing these services, and the
performance of their assigned funds, and independent written evaluation. The Senior credentials and experience of the officers
the Sub-Committees review monthly and Officer recommended that an independent and employees of Invesco Aim who provide
quarterly comparative performance written evaluation be provided and, at the these services. The Board's review of the
information and periodic asset flow data direction of the Board, prepared an qualifications of Invesco Aim to provide
for their assigned funds. These materials independent written evaluation. these services included the Board's
are prepared under the direction and consideration of Invesco Aim's portfolio
supervision of the independent Senior During the annual contract renewal and product review process, various back
Officer, an officer of the AIM Funds who process, the Board considered the factors office support functions provided by
reports directly to the independent discussed below in evaluating the fairness Invesco Aim and its affiliates, and
Trustees. Over the course of each year, and reasonableness of the Fund's Invesco Aim's equity and fixed income
the Sub-Committees meet with portfolio investment advisory agreement and trading operations. The Board concluded
managers for their assigned funds and sub-advisory contracts. The Board that the nature, extent and quality of the
other members of management and review considered all of the information provided advisory services provided to the Fund by
with these individuals the performance, to them, including information provided at Invesco Aim are appropriate and that
investment objective(s), policies, their meetings throughout the year as part Invesco Aim currently is providing
strategies and limitations of these funds. of their ongoing oversight of the Fund, satisfactory advisory services in
and did not identify any particular factor accordance with the terms of the Fund's
that investment advisory agreement. In
addition, based on their
AIM V.I. POWERSHARES ETF ALLOCATION FUND continued
ongoing meetings throughout the year with to utilize the additional resources and of scale through contractual breakpoints
the Fund's portfolio manager or managers, talent of the Affiliated Sub-Advisers in in the Fund's advisory fee schedule. The
the Board concluded that these individuals managing the Fund. Board noted that the Fund's contractual
are competent and able to continue to advisory fee schedule includes seven
carry out their responsibilities under the C. Fund Performance breakpoints, but that due to the Fund's
Fund's investment advisory agreement. asset level at the end of the past
The Board did not consider the performance calendar year, the Fund is not currently
In determining whether to continue the of the Fund because the Fund was newly benefiting from the breakpoints. The Board
Fund's investment advisory agreement, the launched in late 2008 and has no concluded that the Fund's advisory fees
Board considered the prior relationship performance history. appropriately reflect economies of scale
between Invesco Aim and the Fund, as well at current asset levels. The Board also
as the Board's knowledge of Invesco Aim's D. Advisory and Sub-Advisory Fees and noted that the Fund shares directly in
operations, and concluded that it is Fee Waivers economies of scale through lower fees
beneficial to maintain the current charged by third party service providers
relationship, in part, because of such The Board noted that the Fund is a fund of based on the combined size of all of the
knowledge. The Board also considered the funds and invests its assets principally AIM Funds and affiliates.
steps that Invesco Aim and its affiliates in underlying exchange traded funds rather
continue to take to improve the quality than directly in individual securities. F. Profitability and Financial
and efficiency of the services they The Board considered the tactical asset Resources
provide to the AIM Funds in the areas of allocation provided for the Fund, which is
investment performance, product line in contrast to the more static allocation The Board reviewed information from
diversification, distribution, fund models utilized by the AIM Independence Invesco Aim concerning the costs of the
operations, shareholder services and and Asset Allocation funds. advisory and other services that Invesco
compliance. The Board concluded that the Aim and its affiliates provide to the Fund
quality and efficiency of the services The Board also noted that Invesco Aim and the profitability of Invesco Aim and
Invesco Aim and its affiliates provide to has contractually agreed to waive fees its affiliates in providing these
the AIM Funds in each of these areas and/or limit expenses of the Fund through services. The Board also reviewed
support the Board's approval of the at least April 30, 2010 in an amount information concerning the financial
continuance of the Fund's investment necessary to limit total annual operating condition of Invesco Aim and its
advisory agreement. expenses to a specified percentage of affiliates. The Board reviewed with
average daily net assets for each class of Invesco Aim the methodology used to
B. Nature, Extent and Quality of the Fund. prepare the profitability information. The
Services Provided by Affiliated Board considered the overall profitability
Sub-Advisers The Board also considered the services of Invesco Ltd., the ultimate parent of
to be provided by the Affiliated Invesco Aim and the Affiliated
The Board reviewed the services to be Sub-Advisers pursuant to the sub-advisory Sub-Advisers, and of Invesco Aim, as well
provided by the Affiliated Sub-Advisers contracts and the services to be provided as the profitability of Invesco Aim in
under the sub-advisory contracts and the by Invesco Aim pursuant to the Fund's connection with managing the Fund. The
credentials and experience of the officers investment advisory agreement, as well as Board noted that Invesco Aim continues to
and employees of the Affiliated the allocation of fees between Invesco Aim operate at a net profit, although the
Sub-Advisers who will provide these and the Affiliated Sub-Advisers pursuant reduction of assets under management as a
services. The Board concluded that the to the sub-advisory contracts. The Board result of market movements and the
nature, extent and quality of the services noted that the sub-advisory fees have no increase in voluntary fee waivers for
provided by the Affiliated Sub-Advisers direct effect on the Fund or its affiliated money market funds have reduced
are appropriate. The Board noted that the shareholders, as they are paid by Invesco the profitability of Invesco Aim and its
Affiliated Sub-Advisers, which have Aim to the Affiliated Sub-Advisers, and affiliates. The Board concluded that the
offices and personnel that are that Invesco Aim and the Affiliated Fund's fees are fair and reasonable, and
geographically dispersed in financial Sub-Advisers are affiliates. The Board that the level of profits realized by
centers around the world, can provide also considered that the underlying funds Invesco Aim and its affiliates from
research and other information and make in which the Fund will invest primarily providing services to the Fund is not
recommendations on the markets and will pay advisory fees to Invesco Aim's excessive in light of the nature, quality
economies of various countries and affiliate, Invesco PowerShares Capital and extent of the services provided. The
securities of companies located in such Management LLC (Invesco PowerShares). Board considered whether Invesco Aim is
countries or on various types of financially sound and has the resources
investments and investment techniques. The After taking account of the Fund's necessary to perform its obligations under
Board noted that investment decisions for contractual advisory fee rate, the the Fund's investment advisory agreement,
the Fund are made by the Multiple Asset contractual sub-advisory fee rate, the and concluded that Invesco Aim has the
Strategies Group, which is a part of underlying funds fees and expenses and financial resources necessary to fulfill
Invesco Institutional (N.A.), Inc. other relevant factors, the Board these obligations. The Board also
(Invesco Institutional), utilizing an concluded that the Fund's advisory and considered whether each Affiliated
actively managed tactical asset allocation sub-advisory fees are fair and reasonable. Sub-Adviser is financially sound and has
which the group uses to manage the resources necessary to perform its
institutional assets. The Board concluded E. Economies of Scale and Breakpoints obligations under the sub-advisory
that the sub-advisory contracts will contracts, and concluded that each
benefit the Fund and its shareholders by The Board considered the extent to which Affiliated Sub-Adviser has the financial
permitting Invesco Aim there are economies of scale in the resources necessary to fulfill these
provision of advisory services to the obligations.
Fund. The Board also considered whether
the Fund benefits from such economies
AIM V.I. POWERSHARES ETF ALLOCATION FUND continued
G. Collateral Benefits to Invesco Aim
and its Affiliates
The Board considered various other
benefits received by Invesco Aim and its
affiliates resulting from Invesco Aim's
relationship with the Fund, including the
fees received by Invesco Aim and its
affiliates for their provision of
administrative, transfer agency and
distribution services to the Fund and the
advisory fees to Invesco PowerShares. The
Board considered the performance of
Invesco Aim and its affiliates in
providing these services to other AIM
Funds and the organizational structure
employed by Invesco Aim and its affiliates
to provide these services. The Board also
considered that these services will be
provided to the Fund pursuant to written
contracts that are reviewed and approved
on an annual basis by the Board. The Board
concluded that Invesco Aim and its
affiliates were providing these services
in a satisfactory manner and in accordance
with the terms of their contracts, and
were qualified to provide these services
to the Fund.
The Board considered the benefits
realized by Invesco Aim as a result of
portfolio brokerage transactions executed
through "soft dollar" arrangements. It is
not anticipated that the Fund will execute
brokerage transactions through "soft
dollar" arrangements to any significant
degree.
The Board considered the fact that the
Fund's uninvested cash and cash collateral
from any securities lending arrangements
may be invested in money market funds
advised by Invesco Aim pursuant to
procedures approved by the Board. The
Board noted that Invesco Aim will receive
advisory fees from these affiliated money
market funds attributable to such
investments, although Invesco Aim has
contractually agreed to waive through at
least June 30, 2010, the advisory fees
payable by the Fund in an amount equal to
100% of the net advisory fee Invesco Aim
receives from the affiliated money market
funds with respect to the Fund's
investment in the affiliated money market
funds of uninvested cash, but not cash
collateral. The Board concluded that the
Fund's investment of uninvested cash and
cash collateral from any securities
lending arrangements in the affiliated
money market funds is in the best
interests of the Fund and its
shareholders.
AIM V.I. POWERSHARES ETF ALLOCATION FUND
[INVESCO AIM LOGO] AIM V.I. SMALL CAP EQUITY FUND
--SERVICE MARK-- Semiannual Report to Shareholders o June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund
files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the SEC
Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by
calling 202 942 8090 or 800 732 0330, or by electronic request at the following E-mail address: publicinfo@sec.gov. The SEC file
numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent portfolio holdings, as filed on Form N-Q, have also been
made available to insurance companies issuing variable annuity contracts and variable life insurance policies ("variable products")
that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, from our Client Services department at 800 410 4246 or on the Invesco Aim Web site,
invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site,
sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2009, is
available at our Web site. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting
Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. will be merged into
Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc. Additional information
will be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN
MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
SERIES I SHARES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer Inception (8/29/03) 2.98%
charges. If variable product issuer charges were included, returns would be lower. 5 Years -0.26
1 Year -25.19
Series I Shares 3.86%
Series II Shares 3.71 SERIES II SHARES
S&P 500 Index(Triangle) (Broad Market Index) 3.19 Inception (8/29/03) 2.76%
Russell 2000 Index(Triangle) (Style-Specific Index) 2.64 5 Years -0.48
Lipper VUF Small-Cap Core Funds Index(Triangle) (Peer Group Index) 4.21 1 Year -25.31
==========================================
(Triangle) Lipper Inc.
PERFORMANCE INCLUDING VARIABLE PRODUCT
The S&P 500--REGISTERED TRAD EMARK-- INDEX is a market capitalization-weighted index CHARGES, PLEASE CONTACT YOUR VARIABLE
covering all major areas of the U.S. economy. It is not the 500 largest companies, but PRODUCT ISSUER OR FINANCIAL ADVISOR.
rather the most widely held 500 companies chosen with respect to market size,
liquidity, and their industry. HAD THE ADVISOR NOT WAIVED FEES AND/OR
REIMBURSED EXPENSES IN THE PAST,
The RUSSELL 2000--REGISTERED TRADEMARK-- INDEX measures the performance of the 2,000 PERFORMANCE WOULD HAVE BEEN LOWER.
smallest companies in the Russell 3000--REGISTERED TRADEMARK-- Index, which represents
approximately 8% of the total market capitalization of the Russell 3000 Index. The
Russell 2000 Index and the Russell 3000 Index are trademarks/service marks of the Frank
Russell Company. Russell--REGISTERED TRADEMARK-- is a trademark of the Frank Russell
Company.
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 Fund is not managed to track the performance of any particular index, including
the indexes defined here, and consequently, the performance of the Fund may deviate
significantly from the performance of the indexes.
A direct investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends, and they do not reflect sales charges.
Performance of the peer group reflects fund expenses; performance of a market index
does not.
=======================================================================================
THE PERFORMANCE OF THE FUND'S SERIES I AND RATIOS PRESENTED ABOVE MAY VARY FROM THE
SERIES II SHARE CLASSES WILL DIFFER EXPENSE RATIOS PRESENTED IN OTHER SECTIONS
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES. OF THIS REPORT THAT ARE BASED ON EXPENSES
INCURRED DURING THE PERIOD COVERED BY THIS
THE PERFORMANCE DATA QUOTED REPRESENT REPORT.
PAST PERFORMANCE AND CANNOT GUARANTEE
COMPARABLE FUTURE RESULTS; CURRENT AIM V.I. SMALL CAP EQUITY FUND, A
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE SERIES PORTFOLIO OF AIM VARIABLE INSURANCE
CONTACT YOUR VARIABLE PRODUCT ISSUER OR FUNDS, IS CURRENTLY OFFERED THROUGH
FINANCIAL ADVISOR FOR THE MOST RECENT INSURANCE COMPANIES ISSUING VARIABLE
MONTH-END VARIABLE PRODUCT PERFORMANCE. PRODUCTS. YOU CANNOT PURCHASE SHARES OF
PERFORMANCE FIGURES REFLECT FUND EXPENSES, THE FUND DIRECTLY. PERFORMANCE FIGURES
REINVESTED DISTRIBUTIONS AND CHANGES IN GIVEN REPRESENT THE FUND AND ARE NOT
NET ASSET VALUE. INVESTMENT RETURN AND INTENDED TO REFLECT ACTUAL VARIABLE
PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU PRODUCT VALUES. THEY DO NOT REFLECT SALES
MAY HAVE A GAIN OR LOSS WHEN YOU SELL CHARGES, EXPENSES AND FEES ASSESSED IN
SHARES. CONNECTION WITH A VARIABLE PRODUCT. SALES
CHARGES, EXPENSES AND FEES, WHICH ARE
THE TOTAL ANNUAL FUND OPERATING EXPENSE DETERMINED BY THE VARIABLE PRODUCT
RATIO SET FORTH IN THE MOST RECENT FUND ISSUERS, WILL VARY AND WILL LOWER THE
PROSPECTUS AS OF THE DATE OF THIS REPORT TOTAL RETURN.
FOR SERIES I AND SERIES II SHARES WAS
1.10% AND 1.35%, RESPECTIVELY. THE EXPENSE THE MOST RECENT MONTH-END PERFORMANCE
DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
PRODUCT CHARGES, IS AVAILABLE ON THE
INVESCO AIM AUTOMATED INFORMATION LINE,
866 702 4402. AS MENTIONED ABOVE, FOR THE
MOST RECENT MONTH-END
AIM V.I. SMALL CAP EQUITY FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-98.72%
AEROSPACE & DEFENSE-2.56%
AAR Corp.(b) 100,450 $ 1,612,222
- ------------------------------------------------------------------------------
Aerovironment Inc.(b) 44,592 1,376,109
- ------------------------------------------------------------------------------
Curtiss-Wright Corp. 47,516 1,412,651
==============================================================================
4,400,982
==============================================================================
AIRLINES-0.91%
Allegiant Travel Co.(b) 39,282 1,557,139
==============================================================================
APPAREL RETAIL-3.02%
Citi Trends Inc.(b) 63,747 1,649,772
- ------------------------------------------------------------------------------
Collective Brands, Inc.(b) 120,090 1,749,711
- ------------------------------------------------------------------------------
J. Crew Group, Inc.(b) 66,289 1,791,129
==============================================================================
5,190,612
==============================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-2.81%
Carter's, Inc.(b) 78,166 1,923,665
- ------------------------------------------------------------------------------
Phillips-Van Heusen Corp. 59,045 1,694,001
- ------------------------------------------------------------------------------
Volcom, Inc.(b) 97,417 1,217,713
==============================================================================
4,835,379
==============================================================================
APPLICATION SOFTWARE-1.85%
Blackbaud, Inc. 111,387 1,732,068
- ------------------------------------------------------------------------------
Parametric Technology Corp.(b) 123,505 1,443,773
==============================================================================
3,175,841
==============================================================================
ASSET MANAGEMENT & CUSTODY BANKS-1.66%
Affiliated Managers Group, Inc.(b) 23,920 1,391,905
- ------------------------------------------------------------------------------
GAMCO Investors, Inc.-Class A 29,962 1,453,157
==============================================================================
2,845,062
==============================================================================
BIOTECHNOLOGY-0.52%
InterMune, Inc.(b) 58,301 886,175
==============================================================================
COMMUNICATIONS EQUIPMENT-2.47%
Arris Group Inc.(b) 211,558 2,572,545
- ------------------------------------------------------------------------------
Comtech Telecommunications Corp.(b) 52,280 1,666,687
==============================================================================
4,239,232
==============================================================================
COMPUTER STORAGE & PERIPHERALS-1.40%
Synaptics Inc.(b) 62,171 2,402,909
==============================================================================
CONSTRUCTION & ENGINEERING-2.04%
MYR Group Inc.(b) 92,126 1,862,788
- ------------------------------------------------------------------------------
Northwest Pipe Co.(b) 47,335 1,645,364
==============================================================================
3,508,152
==============================================================================
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS-0.40%
Titan International, Inc. 91,590 684,177
==============================================================================
DATA PROCESSING & OUTSOURCED SERVICES-3.47%
CyberSource Corp.(b) 150,997 2,310,254
- ------------------------------------------------------------------------------
Euronet Worldwide, Inc.(b) 81,951 1,589,030
- ------------------------------------------------------------------------------
Wright Express Corp.(b) 80,869 2,059,733
==============================================================================
5,959,017
==============================================================================
DIVERSIFIED CHEMICALS-0.94%
FMC Corp. 33,998 1,608,105
==============================================================================
DIVERSIFIED METALS & MINING-1.00%
Compass Minerals International, Inc. 31,322 1,719,891
==============================================================================
DIVERSIFIED SUPPORT SERVICES-0.48%
EnerNOC, Inc.(b) 37,859 820,405
==============================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-2.28%
Belden Inc. 71,925 1,201,148
- ------------------------------------------------------------------------------
General Cable Corp.(b) 43,383 1,630,333
- ------------------------------------------------------------------------------
GrafTech International Ltd.(b) 96,365 1,089,888
==============================================================================
3,921,369
==============================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.50%
OSI Systems, Inc.(b) 78,063 1,627,613
- ------------------------------------------------------------------------------
Rofin-Sinar Technologies, Inc.(b) 47,588 952,236
==============================================================================
2,579,849
==============================================================================
ENVIRONMENTAL & FACILITIES SERVICES-2.84%
ABM Industries Inc. 122,108 2,206,491
- ------------------------------------------------------------------------------
Team, Inc.(b) 77,970 1,221,790
- ------------------------------------------------------------------------------
Waste Connections, Inc.(b) 56,216 1,456,557
==============================================================================
4,884,838
==============================================================================
GAS UTILITIES-1.78%
Energen Corp. 34,013 1,357,119
- ------------------------------------------------------------------------------
UGI Corp. 66,669 1,699,393
==============================================================================
3,056,512
==============================================================================
GENERAL MERCHANDISE STORES-0.81%
Pantry, Inc. (The)(b) 83,853 1,391,960
==============================================================================
HEALTH CARE DISTRIBUTORS-1.06%
Owens & Minor, Inc. 41,775 1,830,581
==============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. SMALL CAP EQUITY FUND
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT-2.53%
Cardiac Science Corp.(b) 174,461 $ 701,333
- ------------------------------------------------------------------------------
Invacare Corp. 85,826 1,514,829
- ------------------------------------------------------------------------------
Quidel Corp.(b) 145,957 2,125,134
==============================================================================
4,341,296
==============================================================================
HEALTH CARE FACILITIES-1.90%
Skilled Healthcare Group Inc.-Class A(b) 191,769 1,438,267
- ------------------------------------------------------------------------------
Universal Health Services, Inc.-Class B 37,483 1,831,045
==============================================================================
3,269,312
==============================================================================
HEALTH CARE SERVICES-0.71%
Gentiva Health Services, Inc.(b) 74,068 1,219,159
==============================================================================
HEALTH CARE SUPPLIES-1.09%
Haemonetics Corp.(b) 32,977 1,879,689
==============================================================================
HEALTH CARE TECHNOLOGY-0.97%
Omnicell, Inc.(b) 154,553 1,661,445
==============================================================================
HOTELS, RESORTS & CRUISE LINES-0.30%
Red Lion Hotels Corp.(b) 107,200 514,560
==============================================================================
INDUSTRIAL MACHINERY-2.77%
Chart Industries, Inc.(b) 64,407 1,170,919
- ------------------------------------------------------------------------------
RBC Bearings Inc.(b) 68,406 1,398,903
- ------------------------------------------------------------------------------
Valmont Industries, Inc. 30,509 2,199,089
==============================================================================
4,768,911
==============================================================================
INSURANCE BROKERS-1.89%
Arthur J. Gallagher & Co. 77,122 1,645,783
- ------------------------------------------------------------------------------
eHealth, Inc.(b) 90,263 1,594,045
==============================================================================
3,239,828
==============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-2.48%
Alaska Communications Systems Group Inc. 212,389 1,554,687
- ------------------------------------------------------------------------------
Cincinnati Bell Inc.(b) 642,753 1,825,419
- ------------------------------------------------------------------------------
NTELOS Holdings Corp. 48,116 886,297
==============================================================================
4,266,403
==============================================================================
INTERNET SOFTWARE & SERVICES-1.46%
Open Text Corp. (Canada)(b) 68,757 2,504,130
==============================================================================
INVESTMENT BANKING & BROKERAGE-1.34%
KBW Inc.(b) 80,058 2,302,468
- ------------------------------------------------------------------------------
Teton Advisors Inc.(b) 631 0
==============================================================================
2,302,468
==============================================================================
IT CONSULTING & OTHER SERVICES-1.34%
CACI International Inc.-Class A(b) 53,809 2,298,182
==============================================================================
LIFE SCIENCES TOOLS & SERVICES-1.52%
Dionex Corp.(b) 27,926 1,704,324
- ------------------------------------------------------------------------------
eResearch Technology, Inc.(b) 145,645 904,455
==============================================================================
2,608,779
==============================================================================
MARINE-0.73%
DryShips Inc. (Greece)(b) 215,987 1,248,405
==============================================================================
METAL & GLASS CONTAINERS-1.02%
AptarGroup, Inc. 52,177 1,762,017
==============================================================================
MOVIES & ENTERTAINMENT-1.03%
World Wrestling Entertainment, Inc.-Class A 140,457 1,764,140
==============================================================================
MULTI-UTILITIES-0.65%
Avista Corp. 62,360 1,110,632
==============================================================================
OFFICE REIT'S-0.47%
Alexandria Real Estate Equities, Inc. 22,424 802,555
==============================================================================
OIL & GAS EQUIPMENT & SERVICES-4.05%
Complete Production Services, Inc.(b) 239,914 1,525,853
- ------------------------------------------------------------------------------
Lufkin Industries, Inc. 31,802 1,337,274
- ------------------------------------------------------------------------------
NATCO Group Inc.-Class A(b) 59,854 1,970,394
- ------------------------------------------------------------------------------
Oceaneering International, Inc.(b) 47,002 2,124,490
==============================================================================
6,958,011
==============================================================================
OIL & GAS EXPLORATION & PRODUCTION-2.25%
Arena Resources, Inc.(b) 51,527 1,641,135
- ------------------------------------------------------------------------------
Comstock Resources, Inc.(b) 37,879 1,251,901
- ------------------------------------------------------------------------------
Penn Virginia Corp. 58,986 965,601
==============================================================================
3,858,637
==============================================================================
PACKAGED FOODS & MEATS-1.54%
Flowers Foods, Inc. 57,986 1,266,414
- ------------------------------------------------------------------------------
TreeHouse Foods, Inc.(b) 47,835 1,376,213
==============================================================================
2,642,627
==============================================================================
PERSONAL PRODUCTS-0.97%
Alberto-Culver Co. 65,502 1,665,716
==============================================================================
PHARMACEUTICALS-2.03%
ViroPharma Inc.(b) 191,854 1,137,694
- ------------------------------------------------------------------------------
VIVUS, Inc.(b) 386,374 2,349,154
==============================================================================
3,486,848
==============================================================================
PROPERTY & CASUALTY INSURANCE-1.75%
FPIC Insurance Group, Inc.(b) 50,591 1,549,096
- ------------------------------------------------------------------------------
Hanover Insurance Group Inc. (The) 38,372 1,462,357
==============================================================================
3,011,453
==============================================================================
REGIONAL BANKS-5.51%
BancFirst Corp. 32,300 1,116,934
- ------------------------------------------------------------------------------
Commerce Bancshares, Inc. 45,208 1,438,971
- ------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. SMALL CAP EQUITY FUND
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
REGIONAL BANKS-(CONTINUED)
Community Trust Bancorp, Inc. 58,289 $ 1,559,231
- ------------------------------------------------------------------------------
First Financial Bankshares, Inc. 28,380 1,429,217
- ------------------------------------------------------------------------------
FirstMerit Corp. 75,530 1,282,499
- ------------------------------------------------------------------------------
Texas Capital Bancshares, Inc.(b) 114,401 1,769,783
- ------------------------------------------------------------------------------
Whitney Holding Corp. 95,847 877,959
==============================================================================
9,474,594
==============================================================================
RESTAURANTS-4.65%
Brinker International, Inc. 102,771 1,750,190
- ------------------------------------------------------------------------------
DineEquity, Inc.(b) 57,143 1,782,290
- ------------------------------------------------------------------------------
Papa John's International, Inc.(b) 58,494 1,450,066
- ------------------------------------------------------------------------------
Sonic Corp.(b) 154,649 1,551,130
- ------------------------------------------------------------------------------
Texas Roadhouse, Inc.-Class A(b) 133,373 1,455,100
==============================================================================
7,988,776
==============================================================================
SEMICONDUCTOR EQUIPMENT-2.76%
ATMI, Inc.(b) 98,937 1,536,491
- ------------------------------------------------------------------------------
Cymer, Inc.(b) 59,453 1,767,538
- ------------------------------------------------------------------------------
MKS Instruments, Inc.(b) 109,031 1,438,119
==============================================================================
4,742,148
==============================================================================
SEMICONDUCTORS-3.64%
ON Semiconductor Corp.(b) 256,386 1,758,808
- ------------------------------------------------------------------------------
Power Integrations, Inc. 75,787 1,802,973
- ------------------------------------------------------------------------------
Semtech Corp.(b) 169,448 2,695,917
==============================================================================
6,257,698
==============================================================================
SPECIALIZED REIT'S-1.84%
LaSalle Hotel Properties 61,848 763,204
- ------------------------------------------------------------------------------
Senior Housing Properties Trust 62,146 1,014,223
- ------------------------------------------------------------------------------
Universal Health Realty Income Trust 43,889 1,383,381
==============================================================================
3,160,808
==============================================================================
SPECIALTY CHEMICALS-0.60%
Zep, Inc. 85,515 1,030,456
==============================================================================
SYSTEMS SOFTWARE-1.67%
Ariba Inc.(b) 292,386 2,877,078
==============================================================================
TECHNOLOGY DISTRIBUTORS-0.90%
Anixter International Inc.(b) 41,317 1,553,106
==============================================================================
TRADING COMPANIES & DISTRIBUTORS-1.03%
Beacon Roofing Supply, Inc.(b) 122,934 1,777,626
==============================================================================
TRUCKING-3.30%
Landstar System, Inc. 52,162 1,873,137
- ------------------------------------------------------------------------------
Marten Transport, Ltd.(b) 77,272 1,604,167
- ------------------------------------------------------------------------------
Old Dominion Freight Line, Inc.(b) 65,591 2,201,890
==============================================================================
5,679,194
==============================================================================
WATER UTILITIES-0.23%
Cascal N.V. (United Kingdom) 105,529 395,734
==============================================================================
Total Common Stocks & Other Equity Interests
(Cost $188,959,834) 169,620,608
==============================================================================
MONEY MARKET FUNDS-1.19%
Liquid Assets Portfolio-Institutional Class(c) 1,022,735 1,022,735
- ------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(c) 1,022,735 1,022,735
==============================================================================
Total Money Market Funds (Cost $2,045,470) 2,045,470
==============================================================================
TOTAL INVESTMENTS-99.91% (Cost $191,005,304) 171,666,078
==============================================================================
OTHER ASSETS LESS LIABILITIES-0.09% 152,858
==============================================================================
NET ASSETS-100.00% $171,818,936
______________________________________________________________________________
==============================================================================
</Table>
Investment Abbreviations:
<Table>
REIT - Real Estate Investment Trust
</Table>
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) Non-income producing security.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. SMALL CAP EQUITY FUND
PORTFOLIO COMPOSITION
By sector, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
Information Technology 22.5%
- -------------------------------------------------------------------------
Industrials 19.3
- -------------------------------------------------------------------------
Financials 14.4
- -------------------------------------------------------------------------
Consumer Discretionary 12.6
- -------------------------------------------------------------------------
Health Care 12.3
- -------------------------------------------------------------------------
Energy 6.3
- -------------------------------------------------------------------------
Materials 3.6
- -------------------------------------------------------------------------
Utilities 2.7
- -------------------------------------------------------------------------
Consumer Staples 2.5
- -------------------------------------------------------------------------
Telecommunication Services 2.5
- -------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities 1.3
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. SMALL CAP EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $188,959,834) $169,620,608
- --------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 2,045,470
================================================================================
Total investments, at value (Cost $191,005,304) 171,666,078
================================================================================
Receivables for:
Investments sold 131,689
- --------------------------------------------------------------------------------
Fund shares sold 193,810
- --------------------------------------------------------------------------------
Dividends 185,019
- --------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 10,468
================================================================================
Total assets 172,187,064
________________________________________________________________________________
================================================================================
LIABILITIES:
Payables for:
Fund shares reacquired 199,269
- --------------------------------------------------------------------------------
Accrued fees to affiliates 109,451
- --------------------------------------------------------------------------------
Accrued other operating expenses 41,178
- --------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 18,230
================================================================================
Total liabilities 368,128
================================================================================
Net assets applicable to shares outstanding $171,818,936
________________________________________________________________________________
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $223,928,276
- --------------------------------------------------------------------------------
Undistributed net investment income 414,047
- --------------------------------------------------------------------------------
Undistributed net realized gain (loss) (33,184,161)
- --------------------------------------------------------------------------------
Unrealized appreciation (depreciation) (19,339,226)
================================================================================
$171,818,936
________________________________________________________________________________
================================================================================
NET ASSETS:
Series I $162,166,942
________________________________________________________________________________
================================================================================
Series II $ 9,651,994
________________________________________________________________________________
================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 14,700,359
________________________________________________________________________________
================================================================================
Series II 885,796
________________________________________________________________________________
================================================================================
Series I:
Net asset value per share $ 11.03
________________________________________________________________________________
================================================================================
Series II:
Net asset value per share $ 10.90
________________________________________________________________________________
================================================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends $ 852,238
- ------------------------------------------------------
Dividends from affiliated money market
funds (includes securities lending
income of $121,486) 134,932
======================================================
Total investment income 987,170
======================================================
EXPENSES:
Advisory fees 560,507
- ------------------------------------------------------
Administrative services fees 212,605
- ------------------------------------------------------
Custodian fees 12,473
- ------------------------------------------------------
Distribution fees -- Series II 8,914
- ------------------------------------------------------
Transfer agent fees 7,466
- ------------------------------------------------------
Trustees' and officers' fees and
benefits 12,457
- ------------------------------------------------------
Other 22,928
======================================================
Total expenses 837,350
======================================================
Less: Fees waived (2,324)
======================================================
Net expenses 835,026
======================================================
Net investment income 152,144
======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from
investment securities (includes net
gains from securities sold to
affiliates of $34,634) (15,024,510)
======================================================
Change in net unrealized appreciation
of investment securities 20,574,277
======================================================
Net realized and unrealized gain 5,549,767
======================================================
Net increase in net assets resulting
from operations $ 5,701,911
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. SMALL CAP EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- -------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 152,144 $ 281,807
- -------------------------------------------------------------------------------------------------------
Net realized gain (loss) (15,024,510) (17,937,663)
- -------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 20,574,277 (52,374,299)
=======================================================================================================
Net increase (decrease) in net assets resulting from operations 5,701,911 (70,030,155)
=======================================================================================================
Distributions to shareholders from net realized gains:
Series I -- (660,008)
- -------------------------------------------------------------------------------------------------------
Series II -- (21,507)
=======================================================================================================
Total distributions from net realized gains -- (681,515)
=======================================================================================================
Share transactions-net:
Series I 4,710,479 53,423,230
- -------------------------------------------------------------------------------------------------------
Series II 3,539,208 6,837,898
=======================================================================================================
Net increase in net assets resulting from share transactions 8,249,687 60,261,128
=======================================================================================================
Net increase (decrease) in net assets 13,951,598 (10,450,542)
=======================================================================================================
NET ASSETS:
Beginning of period 157,867,338 168,317,880
=======================================================================================================
End of period (includes undistributed net investment income of
$414,047 and $261,903, respectively) $171,818,936 $157,867,338
_______________________________________________________________________________________________________
=======================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. SMALL CAP EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Small Cap Equity Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
AIM V.I. SMALL CAP EQUITY FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. SECURITIES LENDING -- The Fund may lend portfolio securities having a
market value up to one-third of the Fund's total assets. Such loans are
secured by collateral equal to no less than the market value of the loaned
securities determined daily by the securities lending provider. Such
collateral will be cash or debt securities issued or guaranteed by the
U.S. Government or any of its sponsored agencies. Cash collateral received
in connection with these loans is invested in short-term money market
instruments or affiliated money market funds and is shown as such on the
Schedule of Investments. It is the Fund's policy to obtain additional
collateral from or return excess collateral to the borrower by the end of
the next business day, following the valuation date of the securities
loaned. Therefore, the value of the collateral held may be temporarily
less than the value of the securities on loan. Lending securities entails
a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase
the collateral accordingly, and the borrower fails to return the
securities. Upon the failure of the borrower to return the securities,
collateral may be liquidated and the securities may be purchased on the
open market to replace the loaned securities. The Fund could experience
delays and costs in gaining access to the collateral. The Fund bears the
risk of any deficiency in the amount of the collateral available for
return to the borrower due to any loss on the collateral invested.
Dividends received on cash collateral investments for securities lending
transactions, which are net of compensation to counterparties, is included
in Dividends from affiliates on the Statement of Operations. The aggregate
value of securities out on loan is shown as a footnote on the Statement of
Assets and Liabilities, if any.
AIM V.I. SMALL CAP EQUITY FUND
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
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%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 1.15% and Series
II shares to 1.40% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, the only 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. These credits are used to pay certain expenses incurred by the
Fund. The Advisor did not waive fees and/or reimburse expenses during the period
under this expense limitation.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash (excluding investments of cash
collateral from securities lending) in such affiliated money market funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$2,324.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $24,795 for accounting and fund
administrative services and reimbursed $187,810 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable
AIM V.I. SMALL CAP EQUITY FUND
inputs (Level 3) generally when market prices are not readily available or are
unreliable. Based on the valuation inputs, the securities or other investments
are tiered into one of three levels. Changes in valuation methods may result in
transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
========================================================================================================================
Equity Securities $171,666,078 $-- $0 $171,666,078
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
NOTE 4--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS
The Fund is permitted to purchase or sell securities from or to certain other
AIM Funds under specified conditions outlined in procedures adopted by the Board
of Trustees of the Trust. The procedures have been designed to ensure that any
purchase or sale of securities by the Fund from or to another fund or portfolio
that is or could be considered an affiliate by virtue of having a common
investment advisor (or affiliated investment advisors), common Trustees and/or
common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined
under the procedures, each transaction is effected at the current market price.
Pursuant to these procedures, for the six months ended June 30, 2009, the Fund
engaged in securities sales of $302,756, which resulted in net realized gains of
$34,634.
NOTE 5--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $1,613
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 6--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the custodian bank
can be compensated by earning the additional interest; or (ii) compensate by
paying the custodian bank at a rate agreed upon by the custodian bank and
Invesco Aim, not to exceed the contractually agreed upon rate.
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
December 31, 2016 $12,193,640
_______________________________________________________________________________________________
===============================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
AIM V.I. SMALL CAP EQUITY FUND
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $39,191,930 and
$29,524,749, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 15,803,679
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (35,722,485)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $(19,918,806)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $191,584,884.
</Table>
NOTE 9--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- ------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 2,528,845 $ 25,206,170 7,106,974 $ 99,325,405
- ------------------------------------------------------------------------------------------------------------------------
Series II 460,741 4,431,078 581,209 7,454,266
========================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 64,391 660,008
- ------------------------------------------------------------------------------------------------------------------------
Series II -- -- 2,121 21,507
========================================================================================================================
Reacquired:
Series I (2,165,508) (20,495,691) (3,672,675) (46,562,183)
- ------------------------------------------------------------------------------------------------------------------------
Series II (103,886) (891,870) (56,485) (637,875)
========================================================================================================================
Net increase in share activity 720,192 $ 8,249,687 4,025,535 $ 60,261,128
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 81% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and/or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
AIM V.I. SMALL CAP EQUITY FUND
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
(LOSSES)
NET ASSET NET ON SECURITIES DIVIDENDS DISTRIBUTIONS
VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET
BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END
OF PERIOD (LOSS)(a) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD
- ---------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $10.62 $ 0.01 $ 0.40 $ 0.41 $ -- $ -- $ -- $11.03
Year ended 12/31/08 15.53 0.02 (4.88) (4.86) -- (0.05) (0.05) 10.62
Year ended 12/31/07 15.19 (0.01) 0.81 0.80 (0.01) (0.45) (0.46) 15.53
Year ended 12/31/06 13.46 (0.01) 2.37 2.36 -- (0.63) (0.63) 15.19
Year ended 12/31/05 12.45 (0.06) 1.07 1.01 -- -- -- 13.46
Year ended 12/31/04 11.38 (0.06) 1.13 1.07 (0.00) -- (0.00) 12.45
- ---------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 10.51 (0.00) 0.39 0.39 -- -- -- 10.90
Year ended 12/31/08 15.39 0.00 (4.83) (4.83) -- (0.05) (0.05) 10.51
Year ended 12/31/07 15.10 (0.05) 0.79 0.74 -- (0.45) (0.45) 15.39
Year ended 12/31/06 13.41 (0.04) 2.36 2.32 -- (0.63) (0.63) 15.10
Year ended 12/31/05 12.43 (0.08) 1.06 0.98 -- -- -- 13.41
Year ended 12/31/04 11.38 (0.08) 1.13 1.05 (0.00) -- (0.00) 12.43
_________________________________________________________________________________________________________________________________
=================================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS)
TOTAL END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
RETURN(b) (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(c)
- -------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 3.86% $162,167 1.10%(d) 1.10%(d) 0.21%(d) 20%
Year ended 12/31/08 (31.31) 152,310 1.09 1.09 0.16 55
Year ended 12/31/07 5.19 168,286 1.12 1.15 (0.07) 45
Year ended 12/31/06 17.44 93,243 1.15 1.33 (0.06) 52
Year ended 12/31/05 8.11 42,752 1.22 1.57 (0.44) 70
Year ended 12/31/04 9.41 25,964 1.30 2.01 (0.56) 156
- -------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 3.71 9,652 1.35(d) 1.35(d) (0.04)(d) 20
Year ended 12/31/08 (31.40) 5,557 1.34 1.34 (0.09) 55
Year ended 12/31/07 4.84 32 1.37 1.40 (0.32) 45
Year ended 12/31/06 17.20 854 1.40 1.58 (0.31) 52
Year ended 12/31/05 7.88 679 1.42 1.82 (0.64) 70
Year ended 12/31/04 9.23 622 1.45 2.26 (0.71) 156
___________________________________________________________________________________________________________________
===================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Total returns are not annualized for periods less than one
year, if applicable and do not reflect charges assessed in connection with
a variable product, which if included would reduce total returns.
(c) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable. For the period ending
December 31, 2007, the portfolio turnover calculation excludes the value of
securities purchased of $17,709,035 and sold of $19,432,514 in the effort
to realign the Fund's portfolio holdings after the reorganization of AIM
V.I. Small Cap Growth Fund into the Fund.
(d) Ratios are annualized and based on average daily net assets (000's omitted)
of $144,529 and $7,190 for Series I and Series II shares, respectively.
AIM V.I. SMALL CAP EQUITY FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,038.60 $5.56 $1,019.34 $5.51 1.10%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,037.10 6.82 1,018.10 6.76 1.35
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. SMALL CAP EQUITY FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM In addition to their meetings particular factor that was controlling.
Variable Insurance Funds is required under throughout the year, the Sub-Committees Each Trustee may have evaluated the
the Investment Company Act of 1940 to meet at designated contract renewal information provided differently from
approve annually the renewal of the AIM meetings each year to conduct an in-depth another Trustee and attributed different
V.I. Small Cap Equity Fund (the Fund) review of the performance, fees, expenses weight to the various factors. The
investment advisory agreement with Invesco and other matters related to their Trustees recognized that the advisory
Aim Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract arrangements and resulting advisory fees
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive for the Fund and the other AIM Funds are
for Mutual Funds (the sub-advisory comparative performance and fee data the result of years of review and
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an negotiation between the Trustees and
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Invesco Aim, that the Trustees may focus
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and to a greater extent on certain aspects of
Limited, Invesco Australia Limited, supervision of the Senior Officer who also these arrangements in some years than in
Invesco Global Asset Management (N.A.), prepares a separate analysis of this others, and that the Trustees'
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each Sub- deliberations and conclusions in a
Institutional (N.A.), Inc., Invesco Senior Committee then makes recommendations to particular year may be based in part on
Secured Management, Inc. and Invesco the Investments Committee regarding the their deliberations and conclusions
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. regarding these same arrangements
Sub-Advisers). During contract renewal The Investments Committee considers each throughout the year and in prior years.
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes
Board as a whole, and the disinterested or its own recommendations regarding the fees The discussion below serves as a
"independent" Trustees voting separately, and expenses of the AIM Funds to the full summary of the Senior Officer's
approved the continuance of the Fund's Board. The Investments Committee also independent written evaluation with
investment advisory agreement and the considers each Sub-Committee's respect to the Fund's investment advisory
sub-advisory contracts for another year, recommendations in making its annual agreement as well as a discussion of the
effective July 1, 2009. In doing so, the recommendation to the Board whether to material factors and related conclusions
Board determined that the Fund's approve the continuance of each AIM Fund's that formed the basis for the Board's
investment advisory agreement and the investment advisory agreement and approval of the Fund's investment advisory
sub-advisory contracts are in the best sub-advisory contracts for another year. agreement and sub-advisory contracts.
interests of the Fund and its shareholders Unless otherwise stated, information set
and that the compensation to Invesco Aim The independent Trustees met separately forth below is as of June 17, 2009, and
and the Affiliated Sub-Advisers under the during their evaluation of the Fund's does not reflect any changes that may have
Fund's investment advisory agreement and investment advisory agreement and occurred since that date, including but
sub-advisory contracts is fair and sub-advisory contracts with independent not limited to changes to the Fund's
reasonable. legal counsel. The independent Trustees performance, advisory fees, expense
were also assisted in their annual limitations and/or fee waivers.
THE BOARD'S FUND EVALUATION PROCESS evaluation of the Fund's investment
advisory agreement by the Senior Officer. FACTORS AND CONCLUSIONS AND SUMMARY OF
The Board's Investments Committee has One responsibility of the Senior Officer INDEPENDENT WRITTEN FEE EVALUATION
established three Sub-Committees that are is to manage the process by which the AIM
responsible for overseeing the management Funds' proposed management fees are A. Nature, Extent and Quality of
of a number of the series portfolios of negotiated during the annual contract Services Provided by Invesco Aim
the AIM Funds. This Sub-Committee renewal process to ensure that they are
structure permits the Trustees to focus on negotiated in a manner that is at arms' The Board reviewed the advisory services
the performance of the AIM Funds that have length and reasonable. Accordingly, the provided to the Fund by Invesco Aim under
been assigned to them. The Sub-Committees Senior Officer must either supervise a the Fund's investment advisory agreement,
meet throughout the year to review the competitive bidding process or prepare an the performance of Invesco Aim in
performance of their assigned funds, and independent written evaluation. The Senior providing these services, and the
the Sub-Committees review monthly and Officer recommended that an independent credentials and experience of the officers
quarterly comparative performance written evaluation be provided and, at the and employees of Invesco Aim who provide
information and periodic asset flow data direction of the Board, prepared an these services. The Board's review of the
for their assigned funds. These materials independent written evaluation. qualifications of Invesco Aim to provide
are prepared under the direction and these services included the Board's
supervision of the independent Senior During the annual contract renewal consideration of Invesco Aim's portfolio
Officer, an officer of the AIM Funds who process, the Board considered the factors and product review process, various back
reports directly to the independent discussed below in evaluating the fairness office support functions provided by
Trustees. Over the course of each year, and reasonableness of the Fund's Invesco Aim and its affiliates, and
the Sub-Committees meet with portfolio investment advisory agreement and Invesco Aim's equity and fixed income
managers for their assigned funds and sub-advisory contracts. The Board trading operations. The Board concluded
other members of management and review considered all of the information provided that the nature, extent and quality of the
with these individuals the performance, to them, including information provided at advisory services provided to the Fund by
investment objective(s), policies, their meetings throughout the year as part Invesco Aim are appropriate and that
strategies and limitations of these funds. of their ongoing oversight of the Fund, Invesco Aim currently is providing
and did not identify any satisfactory advisory services in
accordance with the terms of the Fund's
investment advisory
AIM V.I. SMALL CAP EQUITY FUND continued
agreement. In addition, based on their C. Fund Performance least one year old and that other data did
ongoing meetings throughout the year with not reflect the market downturn that
the Fund's portfolio manager or managers, The Board considered fund performance as a occurred in the fourth quarter of 2008.
the Board concluded that these individuals relevant factor in considering whether to
are competent and able to continue to approve the investment advisory agreement. The Board also compared the Fund's
carry out their responsibilities under the The Board did not view fund performance as effective fee rate (the advisory fee after
Fund's investment advisory agreement. a relevant factor in considering whether any advisory fee waivers and before any
to approve the sub-advisory contracts for expense limitations/waivers) to the
In determining whether to continue the the Fund, as no Affiliated Sub-Adviser advisory fee rates of other domestic
Fund's investment advisory agreement, the currently manages assets of the Fund. clients of Invesco Aim and its affiliates
Board considered the prior relationship with investment strategies comparable to
between Invesco Aim and the Fund, as well The Board compared the Fund's those of the Fund, including one mutual
as the Board's knowledge of Invesco Aim's performance during the past one, three and fund advised by Invesco Aim and three
operations, and concluded that it is five calendar years to the performance of mutual funds sub-advised by an Invesco Aim
beneficial to maintain the current all funds in the Lipper performance affiliate. The Board noted that the Fund's
relationship, in part, because of such universe that are not managed by Invesco rate was (i) above the effective fee rate
knowledge. The Board also considered the Aim or an Affiliated Sub-Adviser and for the mutual fund advised by Invesco
steps that Invesco Aim and its affiliates against the Lipper VA Underlying Funds - Aim; and (ii) above the sub-adviser
continue to take to improve the quality Small-Cap Core Index. The Board noted that effective fee rates for the domestic
and efficiency of the services they the Fund's performance was in the second mutual funds sub-advised by an Invesco Aim
provide to the AIM Funds in the areas of quintile of its performance universe for affiliate
investment performance, product line the one and five year periods and in the
diversification, distribution, fund first quintile for the three year period The Board noted that Invesco Aim
operations, shareholder services and (the first quintile being the best contractually agreed to waive fees and/or
compliance. The Board concluded that the performing funds and the fifth quintile limit expenses of the Fund through at
quality and efficiency of the services being the worst performing funds). The least April 30, 2010 in an amount
Invesco Aim and its affiliates provide to Board noted that the Fund's performance necessary to limit total annual operating
the AIM Funds in each of these areas was above the performance of the Index for expenses to a specified percentage of
support the Board's approval of the the one, three and five year periods. average daily net assets for each class of
continuance of the Fund's investment Although the independent written the Fund. The Board noted that at the
advisory agreement. evaluation of the Fund's Senior Officer current expense ratio for the Fund, this
only considered Fund performance through expense waiver does not have any impact.
B. Nature, Extent and Quality of the most recent calendar year, the Board
Services Provided by Affiliated also reviewed more recent Fund performance The Board also considered the services
Sub-Advisers and this review did not change their provided by the Affiliated Sub-Advisers
conclusions. The Board noted that, in pursuant to the sub-advisory contracts and
The Board reviewed the services provided response to the Board's focus on fund the services provided by Invesco Aim
by the Affiliated Sub-Advisers under the performance, Invesco Aim has taken a pursuant to the Fund's advisory agreement,
sub-advisory contracts and the credentials number of actions intended to improve the as well as the allocation of fees between
and experience of the officers and investment process for the funds. Invesco Aim and the Affiliated
employees of the Affiliated Sub-Advisers Sub-Advisers pursuant to the sub-advisory
who provide these services. The Board D. Advisory and Sub-Advisory Fees and contracts. The Board noted that the
concluded that the nature, extent and Fee Waivers sub-advisory fees have no direct effect on
quality of the services provided by the the Fund or its shareholders, as they are
Affiliated Sub-Advisers are appropriate. The Board compared the Fund's contractual paid by Invesco Aim to the Affiliated
The Board noted that the Affiliated advisory fee rate to the contractual Sub-Advisers, and that Invesco Aim and the
Sub-Advisers, which have offices and advisory fee rates of funds in the Fund's Affiliated Sub-Advisers are affiliates.
personnel that are geographically Lipper expense group that are not managed
dispersed in financial centers around the by Invesco Aim or an Affiliated After taking account of the Fund's
world, can provide research and other Sub-Adviser, at a common asset level. The contractual advisory fee rate, the
information and make recommendations on Board noted that the Fund's contractual contractual sub-advisory fee rate, the
the markets and economies of various advisory fee rate was below the median comparative advisory fee information and
countries and securities of companies contractual advisory fee rate of funds in other relevant factors, the Board
located in such countries or on various its expense group. The Board also reviewed concluded that the Fund's advisory and
types of investments and investment the methodology used by Lipper in sub-advisory fees are fair and reasonable.
techniques. The Board concluded that the determining contractual fee rates, which
sub-advisory contracts benefit the Fund includes using audited financial data from E. Economies of Scale and Breakpoints
and its shareholders by permitting Invesco the most recent annual report of each fund
Aim to utilize the additional resources in the expense group that was publicly The Board considered the extent to which
and talent of the Affiliated Sub-Advisers available as of the end of the past there are economies of scale in the
in managing the Fund. calendar year. The Board noted that some provision of advisory services to the
comparative data was at Fund. The Board also considered whether
the Fund benefits from such economies of
scale through contractual breakpoints
AIM V.I. SMALL CAP EQUITY FUND continued
in the Fund's advisory fee schedule. The financial resources necessary to fulfill Aim receives from the affiliated money
Board noted that the Fund's contractual these obligations. market funds with respect to the Fund's
advisory fee schedule includes seven investment in the affiliated money market
breakpoints, but that due to the Fund's G. Collateral Benefits to Invesco Aim funds of uninvested cash, but not cash
asset level at the end of the past and its Affiliates collateral. The Board concluded that the
calendar year, the Fund is not currently Fund's investment of uninvested cash and
benefiting from the breakpoints. The Board The Board considered various other cash collateral from any securities
concluded that the Fund's advisory fees benefits received by Invesco Aim and its lending arrangements in the affiliated
would appropriately reflect economies of affiliates resulting from Invesco Aim's money market funds is in the best
scale at higher asset levels. The Board relationship with the Fund, including the interests of the Fund and its
also noted that the Fund shares directly fees received by Invesco Aim and its shareholders.
in economies of scale through lower fees affiliates for their provision of
charged by third party service providers administrative, transfer agency and
based on the combined size of all of the distribution services to the Fund. The
AIM Funds and affiliates. Board considered the performance of
Invesco Aim and its affiliates in
F. Profitability and Financial providing these services and the
Resources organizational structure employed by
Invesco Aim and its affiliates to provide
The Board reviewed information from these services. The Board also considered
Invesco Aim concerning the costs of the that these services are provided to the
advisory and other services that Invesco Fund pursuant to written contracts that
Aim and its affiliates provide to the Fund are reviewed and approved on an annual
and the profitability of Invesco Aim and basis by the Board. The Board concluded
its affiliates in providing these that Invesco Aim and its affiliates are
services. The Board also reviewed providing these services in a satisfactory
information concerning the financial manner and in accordance with the terms of
condition of Invesco Aim and its their contracts, and are qualified to
affiliates. The Board reviewed with continue to provide these services to the
Invesco Aim the methodology used to Fund.
prepare the profitability information. The
Board considered the overall profitability The Board considered the benefits
of Invesco Ltd., the ultimate parent of realized by Invesco Aim and the Affiliated
Invesco Aim and the Affiliated Sub-Advisers as a result of portfolio
Sub-Advisers, and of Invesco Aim, as well brokerage transactions executed through
as the profitability of Invesco Aim in "soft dollar" arrangements. The Board
connection with managing the Fund. The noted that soft dollar arrangements shift
Board noted that Invesco Aim continues to the payment obligation for research and
operate at a net profit, although the execution services from Invesco Aim and
reduction of assets under management as a the Affiliated Sub-Advisers to the funds
result of market movements and the and therefore may reduce Invesco Aim's and
increase in voluntary fee waivers for the Affiliated Sub-Advisers' expenses. The
affiliated money market funds have reduced Board concluded that Invesco Aim's and the
the profitability of Invesco Aim and its Affiliated Sub-Advisers' soft dollar
affiliates. The Board concluded that the arrangements are appropriate. The Board
Fund's fees are fair and reasonable, and also concluded that, based on their review
that the level of profits realized by and representations made by the Chief
Invesco Aim and its affiliates from Compliance Officer of Invesco Aim, these
providing services to the Fund is not arrangements are consistent with
excessive in light of the nature, quality regulatory requirements.
and extent of the services provided. The
Board considered whether Invesco Aim is The Board considered the fact that the
financially sound and has the resources Fund's uninvested cash and cash collateral
necessary to perform its obligations under from any securities lending arrangements
the Fund's investment advisory agreement, may be invested in money market funds
and concluded that Invesco Aim has the advised by Invesco Aim pursuant to
financial resources necessary to fulfill procedures approved by the Board. The
these obligations. The Board also Board noted that Invesco Aim will receive
considered whether each Affiliated Sub- advisory fees from these affiliated money
Adviser is financially sound and has the market funds attributable to such
resources necessary to perform its investments, although Invesco Aim has
obligations under the sub-advisory contractually agreed to waive through at
contracts, and concluded that each least June 30, 2010, the advisory fees
Affiliated Sub-Adviser has the payable by the Fund in an amount equal to
100% of the net advisory fee Invesco
AIM V.I. SMALL CAP EQUITY FUND
[INVESCO AIM LOGO] AIM V.I. TECHNOLOGY FUND
--SERVICE MARK-- Semiannual Report to Shareholders o June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund
files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the SEC
Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by
calling 202 942 8090 or 800 732 0330, or by electronic request at the following E-mail address: publicinfo@sec.gov. The SEC file
numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent portfolio holdings, as filed on Form N-Q, have also been
made available to insurance companies issuing variable annuity contracts and variable life insurance policies ("variable products")
that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, from our Client Services department at 800 410 4246 or on the Invesco Aim Web site,
invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site,
sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2009, is
available at our Web site. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting
Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. will be merged into
Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc. Additional information
will be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN
MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
SERIES I SHARES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer Inception (5/20/97) 0.25%
charges. If variable product issuer charges were included, returns would be lower. 10 Years -6.64
5 Years -2.87
Series I Shares 21.96% 1 Year -22.93
Series II Shares 21.91
S&P 500 Index(Triangle) (Broad Market Index) 3.19 SERIES II SHARES
Merrill Lynch 100 Technology Index(Triangle)* (Style-Specific Index) 26.01 10 Years -6.90%
S&P North American Technology Sector Index(Triangle)* (Former Style-Specific 5 Years -3.12
Index) 26.23 1 Year -23.19
Lipper VUF Science & Technology Funds Category Average(Triangle) (Peer Group) 24.57 ==========================================
(Triangle) Lipper Inc. AIM V.I. TECHNOLOGY FUND, A SERIES
PORTFOLIO OF AIM VARIABLE INSURANCE FUNDS,
* The Fund has elected to use the Merrill Lynch 100 Technology Index as its IS CURRENTLY OFFERED THROUGH INSURANCE
style-specific index because managers believe it reflects the Fund's COMPANIES ISSUING VARIABLE PRODUCTS. YOU
investment style and the performance of the securities in which the Fund CANNOT PURCHASE SHARES OF THE FUND
invests better than does the S&P North American Technology Sector Index. DIRECTLY. PERFORMANCE FIGURES GIVEN
REPRESENT THE FUND AND ARE NOT INTENDED TO
The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index REFLECT ACTUAL VARIABLE PRODUCT VALUES.
covering all major areas of the U.S. economy. It is not the 500 largest companies, but THEY DO NOT REFLECT SALES CHARGES,
rather the most widely held 500 companies chosen with respect to market size, liquidity EXPENSES AND FEES ASSESSED IN CONNECTION
and their industry. WITH A VARIABLE PRODUCT. SALES CHARGES,
EXPENSES AND FEES, WHICH ARE DETERMINED BY
The MERRILL LYNCH 100 TECHNOLOGY INDEX is a price-only equal-dollar weighted index THE VARIABLE PRODUCT ISSUERS, WILL VARY
of 100 stocks designed to measure the performance of a cross section of large, actively AND WILL LOWER THE TOTAL RETURN.
traded technology stocks and American Depositary Receipts.
THE MOST RECENT MONTH-END PERFORMANCE
The S&P NORTH AMERICAN TECHNOLOGY SECTOR INDEX is a modified capitalization-weighted DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
index composed of companies involved in the technology industry. PRODUCT CHARGES, IS AVAILABLE ON THE
INVESCO AIM AUTOMATED INFORMATION LINE,
The LIPPER VUF SCIENCE & TECHNOLOGY FUNDS CATEGORY AVERAGE represents an average of 866 702 4402. AS MENTIONED ABOVE, FOR THE
all of the variable insurance underlying funds in the Lipper Science & Technology Funds MOST RECENT MONTH-END PERFORMANCE
category. These funds invest at least 65% of their assets in science and technology INCLUDING VARIABLE PRODUCT CHARGES, PLEASE
stocks. CONTACT YOUR VARIABLE PRODUCT ISSUER OR
FINANCIAL ADVISOR.
The Fund is not managed to track the performance of any particular index, including
the indexes defined here, and consequently, the performance of the Fund may deviate (1) Total annual operating expenses less
significantly from the performance of the indexes. any contractual fee waivers and/or
expense reimbursements by the advisor
A direct investment cannot be made in an index. Unless otherwise indicated, index in effect through at least April 30,
results include reinvested dividends, and they do not reflect sales charges. 2010. See current prospectus for more
Performance of the peer group reflects fund expenses; performance of a market index information.
does not.
======================================================================================= (2) Total annual operating expenses less
contractual advisory fee waivers by the
SERIES II SHARES' INCEPTION DATE IS APRIL VARIABLE PRODUCT PERFORMANCE. PERFORMANCE advisor in effect through at least June
30, 2004. RETURNS SINCE THAT DATE ARE FIGURES REFLECT FUND EXPENSES, REINVESTED 30, 2010. See current prospectus for
HISTORICAL. ALL OTHER RETURNS ARE THE DISTRIBUTIONS AND CHANGES IN NET ASSET more information.
BLENDED RETURNS OF THE HISTORICAL VALUE. INVESTMENT RETURN AND PRINCIPAL
PERFORMANCE OF SERIES II SHARES SINCE VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE
THEIR INCEPTION AND THE RESTATED A GAIN OR LOSS WHEN YOU SELL SHARES.
HISTORICAL PERFORMANCE OF SERIES I SHARES
(FOR PERIODS PRIOR TO INCEPTION OF SERIES THE NET ANNUAL FUND OPERATING EXPENSE
II SHARES) ADJUSTED TO REFLECT THE RULE RATIO SET FORTH IN THE MOST RECENT FUND
12B-1 FEES APPLICABLE TO SERIES II SHARES. PROSPECTUS AS OF THE DATE OF THIS REPORT
THE INCEPTION DATE OF SERIES I SHARES IS FOR SERIES I AND SERIES II SHARES WAS
MAY 20, 1997. 1.16% AND 1.41%, RESPECTIVELY.(1, 2) THE
TOTAL ANNUAL FUND OPERATING EXPENSE RATIO
THE PERFORMANCE OF THE FUND'S SERIES I SET FORTH IN THE MOST RECENT FUND
AND SERIES II SHARE CLASSES WILL DIFFER PROSPECTUS AS OF THE DATE OF THIS REPORT
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES. FOR SERIES I AND SERIES II SHARES WAS
1.17% AND 1.42%, RESPECTIVELY. THE EXPENSE
THE PERFORMANCE DATA QUOTED REPRESENT RATIOS PRESENTED ABOVE MAY VARY FROM THE
PAST PERFORMANCE AND CANNOT GUARANTEE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS
COMPARABLE FUTURE RESULTS; CURRENT OF THIS REPORT THAT ARE BASED ON EXPENSES
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE INCURRED DURING THE PERIOD COVERED BY THIS
CONTACT YOUR VARIABLE PRODUCT ISSUER OR REPORT.
FINANCIAL ADVISOR FOR THE MOST RECENT
MONTH-END
AIM V.I. TECHNOLOGY FUND
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-96.77%
AEROSPACE & DEFENSE-0.16%
DigitalGlobe Inc.(b) 7,621 $ 146,323
================================================================================
APPLICATION SOFTWARE-6.02%
Adobe Systems Inc.(b) 87,957 2,489,183
- --------------------------------------------------------------------------------
NICE Systems Ltd.-ADR (Israel)(b) 86,862 2,003,907
- --------------------------------------------------------------------------------
Solera Holdings Inc.(b) 34,293 871,042
================================================================================
5,364,132
================================================================================
COMMUNICATIONS EQUIPMENT-12.40%
Brocade Communications Systems, Inc.(b)(c) 93,241 729,145
- --------------------------------------------------------------------------------
Cisco Systems, Inc.(b) 114,658 2,137,225
- --------------------------------------------------------------------------------
Harris Corp.(c) 15,093 428,037
- --------------------------------------------------------------------------------
Nokia Corp.-ADR (Finland)(c) 83,896 1,223,204
- --------------------------------------------------------------------------------
Plantronics, Inc. 61,728 1,167,277
- --------------------------------------------------------------------------------
Polycom, Inc.(b)(c) 34,024 689,666
- --------------------------------------------------------------------------------
QUALCOMM Inc. 64,596 2,919,739
- --------------------------------------------------------------------------------
Research In Motion Ltd. (Canada)(b)(c) 24,734 1,757,351
================================================================================
11,051,644
================================================================================
COMPUTER HARDWARE-11.20%
Apple Inc.(b) 25,656 3,654,184
- --------------------------------------------------------------------------------
Dell Inc.(b)(c) 68,746 943,883
- --------------------------------------------------------------------------------
Hewlett-Packard Co. 86,175 3,330,664
- --------------------------------------------------------------------------------
International Business Machines Corp. 15,082 1,574,862
- --------------------------------------------------------------------------------
Teradata Corp.(b) 20,611 482,916
================================================================================
9,986,509
================================================================================
COMPUTER STORAGE & PERIPHERALS-6.09%
EMC Corp.(b) 163,223 2,138,221
- --------------------------------------------------------------------------------
NetApp, Inc.(b) 24,768 488,425
- --------------------------------------------------------------------------------
Seagate Technology(b)(c) 79,906 835,817
- --------------------------------------------------------------------------------
Synaptics Inc.(b)(c) 26,011 1,005,325
- --------------------------------------------------------------------------------
Western Digital Corp.(b)(c) 36,176 958,664
================================================================================
5,426,452
================================================================================
DATA PROCESSING & OUTSOURCED SERVICES-3.19%
Alliance Data Systems Corp.(b)(c) 17,805 733,388
- --------------------------------------------------------------------------------
MasterCard, Inc.-Class A(c) 5,444 910,836
- --------------------------------------------------------------------------------
VeriFone Holdings, Inc.(b)(c) 62,067 466,123
- --------------------------------------------------------------------------------
Western Union Co. 44,744 733,801
================================================================================
2,844,148
================================================================================
ELECTRONIC COMPONENTS-1.74%
Corning Inc. 39,828 639,638
- --------------------------------------------------------------------------------
Dolby Laboratories Inc.-Class A(b)(c) 24,519 914,068
================================================================================
1,553,706
================================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-0.95%
Cogent Inc.(b)(c) 78,572 843,078
================================================================================
ELECTRONIC MANUFACTURING SERVICES-1.96%
Tyco Electronics Ltd. (Switzerland)(c) 93,923 1,746,029
================================================================================
HOME ENTERTAINMENT SOFTWARE-1.95%
Activision Blizzard, Inc.(b) 70,346 888,470
- --------------------------------------------------------------------------------
Nintendo Co., Ltd. (Japan) 2,300 632,904
- --------------------------------------------------------------------------------
Rosetta Stone, Inc.(b)(c) 7,983 219,053
================================================================================
1,740,427
================================================================================
INTEGRATED TELECOMMUNICATION SERVICES-1.58%
AT&T Inc.(c) 56,727 1,409,099
================================================================================
INTERNET RETAIL-0.66%
Amazon.com, Inc.(b)(c) 6,982 584,114
================================================================================
INTERNET SOFTWARE & SERVICES-8.38%
DivX, Inc.(b) 109,263 599,854
- --------------------------------------------------------------------------------
eBay Inc.(b)(c) 101,212 1,733,761
- --------------------------------------------------------------------------------
Google Inc.-Class A(b) 6,961 2,934,688
- --------------------------------------------------------------------------------
LogMeIn, Inc. 6,997 111,952
- --------------------------------------------------------------------------------
Omniture, Inc.(b)(c) 70,862 890,027
- --------------------------------------------------------------------------------
VeriSign, Inc.(b)(c) 23,788 439,602
- --------------------------------------------------------------------------------
Yahoo! Inc.(b)(c) 48,213 755,016
================================================================================
7,464,900
================================================================================
IT CONSULTING & OTHER SERVICES-4.85%
Amdocs Ltd.(b) 80,680 1,730,586
- --------------------------------------------------------------------------------
Cognizant Technology Solutions Corp.-Class A(b) 97,171 2,594,466
================================================================================
4,325,052
================================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-0.95%
BlueStream Ventures L.P. (Acquired 08/03/00-
06/13/08; Cost $3,149,655)(d)(e) -- 843,645
================================================================================
SEMICONDUCTOR EQUIPMENT-4.20%
Applied Materials, Inc.(c) 117,451 1,288,437
- --------------------------------------------------------------------------------
ASML Holding N.V.-New York Shares (Netherlands)(c) 55,400 1,199,410
- --------------------------------------------------------------------------------
Cymer, Inc.(b)(c) 42,267 1,256,598
================================================================================
3,744,445
================================================================================
SEMICONDUCTORS-14.68%
Intel Corp.(c) 165,129 2,732,885
- --------------------------------------------------------------------------------
Intersil Corp.-Class A(c) 92,323 1,160,500
- --------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. TECHNOLOGY FUND
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
SEMICONDUCTORS-(CONTINUED)
Marvell Technology Group Ltd.(b) 172,401 $ 2,006,748
- --------------------------------------------------------------------------------
Microsemi Corp.(b) 93,397 1,288,879
- --------------------------------------------------------------------------------
ON Semiconductor Corp.(b)(c) 249,165 1,709,272
- --------------------------------------------------------------------------------
Semtech Corp.(b)(c) 73,731 1,173,060
- --------------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co. Ltd.-ADR
(Taiwan)(c) 90,472 851,341
- --------------------------------------------------------------------------------
Texas Instruments Inc.(c) 39,027 831,275
- --------------------------------------------------------------------------------
Xilinx, Inc. 65,169 1,333,358
================================================================================
13,087,318
================================================================================
SYSTEMS SOFTWARE-13.60%
Ariba Inc.(b)(c) 143,342 1,410,485
- --------------------------------------------------------------------------------
Check Point Software Technologies Ltd. (Israel)(b) 106,565 2,501,081
- --------------------------------------------------------------------------------
Microsoft Corp. 148,828 3,537,642
- --------------------------------------------------------------------------------
Novell, Inc.(b) 235,866 1,068,473
- --------------------------------------------------------------------------------
Oracle Corp. 87,887 1,882,539
- --------------------------------------------------------------------------------
Red Hat, Inc.(b) 32,827 660,807
- --------------------------------------------------------------------------------
Symantec Corp.(b) 67,878 1,056,182
================================================================================
12,117,209
================================================================================
TECHNOLOGY DISTRIBUTORS-1.16%
Anixter International Inc.(b)(c) 27,428 1,031,018
================================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.05%
American Tower Corp.-Class A(b)(c) 29,796 939,468
- --------------------------------------------------------------------------------
Total Common Stocks & Other Equity Interests
(Cost $95,332,875) 86,248,716
================================================================================
<Caption>
PRINCIPAL
AMOUNT
U.S. TREASURY NOTES-0.26%
3.13%, 11/30/09 (Cost $227,464) $ 225,000 227,610
================================================================================
<Caption>
SHARES
MONEY MARKET FUNDS-2.70%
Liquid Assets Portfolio-Institutional Class(f) 1,202,600 1,202,600
- --------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(f) 1,202,600 1,202,600
================================================================================
Total Money Market Funds (Cost $2,405,200) 2,405,200
================================================================================
TOTAL INVESTMENTS (excluding investments purchased
with cash collateral from securities on
loan)-99.73% (Cost $97,965,539) 88,881,526
================================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES ON
LOAN
MONEY MARKET FUNDS-26.84%
Liquid Assets Portfolio-Institutional Class (Cost
$23,924,649)(f)(g) 23,924,649 23,924,649
================================================================================
TOTAL INVESTMENTS-126.57% (Cost $121,890,188) 112,806,175
================================================================================
OTHER ASSETS LESS LIABILITIES-(26.57)% (23,682,687)
================================================================================
NET ASSETS-100.00% $ 89,123,488
________________________________________________________________________________
================================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
</Table>
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) Non-income producing security.
(c) All or a portion of this security was out on loan at June 30, 2009.
(d) The Fund has a remaining commitment of $101,250 to purchase additional
interests in BlueStream Ventures L.P., which is subject to the terms of
the limited partnership agreement.
(e) Security purchased or received in a transaction exempt from registration
under the Securities Act of 1933, as amended. The security may be resold
pursuant to an exemption from registration under the 1933 Act, typically
to qualified institutional buyers. The value of this security at June 30,
2009 represented 0.95% of the Fund's Net Assets.
(f) The money market fund and the Fund are affiliated by having the same
investment advisor.
(g) The security has been segregated to satisfy the commitment to return the
cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 1J.
PORTFOLIO COMPOSITION
By sector, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
Information Technology 92.4%
- -------------------------------------------------------------------------
Telecommunication Services 2.6
- -------------------------------------------------------------------------
Financials 0.9
- -------------------------------------------------------------------------
Consumer Discretionary 0.7
- -------------------------------------------------------------------------
Industrials 0.2
- -------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities 3.2
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. TECHNOLOGY FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $95,560,339)* $ 86,476,326
- ---------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 26,329,849
=================================================================================
Total investments, at value (Cost $121,890,188) 112,806,175
=================================================================================
Foreign currencies, at value (Cost $29,044) 28,314
- ---------------------------------------------------------------------------------
Receivables for:
Investments sold 506,422
- ---------------------------------------------------------------------------------
Fund shares sold 43,774
- ---------------------------------------------------------------------------------
Dividends and Interest 43,616
- ---------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 22,006
=================================================================================
Total assets 113,450,307
_________________________________________________________________________________
=================================================================================
LIABILITIES:
Payables for:
Investments purchased 229,952
- ---------------------------------------------------------------------------------
Fund shares reacquired 39,142
- ---------------------------------------------------------------------------------
Collateral upon return of securities loaned 23,924,649
- ---------------------------------------------------------------------------------
Accrued fees to affiliates 55,423
- ---------------------------------------------------------------------------------
Accrued other operating expenses 41,627
- ---------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 36,026
=================================================================================
Total liabilities 24,326,819
=================================================================================
Net assets applicable to shares outstanding $ 89,123,488
_________________________________________________________________________________
=================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 298,786,799
- ---------------------------------------------------------------------------------
Undistributed net investment income (loss) (4,772)
- ---------------------------------------------------------------------------------
Undistributed net realized gain (loss) (200,573,795)
- ---------------------------------------------------------------------------------
Unrealized appreciation (depreciation) (9,084,744)
=================================================================================
$ 89,123,488
_________________________________________________________________________________
=================================================================================
NET ASSETS:
Series I $ 88,959,857
_________________________________________________________________________________
=================================================================================
Series II $ 163,631
_________________________________________________________________________________
=================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 8,701,870
_________________________________________________________________________________
=================================================================================
Series II 16,246
_________________________________________________________________________________
=================================================================================
Series I:
Net asset value per share $ 10.22
_________________________________________________________________________________
=================================================================================
Series II:
Net asset value per share $ 10.07
_________________________________________________________________________________
=================================================================================
</Table>
* At June 30, 2009, securities with an aggregate value of $23,841,422 were on
loan to brokers.
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $10,639) $ 357,404
- -------------------------------------------------------------------------------
Dividends from affiliated money market funds (includes securities
lending income of $71,944) 86,736
===============================================================================
Total investment income 444,140
===============================================================================
EXPENSES:
Advisory fees 283,156
- -------------------------------------------------------------------------------
Administrative services fees 117,647
- -------------------------------------------------------------------------------
Custodian fees 4,369
- -------------------------------------------------------------------------------
Distribution fees -- Series II 161
- -------------------------------------------------------------------------------
Transfer agent fees 18,038
- -------------------------------------------------------------------------------
Trustees' and officers' fees and benefits 11,142
- -------------------------------------------------------------------------------
Professional services fees 24,920
- -------------------------------------------------------------------------------
Other 8,526
===============================================================================
Total expenses 467,959
===============================================================================
Less: Fees waived and expenses reimbursed (2,399)
===============================================================================
Net expenses 465,560
===============================================================================
Net investment income (loss) (21,420)
===============================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (8,079,396)
- -------------------------------------------------------------------------------
Foreign currencies (164,254)
- -------------------------------------------------------------------------------
Futures contracts 41,488
===============================================================================
(8,202,162)
===============================================================================
Change in net unrealized appreciation of:
Investment securities 23,460,336
- -------------------------------------------------------------------------------
Foreign currencies 90,375
===============================================================================
23,550,711
===============================================================================
Net realized and unrealized gain 15,348,549
===============================================================================
Net increase in net assets resulting from operations $15,327,129
_______________________________________________________________________________
===============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. TECHNOLOGY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- ------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (21,420) $ 60,765
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) (8,202,162) (5,883,278)
- ------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 23,550,711 (57,731,412)
======================================================================================================
Net increase (decrease) in net assets resulting from operations 15,327,129 (63,553,925)
======================================================================================================
Share transactions-net:
Series I 2,112,812 (23,694,566)
- ------------------------------------------------------------------------------------------------------
Series II 22,281 41,258
======================================================================================================
Net increase (decrease) in net assets resulting from share
transactions 2,135,093 (23,653,308)
======================================================================================================
Net increase (decrease) in net assets 17,462,222 (87,207,233)
======================================================================================================
NET ASSETS:
Beginning of period 71,661,266 158,868,499
======================================================================================================
End of period (includes undistributed net investment income (loss) of
$(4,772) and $16,648, respectively) $89,123,488 $ 71,661,266
______________________________________________________________________________________________________
======================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. TECHNOLOGY FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Technology Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objective is capital growth.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date. Bond premiums
and discounts are amortized and/or accreted for financial reporting
purposes.
AIM V.I. TECHNOLOGY FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. OTHER RISKS -- The Fund's investments are concentrated in a comparatively
narrow segment of the economy. Consequently, the Fund may tend to be more
volatile than other mutual funds, and the value of the Fund's investments
may tend to rise and fall more rapidly.
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.
J. SECURITIES LENDING -- The Fund may lend portfolio securities having a
market value up to one-third of the Fund's total assets. Such loans are
secured by collateral equal to no less than the market value of the loaned
securities determined daily by the securities lending provider. Such
collateral will be cash or debt securities issued or guaranteed by the
U.S. Government or any of its sponsored agencies. Cash collateral received
in connection with these loans is invested in short-term money market
instruments or affiliated money market funds and is shown as such on the
Schedule of Investments. It is the Fund's policy to obtain additional
collateral from or return excess collateral to the borrower by the end of
the next business day, following the valuation date of the securities
loaned. Therefore, the value of the collateral held may be temporarily
less than the value of the securities on loan. Lending securities entails
a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase
the collateral accordingly, and the borrower fails to return the
securities. Upon the failure of the borrower to return the securities,
collateral may be liquidated and the securities may be purchased on the
open market to replace the loaned securities. The Fund could experience
delays and costs in gaining access to the collateral. The Fund bears the
risk of any deficiency in the amount of the collateral available for
return to the borrower due to any loss on the collateral invested.
Dividends received on cash collateral investments for securities lending
transactions, which are net of compensation to counterparties, is included
in Dividends from affiliates on the Statement of Operations. The aggregate
value of securities out on loan is shown as a footnote on the Statement of
Assets and Liabilities, if any.
K. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation.
AIM V.I. TECHNOLOGY FUND
Purchases and sales of portfolio securities (net of foreign taxes withheld
on disposition) and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for the portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. The combined results of changes in foreign exchange rates
and the fluctuation of market prices on investments (net of estimated
foreign tax withholding) are included with the net realized and unrealized
gain or loss from investments in the Statement of Operations. Reported net
realized foreign currency gains or losses arise from (i) sales of foreign
currencies, (ii) currency gains or losses realized between the trade and
settlement dates on securities transactions, and (iii) the difference
between the amounts of dividends, interest, and foreign withholding taxes
recorded on the Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign currency gains and
losses arise from changes in the fair values of assets and liabilities,
other than investments in securities at fiscal period end, resulting from
changes in exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
L. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed, realized gains (losses) are
recorded. Realized and unrealized gains (losses) on the contracts are
included in the Statement of Operations. The maximum risks associated with
foreign currency contracts include failure of the counterparty to meet the
terms of the contract and the value of the foreign currency changing
unfavorably. These risks may be in excess of the amounts reflected in the
Statement of Assets and Liabilities.
M. FUTURES CONTRACTS -- The Fund may enter into futures contracts to manage
exposure to interest rate and equity price movements and currency risks. A
futures contract is an agreement between two parties to purchase or sell a
specified underlying instrument for a fixed price at a future date. The
Fund currently invests only in exchange-traded futures and they are
standardized as to maturity date and underlying financial instrument.
Initial margin deposits required upon entering into futures contracts are
satisfied by the segregation of specific securities as collateral for the
account of the broker (the Fund's agent in acquiring the futures
position). During the period the futures contracts are open, changes in
the value of the contracts are recognized as unrealized gains or losses by
recalculating the value of the contracts on a daily basis. Subsequent or
variation margin payments are received or made depending upon whether
unrealized gains or losses are incurred. These amounts are reflected as
receivables or payables on the Statement of Assets and Liabilities. When
the contracts are closed or expire, the Fund recognizes a realized gain or
loss equal to the difference between the proceeds from, or cost of, the
closing transaction and the Fund's basis in the contract. The net realized
gain (loss) and the change in unrealized gain (loss) on futures contracts
held during the period is included on the Statement of Operations. The
primary risks associated with futures contracts are market risk and the
absence of a liquid secondary market. If the Fund were unable to liquidate
a futures contract and/or enter into an offsetting closing transaction,
the Fund would continue to be subject to market risk with respect to the
value of the contracts and continue to be required to maintain the margin
deposits on the futures contracts. Futures contracts have minimal
counterparty risk since the exchange's clearinghouse, as counterparty to
all exchange traded futures, guarantees the futures against default. Risks
may exceed amounts recognized in the Statement of Assets and Liabilities.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS 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%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 1.30% and Series
II shares to 1.45% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers reflected above: (i)
interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary
items;
AIM V.I. TECHNOLOGY FUND
(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, in addition to
the expense reimbursement arrangement with Invesco Ltd. ("Invesco") described
more fully below, the only 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. These credits are used to pay certain expenses incurred by the Fund. To
the extent that the annualized expense ratio does not exceed the expense
limitation, the Advisor will retain its ability to be reimbursed for such fee
waivers or reimbursements prior to the end of each fiscal year.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash (excluding investments of cash
collateral from securities lending) in such affiliated money market funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$2,373 and reimbursed class level expenses of $26 for Series II shares.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $24,794 for accounting and fund
administrative services and reimbursed $92,853 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- ----------------------------------------------------------------------------------------------------------------------
Equity Securities $111,102,016 $632,904 $843,645 $112,578,565
- ----------------------------------------------------------------------------------------------------------------------
U.S. Treasury Securities -- 227,610 -- 227,610
======================================================================================================================
Total Investments $111,102,016 $860,514 $843,645 $112,806,175
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
AIM V.I. TECHNOLOGY FUND
NOTE 4--DERIVATIVE INSTRUMENTS
Effective with the beginning of the Fund's fiscal year, the Fund has adopted the
provisions of FASB Statement No. 161, Disclosures about Derivative Instruments
and Hedging Activities. The standard is intended to improve financial reporting
about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an
entity's financial position and financial performance. The adoption of this
provision has no impact on the results of operations reported in the financial
statements.
EFFECT OF DERIVATIVE INSTRUMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009
The table below summarizes the gains (losses) on derivative instruments,
detailed by primary risk exposure, recognized in earnings during the period:
<Table>
<Caption>
LOCATION OF GAIN (LOSS) ON
STATEMENT OF OPERATIONS
--------------------------
FUTURES*
- -------------------------------------------------------------------------------
Realized Gain (Loss)
Index risk $41,488
_______________________________________________________________________________
===============================================================================
</Table>
* The average value outstanding of futures contracts during the period was
$219,677.
NOTE 5--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $1,514
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 6--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the custodian bank
can be compensated by earning the additional interest; or (ii) compensate by
paying the custodian bank at a rate agreed upon by the custodian bank and
Invesco Aim, not to exceed the contractually agreed upon rate.
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions. Under these limitation rules, the Fund is limited to utilizing
$189,666,156 of capital loss carryforward in the fiscal year ending December 31,
2009.
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
December 31, 2009 $153,547,080
- -----------------------------------------------------------------------------------------------
December 31, 2010 33,793,499
- -----------------------------------------------------------------------------------------------
December 31, 2016 2,325,577
===============================================================================================
Total capital loss carryforward $189,666,156
_______________________________________________________________________________________________
===============================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
AIM V.I. TECHNOLOGY FUND
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $22,678,656 and
$20,514,889, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 6,508,627
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (14,146,121)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $ (7,637,494)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $120,443,669.
</Table>
NOTE 9--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- ------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 1,441,163 $ 13,462,255 1,720,789 $ 21,453,022
- ------------------------------------------------------------------------------------------------------------------------
Series II 4,624 42,720 8,278 74,875
========================================================================================================================
Reacquired:
Series I (1,278,731) (11,349,443) (3,692,517) (45,147,588)
- ------------------------------------------------------------------------------------------------------------------------
Series II (2,280) (20,439) (3,056) (33,617)
========================================================================================================================
Net increase (decrease) in share activity 164,776 $ 2,135,093 (1,966,506) $(23,653,308)
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 62% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and/or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
AIM V.I. TECHNOLOGY FUND
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
NET ASSET NET (LOSSES)
VALUE, INVESTMENT ON SECURITIES TOTAL FROM NET ASSET NET ASSETS,
BEGINNING INCOME (BOTH REALIZED INVESTMENT VALUE, END TOTAL END OF PERIOD
OF PERIOD (LOSS) AND UNREALIZED) OPERATIONS OF PERIOD RETURN(a) (000S OMITTED)
- --------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $ 8.38 $(0.00)(c) $ 1.84 $ 1.84 $10.22 21.96% $ 88,960
Year ended 12/31/08 15.10 0.01(c) (6.73) (6.72) 8.38 (44.50) 71,546
Year ended 12/31/07 14.02 (0.06) 1.14 1.08 15.10 7.70 158,739
Year ended 12/31/06 12.69 (0.08) 1.41 1.33 14.02 10.48 173,321
Year ended 12/31/05 12.42 (0.07) 0.34 0.27 12.69 2.17 190,700
Year ended 12/31/04 11.87 (0.04)(e) 0.59 0.55 12.42 4.63 200,556
- --------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 8.26 (0.01)(c) 1.82 1.81 10.07 21.91 164
Year ended 12/31/08 14.95 (0.02)(c) (6.67) (6.69) 8.26 (44.75) 115
Year ended 12/31/07 13.91 (0.10) 1.14 1.04 14.95 7.48 130
Year ended 12/31/06 12.62 (0.12) 1.41 1.29 13.91 10.22 134
Year ended 12/31/05 12.39 (0.11) 0.34 0.23 12.62 1.86 142
Year ended 12/31/04(f) 11.09 (0.05)(e) 1.35 1.30 12.39 11.72 166
____________________________________________________________________________________________________________________
====================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS)
AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
ABSORBED ABSORBED NET ASSETS TURNOVER(b)
- ----------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 1.23%(d) 1.24%(d) (0.06)%(d) 28%
Year ended 12/31/08 1.15 1.16 0.05 81
Year ended 12/31/07 1.10 1.10 (0.38) 59
Year ended 12/31/06 1.12 1.12 (0.54) 116
Year ended 12/31/05 1.12 1.12 (0.60) 114
Year ended 12/31/04 1.15 1.15 (0.39)(e) 137
- ----------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 1.44(d) 1.49(d) (0.27)(d) 28
Year ended 12/31/08 1.40 1.41 (0.20) 81
Year ended 12/31/07 1.35 1.35 (0.63) 59
Year ended 12/31/06 1.37 1.37 (0.79) 116
Year ended 12/31/05 1.37 1.37 (0.85) 114
Year ended 12/31/04(f) 1.40(g) 1.40(g) (0.64)(e)(g) 137
________________________________________________________________________________________
========================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Total returns are not annualized for periods less than one
year, if applicable and do not reflect charges assessed in connection with
a variable product, which if included would reduce total returns.
(b) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(c) Calculated using average shares outstanding.
(d) Ratios are annualized and based on average daily net assets (000's omitted)
of $76,004 and $130 for Series I and Series II shares, respectively.
(e) Net investment income (loss) per share and the ratio of net investment
income (loss) to average net assets include a special cash dividend
received of $3.00 per share owned of Microsoft Corp. on December 2, 2004.
Net investment income (loss) per share and the ratio of net investment
income (loss) to average net assets excluding the special dividend are
$(0.09) and (0.82)% and $(0.10) and (1.07)% for Series I and Series II
shares, respectively.
(f) Commencement date of April 30, 2004.
(g) Annualized.
AIM V.I. TECHNOLOGY FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,219.60 $6.77 $1,018.70 $6.16 1.23%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,219.10 7.92 1,017.65 7.20 1.44
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. TECHNOLOGY FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM In addition to their meetings particular factor that was controlling.
Variable Insurance Funds is required under throughout the year, the Sub-Committees Each Trustee may have evaluated the
the Investment Company Act of 1940 to meet at designated contract renewal information provided differently from
approve annually the renewal of the AIM meetings each year to conduct an in-depth another Trustee and attributed different
V.I. Technology Fund (the Fund) investment review of the performance, fees, expenses weight to the various factors. The
advisory agreement with Invesco Aim and other matters related to their Trustees recognized that the advisory
Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract arrangements and resulting advisory fees
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive for the Fund and the other AIM Funds are
for Mutual Funds (the sub-advisory comparative performance and fee data the result of years of review and
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an negotiation between the Trustees and
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Invesco Aim, that the Trustees may focus
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and to a greater extent on certain aspects of
Limited, Invesco Australia Limited, supervision of the Senior Officer who also these arrangements in some years than in
Invesco Global Asset Management (N.A.), prepares a separate analysis of this others, and that the Trustees'
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each Sub- deliberations and conclusions in a
Institutional (N.A.), Inc., Invesco Senior Committee then makes recommendations to particular year may be based in part on
Secured Management, Inc. and Invesco the Investments Committee regarding the their deliberations and conclusions
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. regarding these same arrangements
Sub-Advisers). During contract renewal The Investments Committee considers each throughout the year and in prior years.
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes
Board as a whole, and the disinterested or its own recommendations regarding the fees The discussion below serves as a
"independent" Trustees voting separately, and expenses of the AIM Funds to the full summary of the Senior Officer's
approved the continuance of the Fund's Board. The Investments Committee also independent written evaluation with
investment advisory agreement and the considers each Sub-Committee's respect to the Fund's investment advisory
sub-advisory contracts for another year, recommendations in making its annual agreement as well as a discussion of the
effective July 1, 2009. In doing so, the recommendation to the Board whether to material factors and related conclusions
Board determined that the Fund's approve the continuance of each AIM Fund's that formed the basis for the Board's
investment advisory agreement and the investment advisory agreement and approval of the Fund's investment advisory
sub-advisory contracts are in the best sub-advisory contracts for another year. agreement and sub-advisory contracts.
interests of the Fund and its shareholders Unless otherwise stated, information set
and that the compensation to Invesco Aim The independent Trustees met separately forth below is as of June 17, 2009, and
and the Affiliated Sub-Advisers under the during their evaluation of the Fund's does not reflect any changes that may have
Fund's investment advisory agreement and investment advisory agreement and occurred since that date, including but
sub-advisory contracts is fair and sub-advisory contracts with independent not limited to changes to the Fund's
reasonable. legal counsel. The independent Trustees performance, advisory fees, expense
were also assisted in their annual limitations and/or fee waivers.
THE BOARD'S FUND EVALUATION PROCESS evaluation of the Fund's investment
advisory agreement by the Senior Officer. FACTORS AND CONCLUSIONS AND SUMMARY OF
The Board's Investments Committee has One responsibility of the Senior Officer INDEPENDENT WRITTEN FEE EVALUATION
established three Sub-Committees that are is to manage the process by which the AIM
responsible for overseeing the management Funds' proposed management fees are A. Nature, Extent and Quality of
of a number of the series portfolios of negotiated during the annual contract Services Provided by Invesco Aim
the AIM Funds. This Sub-Committee renewal process to ensure that they are
structure permits the Trustees to focus on negotiated in a manner that is at arms' The Board reviewed the advisory services
the performance of the AIM Funds that have length and reasonable. Accordingly, the provided to the Fund by Invesco Aim under
been assigned to them. The Sub-Committees Senior Officer must either supervise a the Fund's investment advisory agreement,
meet throughout the year to review the competitive bidding process or prepare an the performance of Invesco Aim in
performance of their assigned funds, and independent written evaluation. The Senior providing these services, and the
the Sub-Committees review monthly and Officer recommended that an independent credentials and experience of the officers
quarterly comparative performance written evaluation be provided and, at the and employees of Invesco Aim who provide
information and periodic asset flow data direction of the Board, prepared an these services. The Board's review of the
for their assigned funds. These materials independent written evaluation. qualifications of Invesco Aim to provide
are prepared under the direction and these services included the Board's
supervision of the independent Senior During the annual contract renewal consideration of Invesco Aim's portfolio
Officer, an officer of the AIM Funds who process, the Board considered the factors and product review process, various back
reports directly to the independent discussed below in evaluating the fairness office support functions provided by
Trustees. Over the course of each year, and reasonableness of the Fund's Invesco Aim and its affiliates, and
the Sub-Committees meet with portfolio investment advisory agreement and Invesco Aim's equity and fixed income
managers for their assigned funds and sub-advisory contracts. The Board trading operations. The Board concluded
other members of management and review considered all of the information provided that the nature, extent and quality of the
with these individuals the performance, to them, including information provided at advisory services provided to the Fund by
investment objective(s), policies, their meetings throughout the year as part Invesco Aim are appropriate and that
strategies and limitations of these funds. of their ongoing oversight of the Fund, Invesco Aim currently is providing
and did not identify any satisfactory advisory services in
accordance with the terms of the Fund's
investment advisory
AIM V.I. TECHNOLOGY FUND continued
agreement. In addition, based on their whether to approve the investment advisory not reflect the market downturn that
ongoing meetings throughout the year with agreement. The Board did not view fund occurred in the fourth quarter of 2008.
the Fund's portfolio manager or managers, performance as a relevant factor in
the Board concluded that these individuals considering whether to approve the The Board also compared the Fund's
are competent and able to continue to sub-advisory contracts for the Fund, as no effective fee rate (the advisory fee after
carry out their responsibilities under the Affiliated Sub-Adviser currently manages any advisory fee waivers and before any
Fund's investment advisory agreement. assets of the Fund. expense limitations/waivers) to the
advisory fee rates of other domestic
In determining whether to continue the The Board compared the Fund's clients of Invesco Aim and its affiliates
Fund's investment advisory agreement, the performance during the past one, three and with investment strategies comparable to
Board considered the prior relationship five calendar years to the performance of those of the Fund, including one mutual
between Invesco Aim and the Fund, as well all funds in the Lipper performance fund advised by Invesco Aim. The Board
as the Board's knowledge of Invesco Aim's universe that are not managed by Invesco noted that the Fund's rate was above the
operations, and concluded that it is Aim or an Affiliated Sub-Adviser and effective fee rate for the mutual fund.
beneficial to maintain the current against the Lipper VA Underlying Funds - The Board also noted that an Invesco Aim
relationship, in part, because of such Science & Technology Index. The Board affiliate advises an off-shore fund with
knowledge. The Board also considered the noted that the Fund's performance was in comparable investment strategies.
steps that Invesco Aim and its affiliates the third quintile of its performance
continue to take to improve the quality universe for the one year period and in The Board noted that Invesco Aim has
and efficiency of the services they the fourth quintile for the three and five contractually agreed to waive fees and/or
provide to the AIM Funds in the areas of year periods (the first quintile being the limit expenses of the Fund through at
investment performance, product line best performing funds and the fifth least April 30, 2010 in an amount
diversification, distribution, fund quintile being the worst performing necessary to limit total annual operating
operations, shareholder services and funds). The Board noted that the Fund's expenses to a specified percentage of
compliance. The Board concluded that the performance was above the performance of average daily net assets for each class of
quality and efficiency of the services the Index for the one year period and the Fund. The Board noted that at the
Invesco Aim and its affiliates provide to below the performance of the Index for the current expense ratio for the Fund, this
the AIM Funds in each of these areas three and five year periods. The Board expense waiver does not have any impact.
support the Board's approval of the noted that Invesco Aim made changes to the
continuance of the Fund's investment Fund's portfolio management team in 2008 The Board also considered the services
advisory agreement. and added a co-manager in 2009. Although provided by the Affiliated Sub-Advisers
the independent written evaluation of the pursuant to the sub-advisory contracts and
B. Nature, Extent and Quality of Fund's Senior Officer only considered Fund the services provided by Invesco Aim
Services Provided by Affiliated performance through the most recent pursuant to the Fund's advisory agreement,
Sub-Advisers calendar year, the Board also reviewed as well as the allocation of fees between
more recent Fund performance and this Invesco Aim and the Affiliated
The Board reviewed the services provided review did not change their conclusions. Sub-Advisers pursuant to the sub-advisory
by the Affiliated Sub-Advisers under the The Board noted that, in response to the contracts. The Board noted that the
sub-advisory contracts and the credentials Board's focus on fund performance, Invesco sub-advisory fees have no direct effect on
and experience of the officers and Aim has taken a number of actions intended the Fund or its shareholders, as they are
employees of the Affiliated Sub-Advisers to improve the investment process for the paid by Invesco Aim to the Affiliated
who provide these services. The Board funds. Sub-Advisers, and that Invesco Aim and the
concluded that the nature, extent and Affiliated Sub-Advisers are affiliates.
quality of the services provided by the D. Advisory and Sub-Advisory Fees and
Affiliated Sub-Advisers are appropriate. Fee Waivers After taking account of the Fund's
The Board noted that the Affiliated contractual advisory fee rate, the
Sub-Advisers, which have offices and The Board compared the Fund's contractual contractual sub-advisory fee rate, the
personnel that are geographically advisory fee rate to the contractual comparative advisory fee information and
dispersed in financial centers around the advisory fee rates of funds in the Fund's other relevant factors, the Board
world, can provide research and other Lipper expense group that are not managed concluded that the Fund's advisory and
information and make recommendations on by Invesco Aim or an Affiliated sub-advisory fees are fair and reasonable.
the markets and economies of various Sub-Adviser, at a common asset level. The
countries and securities of companies Board noted that the Fund's contractual E. Economies of Scale and Breakpoints
located in such countries or on various advisory fee rate was below the median
types of investments and investment contractual advisory fee rate of funds in The Board considered the extent to which
techniques. The Board concluded that the its expense group. The Board also reviewed there are economies of scale in the
sub-advisory contracts benefit the Fund the methodology used by Lipper in provision of advisory services to the
and its shareholders by permitting Invesco determining contractual fee rates, which Fund. The Board also considered whether
Aim to utilize the additional resources includes using audited financial data from the Fund benefits from such economies of
and talent of the Affiliated Sub-Advisers the most recent annual report of each fund scale through contractual breakpoints in
in managing the Fund. in the expense group that was publicly the Fund's advisory fee schedule. The
available as of the end of the past Board noted that the Fund's contractual
C. Fund Performance calendar year. The Board noted that some advisory fee schedule includes seven
comparative data was at least one year old breakpoints, but that due to the Fund's
The Board considered fund performance as a and that other data did asset level at the end of the past
relevant factor in considering calendar year, the Fund is not currently
benefiting from the breakpoints. The Board
concluded that the Fund's advisory fees
AIM V.I. TECHNOLOGY FUND continued
would appropriately reflect economies of tive, transfer agency and distribution
scale at higher asset levels. The Board services to the Fund. The Board considered
also noted that the Fund shares directly the performance of Invesco Aim and its
in economies of scale through lower fees affiliates in providing these services and
charged by third party service providers the organizational structure employed by
based on the combined size of all of the Invesco Aim and its affiliates to provide
AIM Funds and affiliates. these services. The Board also considered
that these services are provided to the
F. Profitability and Financial Fund pursuant to written contracts that
Resources are reviewed and approved on an annual
basis by the Board. The Board concluded
The Board reviewed information from that Invesco Aim and its affiliates are
Invesco Aim concerning the costs of the providing these services in a satisfactory
advisory and other services that Invesco manner and in accordance with the terms of
Aim and its affiliates provide to the Fund their contracts, and are qualified to
and the profitability of Invesco Aim and continue to provide these services to the
its affiliates in providing these Fund.
services. The Board also reviewed
information concerning the financial The Board considered the benefits
condition of Invesco Aim and its realized by Invesco Aim and the Affiliated
affiliates. The Board reviewed with Sub-Advisers as a result of portfolio
Invesco Aim the methodology used to brokerage transactions executed through
prepare the profitability information. The "soft dollar" arrangements. The Board
Board considered the overall profitability noted that soft dollar arrangements shift
of Invesco Ltd., the ultimate parent of the payment obligation for research and
Invesco Aim and the Affiliated execution services from Invesco Aim and
Sub-Advisers, and of Invesco Aim, as well the Affiliated Sub-Advisers to the funds
as the profitability of Invesco Aim in and therefore may reduce Invesco Aim's and
connection with managing the Fund. The the Affiliated Sub-Advisers' expenses. The
Board noted that Invesco Aim continues to Board concluded that Invesco Aim's and the
operate at a net profit, although the Affiliated Sub-Advisers' soft dollar
reduction of assets under management as a arrangements are appropriate. The Board
result of market movements and the also concluded that, based on their review
increase in voluntary fee waivers for and representations made by the Chief
affiliated money market funds have reduced Compliance Officer of Invesco Aim, these
the profitability of Invesco Aim and its arrangements are consistent with
affiliates. The Board concluded that the regulatory requirements.
Fund's fees are fair and reasonable, and
that the level of profits realized by The Board considered the fact that the
Invesco Aim and its affiliates from Fund's uninvested cash and cash collateral
providing services to the Fund is not from any securities lending arrangements
excessive in light of the nature, quality may be invested in money market funds
and extent of the services provided. The advised by Invesco Aim pursuant to
Board considered whether Invesco Aim is procedures approved by the Board. The
financially sound and has the resources Board noted that Invesco Aim will receive
necessary to perform its obligations under advisory fees from these affiliated money
the Fund's investment advisory agreement, market funds attributable to such
and concluded that Invesco Aim has the investments, although Invesco Aim has
financial resources necessary to fulfill contractually agreed to waive through at
these obligations. The Board also least June 30, 2010, the advisory fees
considered whether each Affiliated payable by the Fund in an amount equal to
Sub-Adviser is financially sound and has 100% of the net advisory fee Invesco Aim
the resources necessary to perform its receives from the affiliated money market
obligations under the sub-advisory funds with respect to the Fund's
contracts, and concluded that each investment in the affiliated money market
Affiliated Sub-Adviser has the financial funds of uninvested cash, but not cash
resources necessary to fulfill these collateral. The Board concluded that the
obligations. Fund's investment of uninvested cash and
cash collateral from any securities
G. Collateral Benefits to Invesco Aim lending arrangements in the affiliated
and its Affiliates money market funds is in the best
interests of the Fund and its
The Board considered various other shareholders.
benefits received by Invesco Aim and its
affiliates resulting from Invesco Aim's
relationship with the Fund, including the
fees received by Invesco Aim and its
affiliates for their provision of
administra-
AIM V.I. TECHNOLOGY FUND
[INVESCO AIM LOGO] AIM V.I. UTILITIES FUND
--SERVICE MARK-- Semiannual Report to Shareholders o June 30, 2009
[MOUNTAIN GRAPHIC]
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund
files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund's Form N-Q filings are available on the SEC
Web site, sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by
calling 202 942 8090 or 800 732 0330, or by electronic request at the following E-mail address: publicinfo@sec.gov.
The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund's most recent portfolio holdings, as filed on Form N-Q, have
also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies ("variable
products") that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, from our Client Services department at 800 410 4246 or on the Invesco Aim Web site,
invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site,
sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2009, is
available at our Web site. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting
Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. will be merged into
Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc. Additional information
will be posted at invescoaim.com on or about the end of the fourth quarter of 2009.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS AND VARIABLE PRODUCT PROSPECTUS, WHICH CONTAIN
MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ EACH CAREFULLY BEFORE INVESTING.
Invesco Aim Distributors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
FUND PERFORMANCE
======================================================================================= ==========================================
PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/09
FUND VS. INDEXES
SERIES I SHARES
Cumulative total returns, 12/31/08 to 6/30/09, excluding variable product issuer Inception (12/30/94) 5.72%
charges. If variable product issuer charges were included, returns would be lower. 10 Years 0.52
5 Years 7.61
Series I Shares 0.22% 1 Year -30.10
Series II Shares 0.08
S&P 500 Index(Triangle) (Broad Market Index) 3.19 SERIES II SHARES
Lipper VUF Utility Funds Category Average(Triangle) (Peer Group) 3.72 10 Years 0.27%
5 Years 7.34
(Triangle) Lipper Inc. 1 Year -30.29
==========================================
The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index
covering all major areas of the U.S. economy. It is not the 500 largest companies, but FIGURES GIVEN REPRESENT THE FUND AND ARE
rather the most widely held 500 companies chosen with respect to market size, liquidity NOT INTENDED TO REFLECT ACTUAL VARIABLE
and their industry. PRODUCT VALUES. THEY DO NOT REFLECT SALES
CHARGES, EXPENSES AND FEES ASSESSED IN
The LIPPER VUF UTILITY FUNDS CATEGORY AVERAGE represents an average of all of the CONNECTION WITH A VARIABLE PRODUCT. SALES
variable insurance underlying funds in the Lipper Utility Funds category. These funds CHARGES, EXPENSES AND FEES, WHICH ARE
invest primarily in the equity securities of domestic and foreign utilities companies. DETERMINED BY THE VARIABLE PRODUCT
ISSUERS, WILL VARY AND WILL LOWER THE
The Fund is not managed to track the performance of any particular index, including TOTAL RETURN.
the indexes defined here, and consequently, the performance of the Fund may deviate
significantly from the performance of the indexes. THE MOST RECENT MONTH-END PERFORMANCE
DATA AT THE FUND LEVEL, EXCLUDING VARIABLE
A direct investment cannot be made in an index. Unless otherwise indicated, index PRODUCT CHARGES, IS AVAILABLE ON THE
results include reinvested dividends, and they do not reflect sales charges. INVESCO AIM AUTOMATED INFORMATION LINE,
Performance of the peer group reflects fund expenses; performance of a market index 866 702 4402. AS MENTIONED ABOVE, FOR THE
does not. MOST RECENT MONTH-END PERFORMANCE
======================================================================================= INCLUDING VARIABLE PRODUCT CHARGES, PLEASE
CONTACT YOUR VARIABLE PRODUCT ISSUER OR
SERIES II SHARES' INCEPTION DATE IS IN NET ASSET VALUE. INVESTMENT RETURN AND FINANCIAL ADVISOR.
APRIL 30, 2004. RETURNS SINCE THAT DATE PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU
ARE HISTORICAL. ALL OTHER RETURNS ARE THE MAY HAVE A GAIN OR LOSS WHEN YOU SELL
BLENDED RETURNS OF THE HISTORICAL SHARES.
PERFORMANCE OF SERIES II SHARES SINCE 1 Total annual operating expenses less
THEIR INCEPTION AND THE RESTATED THE NET ANNUAL FUND OPERATING EXPENSE any contractual fee waivers and/or
HISTORICAL PERFORMANCE OF SERIES I SHARES RATIO SET FORTH IN THE MOST RECENT FUND expense reimbursements by the advisor
(FOR PERIODS PRIOR TO INCEPTION OF SERIES PROSPECTUS AS OF THE DATE OF THIS REPORT in effect through at least April 30,
II SHARES) ADJUSTED TO REFLECT THE RULE FOR SERIES I AND SERIES II SHARES WAS 2010. See current prospectus for more
12B-1 FEES APPLICABLE TO SERIES II SHARES. 0.93% AND 1.18%, RESPECTIVELY.(1,2) THE information.
THE INCEPTION DATE OF SERIES I SHARES IS TOTAL ANNUAL FUND OPERATING EXPENSE RATIO
DECEMBER 30, 1994. SET FORTH IN THE MOST RECENT FUND 2 Total annual operating expenses less
PROSPECTUS AS OF THE DATE OF THIS REPORT contractual fee waivers by the advisor
THE PERFORMANCE OF THE FUND'S SERIES I FOR SERIES I AND SERIES II SHARES WAS in effect through at least June 30,
AND SERIES II SHARE CLASSES WILL DIFFER 0.96% AND 1.21%, RESPECTIVELY. THE EXPENSE 2010. See current prospectus for more
PRIMARILY DUE TO DIFFERENT CLASS EXPENSES. RATIOS PRESENTED ABOVE MAY VARY FROM THE information.
EXPENSE RATIOS PRESENTED IN OTHER SECTIONS
THE PERFORMANCE DATA QUOTED REPRESENT OF THIS REPORT THAT ARE BASED ON EXPENSES
PAST PERFORMANCE AND CANNOT GUARANTEE INCURRED DURING THE PERIOD COVERED BY THIS
COMPARABLE FUTURE RESULTS; CURRENT REPORT.
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE
CONTACT YOUR VARIABLE PRODUCT ISSUER OR AIM V.I. UTILITIES FUND, A SERIES
FINANCIAL ADVISOR FOR THE MOST RECENT PORTFOLIO OF AIM VARIABLE INSURANCE FUNDS,
MONTH-END VARIABLE PRODUCT PERFORMANCE. IS CURRENTLY OFFERED THROUGH INSURANCE
PERFORMANCE FIGURES REFLECT FUND EXPENSES, COMPANIES ISSUING VARIABLE PRODUCTS. YOU
REINVESTED DISTRIBUTIONS AND CHANGES CANNOT PURCHASE SHARES OF THE FUND
DIRECTLY. PERFORMANCE
AIM V.I. Utilities Fund
SCHEDULE OF INVESTMENTS(a)
June 30, 2009
(Unaudited)
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------
COMMON STOCKS-95.88%
ELECTRIC UTILITIES-42.74%
American Electric Power Co., Inc. 73,737 $ 2,130,262
- -----------------------------------------------------------------------------
Duke Energy Corp. 136,403 1,990,120
- -----------------------------------------------------------------------------
E.ON AG (Germany) 59,243 2,102,046
- -----------------------------------------------------------------------------
Edison International 84,880 2,670,325
- -----------------------------------------------------------------------------
Entergy Corp. 44,654 3,461,578
- -----------------------------------------------------------------------------
Exelon Corp. 70,046 3,587,056
- -----------------------------------------------------------------------------
FirstEnergy Corp. 60,196 2,332,595
- -----------------------------------------------------------------------------
FPL Group, Inc. 73,686 4,189,786
- -----------------------------------------------------------------------------
Pepco Holdings, Inc. 113,103 1,520,104
- -----------------------------------------------------------------------------
Portland General Electric Co. 110,188 2,146,462
- -----------------------------------------------------------------------------
PPL Corp. 76,241 2,512,904
- -----------------------------------------------------------------------------
Southern Co. 42,801 1,333,679
=============================================================================
29,976,917
=============================================================================
GAS UTILITIES-11.86%
AGL Resources Inc. 78,357 2,491,753
- -----------------------------------------------------------------------------
EQT Corp. 69,359 2,421,323
- -----------------------------------------------------------------------------
ONEOK, Inc. 63,760 1,880,282
- -----------------------------------------------------------------------------
Questar Corp. 31,890 990,503
- -----------------------------------------------------------------------------
UGI Corp. 21,041 536,335
=============================================================================
8,320,196
=============================================================================
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS-3.58%
NRG Energy, Inc.(b) 96,792 2,512,720
=============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-5.92%
AT&T Inc. 78,243 1,943,556
- -----------------------------------------------------------------------------
Verizon Communications Inc. 71,893 2,209,272
=============================================================================
4,152,828
=============================================================================
MULTI-UTILITIES-26.38%
CMS Energy Corp. 212,303 2,564,620
- -----------------------------------------------------------------------------
Dominion Resources, Inc. 83,819 2,801,231
- -----------------------------------------------------------------------------
National Grid PLC (United Kingdom) 183,123 1,651,297
- -----------------------------------------------------------------------------
PG&E Corp. 77,412 2,975,717
- -----------------------------------------------------------------------------
Public Service Enterprise Group Inc. 69,762 2,276,334
- -----------------------------------------------------------------------------
Sempra Energy 46,781 2,321,741
- -----------------------------------------------------------------------------
Wisconsin Energy Corp. 34,282 1,395,620
- -----------------------------------------------------------------------------
Xcel Energy, Inc. 136,592 2,514,659
=============================================================================
18,501,219
=============================================================================
OIL & GAS STORAGE & TRANSPORTATION-5.40%
El Paso Corp. 141,084 1,302,206
- -----------------------------------------------------------------------------
Williams Cos., Inc. (The) 158,902 2,480,460
=============================================================================
3,782,666
=============================================================================
Total Common Stocks (Cost $63,708,069) 67,246,546
=============================================================================
MONEY MARKET FUNDS-3.78%
Liquid Assets Portfolio-Institutional Class(c) 1,326,739 1,326,739
- -----------------------------------------------------------------------------
Premier Portfolio-Institutional Class(c) 1,326,739 1,326,739
=============================================================================
Total Money Market Funds (Cost $2,653,478) 2,653,478
=============================================================================
TOTAL INVESTMENTS-99.66% (Cost $66,361,547) 69,900,024
=============================================================================
OTHER ASSETS LESS LIABILITIES-0.34% 235,620
=============================================================================
NET ASSETS-100.00% $70,135,644
_____________________________________________________________________________
=============================================================================
</Table>
Investment Abbreviations:
Notes to Schedule of Investments:
(a) Industry and/or sector classifications used in this report are generally
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of MSCI Inc.
and Standard & Poor's.
(b) Non-income producing security.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
PORTFOLIO COMPOSITION
By sector, based on Net Assets
as of June 30, 2009
<Table>
- -------------------------------------------------------------------------
Utilities 84.6%
- -------------------------------------------------------------------------
Telecommunication Services 5.9
- -------------------------------------------------------------------------
Energy 5.4
- -------------------------------------------------------------------------
Money Market Funds Plus Other Assets Less Liabilities 4.1
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. UTILITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
<Table>
ASSETS:
Investments, at value (Cost $63,708,069) $67,246,546
- -------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 2,653,478
===============================================================================
Total investments, at value (Cost $66,361,547) 69,900,024
===============================================================================
Receivables for:
Fund shares sold 58,816
- -------------------------------------------------------------------------------
Dividends 321,416
- -------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 27,669
===============================================================================
Total assets 70,307,925
_______________________________________________________________________________
===============================================================================
LIABILITIES:
Payables for:
Fund shares reacquired 56,962
- -------------------------------------------------------------------------------
Accrued fees to affiliates 40,087
- -------------------------------------------------------------------------------
Accrued other operating expenses 36,132
- -------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 39,100
===============================================================================
Total liabilities 172,281
===============================================================================
Net assets applicable to shares outstanding $70,135,644
_______________________________________________________________________________
===============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $68,296,649
- -------------------------------------------------------------------------------
Undistributed net investment income 4,478,447
- -------------------------------------------------------------------------------
Undistributed net realized gain (loss) (6,184,016)
- -------------------------------------------------------------------------------
Unrealized appreciation 3,544,564
===============================================================================
$70,135,644
_______________________________________________________________________________
===============================================================================
NET ASSETS:
Series I $68,564,965
_______________________________________________________________________________
===============================================================================
Series II $ 1,570,679
_______________________________________________________________________________
===============================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Series I 5,113,657
_______________________________________________________________________________
===============================================================================
Series II 118,042
_______________________________________________________________________________
===============================================================================
Series I:
Net asset value per share $ 13.41
_______________________________________________________________________________
===============================================================================
Series II:
Net asset value per share $ 13.31
_______________________________________________________________________________
===============================================================================
</Table>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding
taxes of $17,771) $ 1,646,030
- ------------------------------------------------------
Dividends from affiliated money market
funds 4,903
======================================================
Total investment income 1,650,933
======================================================
EXPENSES:
Advisory fees 210,988
- ------------------------------------------------------
Administrative services fees 91,629
- ------------------------------------------------------
Custodian fees 3,869
- ------------------------------------------------------
Distribution fees -- Series II 1,878
- ------------------------------------------------------
Transfer agent fees 9,616
- ------------------------------------------------------
Trustees' and officers' fees and
benefits 11,468
- ------------------------------------------------------
Professional services fees 20,060
- ------------------------------------------------------
Other 6,285
======================================================
Total expenses 355,793
======================================================
Less: Fees waived (28,059)
======================================================
Net expenses 327,734
======================================================
Net investment income 1,323,199
======================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (5,705,811)
- ------------------------------------------------------
Foreign currencies 10,128
======================================================
(5,695,683)
======================================================
Change in net unrealized appreciation
of:
Investment securities 3,551,460
- ------------------------------------------------------
Foreign currencies 1,152
======================================================
3,552,612
======================================================
Net realized and unrealized gain (loss) (2,143,071)
======================================================
Net increase (decrease) in net assets
resulting from operations $ (819,872)
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. UTILITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009 and the year ended December 31, 2008
(Unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2009 2008
- --------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 1,323,199 $ 3,211,845
- --------------------------------------------------------------------------------------------------------
Net realized gain (loss) (5,695,683) 1,506,366
- --------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 3,552,612 (52,819,002)
========================================================================================================
Net increase (decrease) in net assets resulting from operations (819,872) (48,100,791)
========================================================================================================
Distributions to shareholders from net investment income:
Series I -- (2,992,914)
- --------------------------------------------------------------------------------------------------------
Series II -- (56,469)
========================================================================================================
Total distributions from net investment income -- (3,049,383)
========================================================================================================
Distributions to shareholders from net realized gains:
Series I -- (10,996,910)
- --------------------------------------------------------------------------------------------------------
Series II -- (235,824)
========================================================================================================
Total distributions from net realized gains -- (11,232,734)
========================================================================================================
Share transactions-net:
Series I (11,339,937) (13,874,354)
- --------------------------------------------------------------------------------------------------------
Series II (125,415) (362,485)
========================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (11,465,352) (14,236,839)
========================================================================================================
Net increase (decrease) in net assets (12,285,224) (76,619,747)
========================================================================================================
NET ASSETS:
Beginning of period 82,420,868 159,040,615
========================================================================================================
End of period (includes undistributed net investment income of
$4,478,447 and $3,155,248, respectively) $ 70,135,644 $ 82,420,868
________________________________________________________________________________________________________
========================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
AIM V.I. UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Utilities Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twenty-
one separate portfolios, (each constituting a "Fund"). The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. Current Securities and Exchange Commission ("SEC") guidance,
however, requires participating insurance companies offering separate accounts
to vote shares proportionally in accordance with the instructions of the
contract owners whose investments are funded by shares of each Fund or class.
The Fund's investment objectives are capital growth and income.
The Fund currently offers two classes of shares, Series I and Series II, both
of which are offered to insurance company separate accounts funding variable
annuity contracts and variable life insurance policies ("variable products").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. 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 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. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable 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 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 of an independent pricing service 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
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
AIM V.I. UTILITIES FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor may determine the country in which an issuer is located and/or
credit risk exposure based on various factors. These factors include the
laws of the country under which the issuer is organized, where the issuer
maintains a principal office, the country in which the issuer derives 50%
or more of its total revenues and the country that has the primary market
for the issuer's securities, as well as other criteria. Among the other
criteria that may be evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America,
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid to separate accounts of participating insurance
companies annually and recorded on ex-dividend date.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates by a
significant amount. In addition, management monitors for material events
or transactions that may occur or become known after the period end date
and before the date the financial statements are available for issuance.
Such events and transactions are monitored through the date of the report
of independent registered public accounting firm for audited periods and
45 days from the period end date for all other periods.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. OTHER RISKS -- The Fund's investments are concentrated in a comparatively
narrow segment of the economy. Consequently, the Fund may tend to be more
volatile than other mutual funds, and the value of the Fund's investments
may tend to rise and fall more rapidly.
The Fund may invest a large percentage of assets in securities of a
limited number of companies, such that each investment may have 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.
Government regulation, difficulties in obtaining adequate financing and
investment return, environmental issues, prices of fuel for generation of
electricity, availability of natural gas, risks associated with power
marketing and trading, and risks associated with nuclear power facilities
may adversely affect the market value of the Fund's holdings.
J. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
Reported net realized foreign currency gains or losses arise from (i)
sales of foreign currencies, (ii) currency gains or losses realized
between the trade and settlement dates on securities transactions, and
(iii) the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency gains and losses arise from changes in the fair values of
assets and liabilities, other than investments in securities at fiscal
period end, resulting from changes in exchange rates.
AIM V.I. UTILITIES FUND
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
K. FOREIGN CURRENCY CONTRACTS -- The Fund may enter into foreign currency
contracts to manage or minimize currency or exchange rate risk. The Fund
may also enter into foreign currency contracts for the purchase or sale of
a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. A foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The use of foreign currency contracts does not
eliminate fluctuations in the price of the underlying securities the Fund
owns or intends to acquire but establishes a rate of exchange in advance.
Fluctuations in the value of these contracts are measured by the
difference in the contract date and reporting date exchange rates and are
recorded as unrealized appreciation (depreciation) until the contracts are
closed. When the contracts are closed, realized gains (losses) are
recorded. Realized and unrealized gains (losses) on the contracts are
included in the Statement of Operations. The maximum risks associated with
foreign currency contracts include failure of the counterparty to meet the
terms of the contract and the value of the foreign currency changing
unfavorably. These risks may be in excess of the amounts reflected in the
Statement of Assets and Liabilities.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. ("Invesco AIM" or the "Advisor"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of 0.60% of the Fund's average daily net assets.
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, 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 Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Series I shares to 0.93% and Series
II shares to 1.18% of average daily net assets, through at least April 30, 2010.
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
net annual operating expenses to exceed the numbers 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, in
addition to the expense reimbursement arrangement with Invesco Ltd. ("Invesco")
described more fully below, the only 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. These credits are used to pay certain expenses incurred by the
Fund. To the extent that the annualized expense ratio does not exceed the
expense limitation, the Advisor will retain its ability to be reimbursed for
such fee waivers or reimbursements prior to the end of each fiscal year.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash in such affiliated money market
funds.
For the six months ended June 30, 2009, the Advisor waived advisory fees of
$28,059.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the six months ended June 30, 2009, Invesco did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim a fee for
costs incurred in providing accounting services and fund administrative services
to the Fund and to reimburse Invesco Aim for administrative services fees paid
to insurance companies that have agreed to provide services to the participants
of separate accounts. These administrative services provided by the insurance
companies may include, among other things: the printing of prospectuses,
financial reports and proxy statements and the delivery of the same to existing
participants; the maintenance of master accounts; the facilitation of purchases
and redemptions requested by the participants; and the servicing of
participants' accounts. Pursuant to such agreement, for the six months ended
June 30, 2009, Invesco Aim was paid $24,795 for accounting and fund
administrative services and reimbursed $66,834 for services provided by
insurance companies.
The Trust has entered into a transfer agency and service agreement with
Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. For the six months ended June 30, 2009,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Fund. The Trust
has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays IADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Series II shares. Of the Plan payments, up to 0.25% of the average daily net
assets of the Series II shares may be paid to insurance companies who furnish
continuing personal shareholder services to customers who purchase and own
Series II shares of the Fund. For the six months ended June 30, 2009, expenses
incurred under the Plan are detailed in the Statement of Operations as
distribution fees.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
AIM V.I. UTILITIES FUND
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (GAAP) defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. GAAP
establishes a hierarchy that prioritizes the inputs to valuation methods giving
the highest priority to readily available unadjusted quoted prices in an active
market for identical assets (Level 1) and the lowest priority to significant
unobservable inputs (Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the securities or
other investments are tiered into one of three levels. Changes in valuation
methods may result in transfers in or out of an investment's assigned level:
Level 1 -- Prices are determined using quoted prices in an active market for
identical assets.
Level 2 -- Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may use
in pricing a security. These may include quoted prices for similar
securities, interest rates, prepayment speeds, credit risk and
others.
Level 3 -- Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are unavailable
(for example, when there is little or no market activity for an
investment at the end of the period), unobservable inputs may be
used. Unobservable inputs reflect the Fund's own assumptions about
the factors market participants would use in determining fair value
of the securities or instruments and would be based on the best
available information.
The following is a summary of the tiered valuation input levels, as of the end
of the reporting period, June 30, 2009. The level assigned to the securities
valuations may not be an indication of the risk or liquidity associated with
investing in those securities. Because of the inherent uncertainties of
valuation, the values reflected in the financial statements may materially
differ from the value received upon actual sale of those investments.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- ---------------------------------------------------------------------------------------------------------------------
Equity Securities $66,146,681 $3,753,343 $-- $69,900,024
_____________________________________________________________________________________________________________________
=====================================================================================================================
</Table>
NOTE 4--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested. Finally, certain current Trustees are eligible to
participate in a retirement plan that provides for benefits to be paid upon
retirement to Trustees over a period of time based on the number of years of
service. The Fund may have certain former Trustees who also participate in a
retirement plan and receive benefits under such plan. "Trustees' and Officers'
Fees and Benefits" include amounts accrued by the Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Fund.
During the six months ended June 30, 2009, the Fund paid legal fees of $1,525
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 5--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(i) leave funds as a compensating balance in the account so the custodian bank
can be compensated by earning the additional interest; or (ii) compensate by
paying the custodian bank at a rate agreed upon by the custodian bank and
Invesco Aim, not to exceed the contractually agreed upon rate.
NOTE 6--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of net assets will be
reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund had a capital loss carryforward as of December 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
December 31, 2009 $919,643
_______________________________________________________________________________________________
===============================================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
AIM V.I. UTILITIES FUND
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the six months ended June 30, 2009 was $4,832,659 and
$16,358,832, respectively. Cost of investments on a tax basis includes the
adjustments for financial reporting purposes as of the most recently completed
Federal income tax reporting period-end.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- -----------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $10,718,998
- -----------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (7,392,547)
===============================================================================================
Net unrealized appreciation of investment securities $ 3,326,451
_______________________________________________________________________________________________
===============================================================================================
Cost of investments for tax purposes is $66,573,573.
</Table>
NOTE 8--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
-----------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2009(a) DECEMBER 31, 2008
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 356,315 $ 4,398,884 1,346,697 $ 28,997,020
- ------------------------------------------------------------------------------------------------------------------------
Series II 7,570 94,404 26,485 551,996
========================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 1,077,799 13,989,824
- ------------------------------------------------------------------------------------------------------------------------
Series II -- -- 22,659 292,293
========================================================================================================================
Reacquired:
Series I (1,273,928) (15,738,821) (2,890,405) (56,861,198)
- ------------------------------------------------------------------------------------------------------------------------
Series II (18,643) (219,819) (58,398) (1,206,774)
========================================================================================================================
Net increase (decrease) in share activity (928,686) $(11,465,352) (475,163) $(14,236,839)
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 58% of the
outstanding shares of the Fund. The Fund and the Fund's principal
underwriter or advisor, are parties to participation agreements with these
entities whereby these entities sell units of interest in separate accounts
funding variable products that are invested in the Fund. The Fund, Invesco
Aim and/or Invesco Aim affiliates may make payments to these entities,
which are considered to be related to the Fund, for providing services to
the Fund, Invesco Aim and or Invesco Aim affiliates including but not
limited to services such as, securities brokerage, third party record
keeping and account servicing and administrative services. The Trust has no
knowledge as to whether all or any portion of the shares owned of record by
these entities are also owned beneficially.
AIM V.I. UTILITIES FUND
NOTE 9--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
NET GAINS
(LOSSES)
NET ASSET ON SECURITIES DIVIDENDS DISTRIBUTIONS
VALUE, NET (BOTH TOTAL FROM FROM NET FROM NET NET ASSET
BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END
OF PERIOD INCOME(a) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD
- ---------------------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 $13.38 $0.23 $(0.20) $ 0.03 $ -- $ -- $ -- $13.41
Year ended 12/31/08 23.97 0.52 (8.36) (7.84) (0.59) (2.16) (2.75) 13.38
Year ended 12/31/07 21.23 0.47 3.94 4.41 (0.47) (1.20) (1.67) 23.97
Year ended 12/31/06 17.83 0.47 4.06 4.53 (0.70) (0.43) (1.13) 21.23
Year ended 12/31/05 15.61 0.42 2.21 2.63 (0.41) -- (0.41) 17.83
Year ended 12/31/04 12.95 0.42 2.57 2.99 (0.33) -- (0.33) 15.61
- ---------------------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 13.30 0.22 (0.21) 0.01 -- -- -- 13.31
Year ended 12/31/08 23.80 0.46 (8.28) (7.82) (0.52) (2.16) (2.68) 13.30
Year ended 12/31/07 21.12 0.41 3.91 4.32 (0.44) (1.20) (1.64) 23.80
Year ended 12/31/06 17.76 0.42 4.06 4.48 (0.69) (0.43) (1.12) 21.12
Year ended 12/31/05 15.57 0.38 2.20 2.58 (0.39) -- (0.39) 17.76
Year ended 12/31/04(e) 12.63 0.26 2.68 2.94 -- -- -- 15.57
_________________________________________________________________________________________________________________________________
=================================================================================================================================
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME
TOTAL END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
RETURN(b) (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(c)
- ------------------------------------------------------------------------------------------------------------------
SERIES I
Six months ended 06/30/09 0.22% $ 68,565 0.93%(d) 1.01%(d) 3.77%(d) 7%
Year ended 12/31/08 (32.35) 80,704 0.93 0.96 2.53 15
Year ended 12/31/07 20.64 155,748 0.93 0.94 1.97 30
Year ended 12/31/06 25.46 139,080 0.93 0.96 2.40 38
Year ended 12/31/05 16.83 114,104 0.93 0.96 2.49 49
Year ended 12/31/04 23.65 159,554 1.01 1.01 3.09 52
- ------------------------------------------------------------------------------------------------------------------
SERIES II
Six months ended 06/30/09 0.08 1,571 1.18(d) 1.26(d) 3.52(d) 7
Year ended 12/31/08 (32.51) 1,717 1.18 1.21 2.28 15
Year ended 12/31/07 20.32 3,293 1.18 1.19 1.72 30
Year ended 12/31/06 25.25 2,462 1.18 1.21 2.15 38
Year ended 12/31/05 16.55 801 1.18 1.21 2.24 49
Year ended 12/31/04(e) 23.28 602 1.28(f) 1.28(f) 2.82(f) 52
__________________________________________________________________________________________________________________
==================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Total returns are not annualized for periods less than one
year, if applicable and do not reflect charges assessed in connection with
a variable product, which if included would reduce total returns.
(c) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(d) Ratios are annualized and based on average daily net assets (000's omitted)
of $69,397 and $1,515 for Series I and Series II, respectively.
(e) Commencement date of April 30, 2004.
(f) Annualized.
AIM V.I. UTILITIES FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and/or service fees (12b-1); and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with ongoing costs of investing
in other mutual funds. The example is based on an investment of $1,000 invested
at the beginning of the period and held for the entire period January 1, 2009
through June 30, 2009.
The actual and hypothetical expenses in the examples below do not represent
the effect of any fees or other expenses assessed in connection with a variable
product; if they did, the expenses shown would be higher while the ending
account values shown would be lower.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs. Therefore, the hypothetical information is useful in comparing
ongoing costs, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
------------------------------------------------------
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (01/01/09) (06/30/09)(1) PERIOD(2) (06/30/09) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
Series I $1,000.00 $1,002.20 $4.62 $1,020.18 $4.66 0.93%
- ---------------------------------------------------------------------------------------------------
Series II 1,000.00 1,000.80 5.85 1,018.94 5.91 1.18
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period January 1, 2009 through June 30, 2009, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
181/365 to reflect the most recent fiscal half year.
AIM V.I. UTILITIES FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM In addition to their meetings was controlling. Each Trustee may have
Variable Insurance Funds is required under throughout the year, the Sub-Committees evaluated the information provided
the Investment Company Act of 1940 to meet at designated contract renewal differently from another Trustee and
approve annually the renewal of the AIM meetings each year to conduct an in-depth attributed different weight to the various
V.I. Utilities Fund (the Fund) investment review of the performance, fees, expenses factors. The Trustees recognized that the
advisory agreement with Invesco Aim and other matters related to their advisory arrangements and resulting
Advisors, Inc. (Invesco Aim) and the assigned funds. During the contract advisory fees for the Fund and the other
Master Intergroup Sub-Advisory Contract renewal process, the Trustees receive AIM Funds are the result of years of
for Mutual Funds (the sub-advisory comparative performance and fee data review and negotiation between the
contracts) with Invesco Asset Management regarding the AIM Funds prepared by an Trustees and Invesco Aim, that the
Deutschland GmbH, Invesco Asset Management independent company, Lipper, Inc. Trustees may focus to a greater extent on
Limited, Invesco Asset Management (Japan) (Lipper), under the direction and certain aspects of these arrangements in
Limited, Invesco Australia Limited, supervision of the Senior Officer who also some years than in others, and that the
Invesco Global Asset Management (N.A.), prepares a separate analysis of this Trustees' deliberations and conclusions in
Inc., Invesco Hong Kong Limited, Invesco information for the Trustees. Each a particular year may be based in part on
Institutional (N.A.), Inc., Invesco Senior Sub-Committee then makes recommendations their deliberations and conclusions
Secured Management, Inc. and Invesco to the Investments Committee regarding the regarding these same arrangements
Trimark Ltd. (collectively, the Affiliated fees and expenses of their assigned funds. throughout the year and in prior years.
Sub-Advisers). During contract renewal The Investments Committee considers each
meetings held on June 16-17, 2009, the Sub-Committee's recommendations and makes The discussion below serves as a
Board as a whole, and the disinterested or its own recommendations regarding the fees summary of the Senior Officer's
"independent" Trustees voting separately, and expenses of the AIM Funds to the full independent written evaluation with
approved the continuance of the Fund's Board. The Investments Committee also respect to the Fund's investment advisory
investment advisory agreement and the considers each Sub-Committee's agreement as well as a discussion of the
sub-advisory contracts for another year, recommendations in making its annual material factors and related conclusions
effective July 1, 2009. In doing so, the recommendation to the Board whether to that formed the basis for the Board's
Board determined that the Fund's approve the continuance of each AIM Fund's approval of the Fund's investment advisory
investment advisory agreement and the investment advisory agreement and agreement and sub-advisory contracts.
sub-advisory contracts are in the best sub-advisory contracts for another year. Unless otherwise stated, information set
interests of the Fund and its shareholders forth below is as of June 17, 2009, and
and that the compensation to Invesco Aim The independent Trustees met separately does not reflect any changes that may have
and the Affiliated Sub-Advisers under the during their evaluation of the Fund's occurred since that date, including but
Fund's investment advisory agreement and investment advisory agreement and not limited to changes to the Fund's
sub-advisory contracts is fair and sub-advisory contracts with independent performance, advisory fees, expense
reasonable. legal counsel. The independent Trustees limitations and/or fee waivers.
were also assisted in their annual
THE BOARD'S FUND EVALUATION PROCESS The evaluation of the Fund's investment FACTORS AND CONCLUSIONS AND SUMMARY OF
Board's Investments Committee has advisory agreement by the Senior Officer. INDEPENDENT WRITTEN FEE EVALUATION
established three Sub-Committees that are One responsibility of the Senior Officer
responsible for overseeing the management is to manage the process by which the AIM A. Nature, Extent and Quality of
of a number of the series portfolios of Funds' proposed management fees are Services Provided by Invesco Aim
the AIM Funds. This Sub-Committee negotiated during the annual contract
structure permits the Trustees to focus on renewal process to ensure that they are The Board reviewed the advisory services
the performance of the AIM Funds that have negotiated in a manner that is at arms' provided to the Fund by Invesco Aim under
been assigned to them. The Sub-Committees length and reasonable. Accordingly, the the Fund's investment advisory agreement,
meet throughout the year to review the Senior Officer must either supervise a the performance of Invesco Aim in
performance of their assigned funds, and competitive bidding process or prepare an providing these services, and the
the Sub-Committees review monthly and independent written evaluation. The Senior credentials and experience of the officers
quarterly comparative performance Officer recommended that an independent and employees of Invesco Aim who provide
information and periodic asset flow data written evaluation be provided and, at the these services. The Board's review of the
for their assigned funds. These materials direction of the Board, prepared an qualifications of Invesco Aim to provide
are prepared under the direction and independent written evaluation. these services included the Board's
supervision of the independent Senior consideration of Invesco Aim's portfolio
Officer, an officer of the AIM Funds who During the annual contract renewal and product review process, various back
reports directly to the independent process, the Board considered the factors office support functions provided by
Trustees. Over the course of each year, discussed below in evaluating the fairness Invesco Aim and its affiliates, and
the Sub-Committees meet with portfolio and reasonableness of the Fund's Invesco Aim's equity and fixed income
managers for their assigned funds and investment advisory agreement and trading operations. The Board concluded
other members of management and review sub-advisory contracts. The Board that the nature, extent and quality of the
with these individuals the performance, considered all of the information provided advisory services provided to the Fund by
investment objective(s), policies, to them, including information provided at Invesco Aim are appropriate and that
strategies and limitations of these funds. their meetings throughout the year as part Invesco Aim currently is providing
of their ongoing oversight of the Fund, satisfactory advisory services in
and did not identify any particular factor accordance with the terms of the Fund's
that investment advisory agreement. In
addition, based on their
AIM V.I. UTILITIES FUND continued
ongoing meetings throughout the year with The Board considered fund performance least one year old and that other data did
the Fund's portfolio manager or managers, as a relevant factor in considering not reflect the market downturn that
the Board concluded that these individuals whether to approve the investment advisory occurred in the fourth quarter of 2008.
are competent and able to continue to agreement. The Board did not view fund
carry out their responsibilities under the performance as a relevant factor in The Board also compared the Fund's
Fund's investment advisory agreement. considering whether to approve the effective fee rate (the advisory fee after
sub-advisory contracts for the Fund, as no any advisory fee waivers and before any
In determining whether to continue the Affiliated Sub-Adviser currently manages expense limitations/waivers) to the
Fund's investment advisory agreement, the assets of the Fund. advisory fee rates of other domestic
Board considered the prior relationship clients of Invesco Aim and its affiliates
between Invesco Aim and the Fund, as well The Board compared the Fund's with investment strategies comparable to
as the Board's knowledge of Invesco Aim's performance during the past one, three and those of the Fund, including one mutual
operations, and concluded that it is five calendar years to the performance of fund advised by Invesco Aim. The Board
beneficial to maintain the current all funds in the Lipper performance noted that the Fund's rate was below the
relationship, in part, because of such universe that are not managed by Invesco effective fee rate for the other mutual
knowledge. The Board also considered the Aim or an affiliated Sub-Adviser and fund.
steps that Invesco Aim and its affiliates against the Lipper VA Underlying Funds -
continue to take to improve the quality Utility Index. The Board noted that the The Board noted that Invesco Aim has
and efficiency of the services they Fund's performance was in the first contractually agreed to waive fees and/or
provide to the AIM Funds in the areas of quintile of its Lipper performance limit expenses of the Fund through at
investment performance, product line universe for the one year period, the least April 30, 2010 in an amount
diversification, distribution, fund third quintile for the three year period necessary to limit total annual operating
operations, shareholder services and and the second quintile for the five year expenses to a specified percentage of
compliance. The Board concluded that the period (the first quintile being the best average daily net assets for each class of
quality and efficiency of the services performing funds and the fifth quintile the Fund. The Board also considered the
Invesco Aim and its affiliates provide to being the worst performing funds). The effect this expense limitation would have
the AIM Funds in each of these areas Board noted that the Fund's performance on the Fund's estimated total expenses.
support the Board's approval of the was above the performance of the Index for
continuance of the Fund's investment the one, three and five year periods. The Board also considered the services
advisory agreement. Although the independent written provided by the Affiliated Sub-Advisers
evaluation of the Fund's Senior Officer pursuant to the sub-advisory contracts and
B. Nature, Extent and Quality of only considered Fund performance through the services provided by Invesco Aim
Services Provided by Affiliated the most recent calendar year, the Board pursuant to the Fund's advisory agreement,
Sub-Advisers also reviewed more recent Fund performance as well as the allocation of fees between
and this review did not change their Invesco Aim and the Affiliated
The Board reviewed the services provided conclusions. The Board noted that, in Sub-Advisers pursuant to the sub-advisory
by the Affiliated Sub-Advisers under the response to the Board's focus on fund contracts. The Board noted that the
sub-advisory contracts and the credentials performance, Invesco Aim has taken a sub-advisory fees have no direct effect on
and experience of the officers and number of actions intended to improve the the Fund or its shareholders, as they are
employees of the Affiliated Sub-Advisers investment process for the funds. paid by Invesco Aim to the Affiliated
who provide these services. The Board Sub-Advisers, and that Invesco Aim and the
concluded that the nature, extent and D. Advisory and Sub-Advisory Fees and Affiliated Sub-Advisers are affiliates.
quality of the services provided by the Fee Waivers
Affiliated Sub-Advisers are appropriate. After taking account of the Fund's
The Board noted that the Affiliated The Board compared the Fund's contractual contractual advisory fee rate, the
Sub-Advisers, which have offices and advisory fee rate to the contractual contractual sub-advisory fee rate, the
personnel that are geographically advisory fee rates of funds in the Fund's comparative advisory fee information
dispersed in financial centers around the Lipper expense group that are not managed discussed above, the expense limitations
world, can provide research and other by Invesco Aim or an Affiliated and other relevant factors, the Board
information and make recommendations on Sub-Adviser, at a common asset level. The concluded that the Fund's advisory and
the markets and economies of various Board noted that the Fund's contractual sub-advisory fees are fair and reasonable.
countries and securities of companies advisory fee rate was below the median
located in such countries or on various contractual advisory fee rate of funds in E. Economies of Scale and Breakpoints
types of investments and investment its expense group. The Board also reviewed
techniques. The Board concluded that the the methodology used by Lipper in The Board considered the extent to
sub-advisory contracts benefit the Fund determining contractual fee rates, which which there are economies of scale in the
and its shareholders by permitting Invesco includes using audited financial data from provision of advisory services to the
Aim to utilize the additional resources the most recent annual report of each fund Fund. The Board also considered whether
and talent of the Affiliated Sub-Advisers in the expense group that was publicly the Fund benefits from such economies of
in managing the Fund. available as of the end of the past scale through contractual breakpoints in
calendar year. The Board noted that some the Fund's advisory fee schedule. The
C. Fund Performance comparative data was at Board noted that the Fund's contractual
advisory fee schedule does not include any
breakpoints. The Board noted that the Fund
shares directly in economies of scale
through lower fees charged by third
AIM V.I. UTILITIES FUND continued
party service providers based on the services to the Fund. The Board considered
combined size of all of the AIM Funds and the performance of Invesco Aim and its
affiliates. affiliates in providing these services and
the organizational structure employed by
F. Profitability and Financial Invesco Aim and its affiliates to provide
Resources these services. The Board also considered
that these services are provided to the
The Board reviewed information from Fund pursuant to written contracts that
Invesco Aim concerning the costs of the are reviewed and approved on an annual
advisory and other services that Invesco basis by the Board. The Board concluded
Aim and its affiliates provide to the Fund that Invesco Aim and its affiliates are
and the profitability of Invesco Aim and providing these services in a satisfactory
its affiliates in providing these manner and in accordance with the terms of
services. The Board also reviewed their contracts, and are qualified to
information concerning the financial continue to provide these services to the
condition of Invesco Aim and its Fund.
affiliates. The Board reviewed with
Invesco Aim the methodology used to The Board considered the benefits
prepare the profitability information. The realized by Invesco Aim and the Affiliated
Board considered the overall profitability Sub-Advisers as a result of portfolio
of Invesco Ltd., the ultimate parent of brokerage transactions executed through
Invesco Aim and the Affiliated "soft dollar" arrangements. The Board
Sub-Advisers, and of Invesco Aim, as well noted that soft dollar arrangements shift
as the profitability of Invesco Aim in the payment obligation for research and
connection with managing the Fund. The execution services from Invesco Aim and
Board noted that Invesco Aim continues to the Affiliated Sub-Advisers to the funds
operate at a net profit, although the and therefore may reduce Invesco Aim's and
reduction of assets under management as a the Affiliated Sub-Advisers' expenses. The
result of market movements and the Board concluded that Invesco Aim's and the
increase in voluntary fee waivers for Affiliated Sub-Advisers' soft dollar
affiliated money market funds have reduced arrangements are appropriate. The Board
the profitability of Invesco Aim and its also concluded that, based on their review
affiliates. The Board concluded that the and representations made by the Chief
Fund's fees are fair and reasonable, and Compliance Officer of Invesco Aim, these
that the level of profits realized by arrangements are consistent with
Invesco Aim and its affiliates from regulatory requirements.
providing services to the Fund is not
excessive in light of the nature, quality The Board considered the fact that the
and extent of the services provided. The Fund's uninvested cash and cash collateral
Board considered whether Invesco Aim is from any securities lending arrangements
financially sound and has the resources may be invested in money market funds
necessary to perform its obligations under advised by Invesco Aim pursuant to
the Fund's investment advisory agreement, procedures approved by the Board. The
and concluded that Invesco Aim has the Board noted that Invesco Aim will receive
financial resources necessary to fulfill advisory fees from these affiliated money
these obligations. The Board also market funds attributable to such
considered whether each Affiliated investments, although Invesco Aim has
Sub-Adviser is financially sound and has contractually agreed to waive through at
the resources necessary to perform its least June 30, 2010, the advisory fees
obligations under the sub-advisory payable by the Fund in an amount equal to
contracts, and concluded that each 100% of the net advisory fee Invesco Aim
Affiliated Sub-Adviser has the financial receives from the affiliated money market
resources necessary to fulfill these funds with respect to the Fund's
obligations. investment in the affiliated money market
funds of uninvested cash, but not cash
G. Collateral Benefits to Invesco Aim collateral. The Board concluded that the
and its Affiliates Fund's investment of uninvested cash and
cash collateral from any securities
The Board considered various other lending arrangements in the affiliated
benefits received by Invesco Aim and its money market funds is in the best
affiliates resulting from Invesco Aim's interests of the Fund and its
relationship with the Fund, including the shareholders.
fees received by Invesco Aim and its
affiliates for their provision of
administrative, transfer agency and
distribution
AIM V.I. UTILITIES FUND
ITEM 2. CODE OF ETHICS.
There were no amendments to the Code of Ethics (the "Code") that
applies to the Registrant's Principal Executive Officer ("PEO") and
Principal Financial Officer ("PFO") during the period covered by the
report. The Registrant did not grant any waivers, including implicit
waivers, from any provisions of the Code to the PEO or PFO during the
period covered by this report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Investments in securities of unaffiliated issuers is included as part
of the reports to stockholders filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 11. CONTROLS AND PROCEDURES.
(a) As of June 15, 2009, an evaluation was performed under the
supervision and with the participation of the officers of the
Registrant, including the Principal Executive Officer ("PEO") and
Principal Financial Officer ("PFO"), to assess the effectiveness of
the Registrant's disclosure controls and procedures, as that term is
defined in Rule 30a-3(c) under the Investment Company Act of 1940
(the "Act"), as amended. Based on that evaluation, the Registrant's
officers, including the PEO and PFO, concluded that, as of June 15,
2009, the Registrant's disclosure controls and procedures were
reasonably designed to ensure: (1) that information required to be
disclosed by the Registrant on Form N-CSR is recorded,
processed, summarized and reported within the time periods specified
by the rules and forms of the Securities and Exchange Commission; and
(2) that material information relating to the Registrant is made
known to the PEO and PFO as appropriate to allow timely decisions
regarding required disclosure.
(b) There have been no changes in the Registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act) that
occurred during the second fiscal quarter of the period covered by
the report that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
12(a)(1) Not applicable.
12(a)(2) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(a) under the Investment Company Act
of 1940.
12(a)(3) Not applicable.
12(b) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(b) under the Investment Company Act
of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: AIM Variable Insurance Funds
By: /s/ Philip A. Taylor
---------------------------------
Philip A. Taylor
Principal Executive Officer
Date: August 26, 2009
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: /s/ Philip A. Taylor
---------------------------------
Philip A. Taylor
Principal Executive Officer
Date: August 26, 2009
By: /s/ Sheri Morris
---------------------------------
Sheri Morris
Principal Financial Officer
Date: August 26, 2009
EXHIBIT INDEX
12(a)(1) Not applicable.
12(a)(2) Certifications of principal executive officer and principal
financial officer as required by Rule 30a-2(a) under the Investment
Company Act of 1940.
12(a)(3) Not applicable.
12(b) Certifications of principal executive officer and principal
financial officer as required by Rule 30a-2(b) under the Investment
Company Act of 1940.